Insurers' High-deductible Plans Leave Many Without Needed Care
May 18, 2015

A dozen or so years ago, a small group of wealthy corporate insurance executives decided their customers were not paying nearly enough for the medical care they received. How else to explain the fact that managed care — which they had touted as a silver bullet just a decade earlier — had failed miserably at controlling health care costs.

Those executives came to embrace as the newest silver bullet a strategy incubated at the National Center for Policy Analysis, a Dallas-based libertarian think tank that advocates for fewer government regulations and more individual responsibility. The strategy that emerged in the early 2000s was what the insurance industry called consumer driven health plans — CDHPs for short. These plans are superficially appealing because the premiums are lower. But that obscures a defining and central feature of CDHPs: a requirement that folks enrolled in them, regardless of income, pay a substantial sum from their wallets for medical care every year before their insurance coverage kicks in. In some ways at least, CDHPs are about less insurance. With every passing year, under the industry’s strategy, insurance companies would be paying a smaller percentage of medical claims while their customers would be paying more because of the high deductibles.

Fast forward to 2015 and the effects of that strategy are playing out – but not to the benefit of consumers. Instead, ever-increasing numbers of Americans are finding themselves in the ranks of the underinsured.

The latest evidence came last Thursday in a study released by the left-of-center Families USA. Using data collected by the Urban Institute’s Health Reform Monitoring Survey, the group found that more than one of every four adults enrolled in these CDHPs went without needed care because they didn’t have the cash to pay for it.

The most common types of care they skipped, according to Families USA’s report, were medical tests and treatments and follow-up care.

Some critics of high deductible plans have characterized them as “blunt instruments” because they typically are not adjusted to take an individual’s or family’s income into consideration. Someone making $50,000 a year has to pay the same amount out of his or her own pocket before insurance kicks in as someone making $250,000.

So it should come as no surprise that Families USA’s study found that lower- to middle-income adults were the most adversely affected by the steady growth of CDHPs, with almost one out of three (32.3%) Americans reporting they skipped needed health care because they couldn’t afford it.

“Too many lower- and middle-income consumers face deductibles that are likely unaffordable relative to their incomes and that could create barriers to them getting the care they need,” the authors of the Families USA study noted.Other studies have found that the average deductible in CDHPs has been increasing every year and that the rate of increase has exceeded the growth of household income. There is no reason to think that trend won’t continue. So future studies like the one released last week undoubtedly will show that the percentage of American families skipping needed care will be even higher.

Already, 30 percent of American adults enrolled in CDHPs had what Families USA called “exceedingly high” deductibles of $3,000 or more. It is not at all unusual for individual and family deductibles to exceed $5,000. Many people enroll in such plans because they can’t afford the premiums of plans with lower deductibles. Others likely pay scant attention to the deductibles or enroll in CDHP’s and then pray they won’t get sick or injured.

As Families USA Executive Ron Pollack noted, while the Affordable Care Act has enabled millions of Americans to find health insurance with premiums that won’t bust their budgets, many of the newly insured unfortunately are finding themselves poorly insured because of the high deductibles.Pollack, whose organization was a leading advocate of health care reform, called the Affordable Care Act “a huge, historic success in expanding health coverage.” But the fact that increasing numbers of Americans are in plans that make care unaffordable because of high out-of-pocket obligations is something Pollack said “needs to be fixed.”

Among the fixes Families USA is proposing: a requirement that some of the silver plans insurers sell on the health insurance exchanges have lower upfront cost sharing for primary care, outpatient services and prescription drugs.That would mean, of course, that insurers would have to cover more of their enrollees’ medical claims than they are currently required to do. If they did, it would, of course, cut into profits. So while it’s a worthy idea, and one that would mean that fewer Americans would have to skip on needed care, it is not one that the small group of wealthy corporate insurance executives that gave us CDHPs in the first place will likely agree to.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Know About the Affordable Care Act.

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