Sky-High Deductibles Broke the U.S. Health Insurance System

Employers are questioning a system they say costs patients too much.

It’s a reality for a growing share of Americans. Today, 39% of large employers offer only high-deductible plans, up from 7% in 2009, according to a survey by the National Business Group on Health. Half of all workers now have health insurance with a deductible of at least $1,000 for an individual, up from 22% in 2009, according to data from the Kaiser Family Foundation. About 41% say they can’t pay a $400 emergency expense without borrowing or selling something, according to the Federal Reserve. The bottom line: People simply can’t afford to get sick.

How the U.S. insurance system came to stick its customers with increasingly onerous medical bills is a 15-year long story of miscalculations and missed opportunities. It started in 2003 when President George W. Bush and congressional Republicans passed a change to the tax code that encouraged employers to experiment with high-deductible plans, which ask patients to pay out of pocket for care – sometimes thousands of dollars – before insurance coverage kicks in. The trend got a push when the financial crisis hit: As the economy stalled and employers shed 9 million jobs over the arrival of Obamacare in 2010. Millions who were previously uninsured could now get coverage, but many of them took on deductibles of $1,000 or higher.

High-deductible plans do reduce healthcare costs, but they don’t seem to be doing it in smart ways, say Neeraj Sood, Director of Research at the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California. The health industry is taking notice that families are going bankrupt to pay medical bills with high deductibles. About 5 years ago, CVS switched all of its 200,000 employees and their families to health insurance plans with high deductibles. As the company pushed more costs onto employees, they stopped taking their medications. Families simply reduced the amount of medical care they used, including preventative care. In high-deductible plans, women are more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat, according to research in the Journal of Clinical Oncology.

It should be noted that health insurance companies’ stock prices, not to mention industry executives salaries, were both soaring, while the thousands of dollars in premiums the families are paying, protected neither their family’s health or finances. Many insurance companies are pulling out of California now, and Obama Care is imploding, so we will have fewer choices. Until then we will have higher deductibles, more people going to the emergency room for things they should have seen a doctor for, and people not buying their medications, because they simply cannot afford them. Is this a good long term approach?