Health insurance and the high deductible option

It has been made very clear that if we do not begin to address the rising cost of health insurance premiums, no one in the middle class will be able to afford any coverage. Consider the following from the Robert Graham Center:

“With health insurance packages bought and sold as profitable commodities, adequate health insurance coverage will soon be a product of shrinking benefits, to be bought by the wealthy and sold to the healthy. Most individuals cannot shoulder the burden of rising health care costs, and medical expense now tops the list of reasons for personal bankruptcy. If the system remains the same, the number of uninsured will continue to grow.”

One of the core tenets of the Patient Protection and Affordable Care Act was the creation of Health Insurance Exchanges. According to the Commonwealth Fund, exchanges will “expand health insurance coverage, improve the quality of such coverage and perhaps of health care itself, and reduce costs.” It is within these exchanges that individuals unable to afford health insurance in the traditional marketplace can come to find a more affordable option.

Click on the map to find out where your state is in planning for health insurance exchange

Or at least that is the goal. However, with options comes choices and it is important that the community is aware of the options to make the most informed choice.

One choice that most individuals will have to make when looking for insurance on the health insurance exchanges is around the deductible. First, let’s explain deductibles.

Deductibles are fixed amounts of money one has to pay before the health policy benefit can be received; however, in most insurance policies some services can be utilized like a primary care visit or emergency room visit without having paid the full deductible first. So if an individual has a high deductible, they would need to pay in a great deal of their own money before the health insurance company started paying for services.

Doesn’t sound too appealing does it?

Well think about it for a second – the higher the deductible the lower the monthly premium (the opposite is also true). If a family is relatively healthy and looking to cut their monthly healthcare costs, they could choose a high deductible plan and pay less in premiums. So, if that family has no major health problems that year they are likely to pay less for healthcare.

So the high deductible plans may on the surface be appealing just because they “cost less” per month.

In an excellent Health Affairs article on the subject of high deductibles, author Maribeth Shannon offers three recommendations when considering what patients should do for insurance options (below are taking directly from her article):

“Understanding benefit design. At a minimum, patients need to know which services are covered under their plan and whether costs incurred will be applied toward their deductible. Fortunately, the ACA provides for a uniform approach to describing benefits through the Summary of Benefits and Coverage (SBC).  The SBC seeks to provide standardized information – presented in a simplified, easy-to-access way — to help consumers understand coverage limits and estimated costs. Consumers Union and the National Association of Insurance Commissioners (NAIC) already have provided prototypes and user testing results to help shape such tools.

Understanding price. Price is still one of the most opaque areas in health care. Surveys consistently find that consumers say they want price information, but when it comes down to it, they cannot often find it. A few states (e.g., New Hampshire) have taken steps to fill this void with pricing tools drawn from All Payer Claims Databases.  Some health plans have also recently launched tools for their members. To be effective, such tools have to provide specific pricing information at the individual provider level, with health plan-specific negotiated rates.

Understanding options. Also crucial for patients is reliable information about the risks and benefits of comparative treatments, and their relative value. On this front, the Patient-Centered Outcomes Research Institute (PCORI) is working on improving understanding of treatment options for both patients and their providers.”

In the current healthcare system, health insurance is critical to gain access to services. Whatever option you choose, it is important to be aware of the impact of your choice, and how that will help or hurt your chances of being healthier.

Dr. Miller has his doctorate in clinical psychology and is an Assistant Professor in the Department of Family Medicine at the University of Colorado Denver School of Medicine where he is the Director of the Office of Integrated Healthcare Research and Policy. His core task is to integrate mental health across all three of the department’s core mission areas: clinical, education, and research. Opinions expressed here are his own and not those of his employer.

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  • Taylor Struemph

    An equally compelling case for high deductible plans can be made for those considered only “relatively healthy”. In addition to epilepsy, I have a few minor health
    conditions. For a good month, I have 5 to 8 prescriptions to fill. On an HMO,
    each would cost a co-pay and I would pay a monthly premium. We all know that prescription drug prices are too high- unfortunately I am one of the people who literally cannot afford to live without health insurance. But with a high deductible plan, this works in my favor doubly. On prescriptions alone I reach my deductible within weeks, after which I pay only 20% of my costs. Because my seizure medications are SO expensive, that remaining 20% quickly adds up to exceed my out of pocket maximum. Within three months, I no longer have a co-pay for any medical services. The total out of pocket maximum divided over twelve months is much less than what an HMO’s copays and premiums would add up to. And because my employer offers flexible health care spending accounts, that amount of money is withdrawn from my monthly pay as though it were a premium AND it is taken pre-tax. As if the savings weren’t reason enough, many high deductible plans have an open formulary for prescription coverage. Several of my medications are Tier 3 or higher. When my pharmacy switched generic manufacturers, I began having breakthrough seizures. My neurologist simply wrote a script for non-generic; there was no need to fight the insurance company over the extra cost. I don’t need to worry about coverage when my doctors recommend a new treatment. MRI? Sure! Sleep study? Sure! Physical therapy? Sure! The only thing I haven’t tried is asking for is a puppy. Lastly, the high deductible is the only plan my employer offers that extends out of state treatment. I no longer worry about having a seizure while travelling. The fact that I consider that a luxury is a sad testament to the state of our health care system.

    This sounds like an infomercial, I know. But as the article says, understanding benefit designs is crucial. Something that seemed extreme and expensive has made an enormous difference in the quality of my healthcare (and thus my life) and in fact saved money.