Doc, I need to get this done before my new deductible kicks in. Physicians hear this a lot; it reflects the increasing use of so-called consumer-directed health plans, where people are responsible for the first several thousand dollars of care before their insurance company has to pay. If you don’t already have one, you probably will soon.
And, believe it or not, this trend has nothing to do with Obamacare. The adoption of high-deductible plans is a symptom of a deeper problem: the fact that everything costs way more in America than anywhere else. For decades, there has been so much money sloshing around the system that there has been an arms race over who can charge the most. And for-profit insurance companies have never had the leverage to actually bring those prices down – the system is too fragmented.
There are some good things that come from those prices; part of that money goes to developing new treatments and technology. But a lot of that money ends up being wasted. For instance, a huge amount is thrown away on needless bureaucracy. A 2003 paper in the New England Journal of Medicine estimated that up to 30 percent of our health care costs come from administrative waste.
And it gets even worse. Researchers have shown that some of the care provided may not be as necessary or effective as doctors think. For instance, there is a whole website created by the American Board of Internal Medicine to help doctors and patients decide which tests and treatments actually are useful (choosingwisely.org).
So we have a system that is insanely expensive, that wastes money on needless paperwork and may not always provide the right type of care. But no one can fix it because it is too disjointed and unwieldy. So what do you do if you are a for-profit insurance company? You figure out a way to make someone else pay.
And that is why we have high-deductible plans. The insurance company is off the hook for the first several thousand dollars. Plus, the thinking is that if you have to pay that first big amount, you will somehow be able to control costs and solve the system’s problems. Now, there is a bit of truth to that. Studies show that people respond to high deductibles by cutting down on doctor visits for simple things. More importantly, it gets people to be more involved in their care, and that is definitely a good thing.
Unfortunately, it doesn’t solve the fundamental problem of high costs. Once people get really sick, they blast through the deductible and the system ends up right back where it started, with lots of expensive care and no way to control it. And a lot of studies show that when people are worried about their deductibles, they put off being evaluated, ending up much sicker and with more expensive problems. Children can often be the innocent victims of this, as parents struggling with finances try to decide which symptoms need a doctor and which don’t. Finally, women tend to have higher health costs overall, and high-deductible plans amount to more than a $1,000 loss in pay for women compared to men.
But the winners are always the insurance companies. They have managed to shift their costs onto you, yet they can still charge huge premiums and deceptively blame Obamacare (rather than admit that they are perpetuating a broken business model). It would have been so much simpler, and cheaper, if Congress had just raised everyone’s Medicare tax – less than what we pay for private insurance – then we could all have some degree of basic coverage through Medicare. But that concept is kept so far off the table that most Americans don’t realize it is an option.
But even if research suggests that high-deductible plans can’t work, it doesn’t make any difference. They are happening. So in coming years, as you pay thousands of dollars to fulfill your deductible, remember that you are spending all that extra money to help your insurance company survive. Hopefully you will, too.