Rising deductibles, coupled with the slow economic recovery from the Great Recession, has depressed utilization of health services and helped to keep premium increases lower than they would otherwise be. High-deductible plans are cheaper: Family coverage in a typical high-deductible plan with a savings option runs $16,737, compared with $19,003 for a PPO plan for a family. Enrollment in high-deductible plans with savings accounts reduced the average premium increase for all employers by half a percentage point in 2014 and 2015.
But just as high deductibles help hold down costs, they also can take a big bite from the pocketbooks of consumers. As the chart below illustrates [go to link] deductibles are rising almost six times faster than wages. This, more than any other single factor, is why consumers don’t see the bright side of the historic moderation in health costs the country is experiencing. Their share of premium payments is up–if more modestly than in the past–and their deductibles are growing steadily and in some cases steeply, while wage growth has been sluggish.
Today we debate high deductibles, a trend that started long before Obamacare, promoted by consultants who convinced employers that they could turn employees into consumers if they forced them to pay more for health care.
If that was true and working today, a high deductible for most people would not be a big a deal because they would be avoiding health care expenses and thus the deductible would be nearly irrelevant. Of course that is not the case, and many employees (and now Obamacare enrollees ) are caught in the middle with both health care costs and high deductibles.
What they miss in the equation is that their premiums are lower because of high deductibles, but that is little comfort for those having most of the premium subsidized through Obamacare.
For those of us who have been around a while all this is somewhat amusing. Back in the day as they say, health plans provided coverage only for in-patient services with a fixed amount allocated for surgery, anesthesia, lab and x-ray services. There was no insurance for out-patient services such as office visits, physical therapy, prescription drugs and much more. Who knew? Perhaps we should have stayed with a system that worked.