USA Today’s Kelly Kennedy is reporting that as health care premiums continue to outpace wages, a growing number of Americans are now turning to high-deductible coverage for premium relief:
In 2007, about 4.5 million people had high-deductible plans, but by 2010, 10 million people had signed up for the plans, according to an America’s Health Insurance Plans survey of its members.
In exchange for a high deductible — a maximum $3,000 deductible for individuals and a $6,000 deductible for families, for instance — people can save about $85 to $100 a month on premiums.
“People are choosing higher deductibles for lower premiums,” said Karen Ignagni, president of America’s Health Insurance Plans, which represents 1,300 companies providing health insurance to more than 200 million Americans.
It’s important that they understand those lower premiums can mean higher doctors’ bills, she said.
Families spend thousands to meet their deductible and often times avoid treatment altogether. And it’s not the kind of high-tech super expensive care that people are abusing. What the research shows is that people are forging preventive care — the very services that help avoid high costs in the future:
RAND researchers also found that people on high-deductible plans — no matter their income level — received less preventive care: fewer annual exams, fewer cervical cancer screenings and fewer colonoscopies.
Studies have shown that people don’t know that their plans waive fees for preventive care, researcher Amelia Haviland wrote in the report.
According to the study, families enrolled in high-deductible coverage spent 14 percent less in the first year than families with lower deductibles, but “the percentage of young children receiving vaccinations dropped as much as 8.5 percent in the first year their families were covered by the high-deductible plans, while vaccination rates for children in standard plans rose slightly.” “And use of cancer screenings was two to three percentage points lower among families with high deductibles.”
The other problem is that catastrophic-only plans generally appeal to a younger and healthier population that doesn’t think it will ever get sick — at least not in the immediate future. They opt for these kinds of plans, thus further fragmenting the health care market.
The Affordable Care Act already gives younger individuals the option of enrolling in high deductible plans that cover less services at cheaper rates. Insurers will also be able to price their policies based on age and charge young people rates that are three-times lower than what older (and presumably sicker) applicants will be paying.
But some conservatives want to seize the growth in catastrophic-only coverage and go even further. They’re suggesting that insurers should be allowed to design catastrophic plans outside of the requirements of the law (which mandates policies to provide a set of essential benefits) and the exchanges. You can see how this wouldn’t work. If younger people have an incentive to enroll in cheaper high-deductible coverage, the exchanges will be left with sicker individuals who need comprehensive coverage and use it frequently. Without healthy individuals to offset the costs of this care, premiums will have to increase, pushing out everyone but the sickest and neediest applicants. As a result, the exchanges will become cost prohibitive for most Americans.