Over the past decade and a half, the American healthcare system has undergone a silent revolution. I’m not referring to the Affordable Care Act, but instead to a separate paradigm shift in how Americans pay for their healthcare—they increasingly find themselves in insurance plans that carry high out-of-pocket expenses, meaning their coverage doesn’t leave them well covered. Almost half of Americans younger than 65 are currently enrolled in high deductible health plans, required to pay for the first $1,000, $2,000, or even $5,000 of their health care expenses before their insurance kicks in. Euphemistically referred to as Consumer-Directed Health Plans, these high out-of-pocket programs are in theory supposed to incentivize people to scrutinize the cost and quality of their medical care, thus bringing pressure on providers to lower the price and/or raise the quality of their services.
This theory isn’t borne out in practice. As a matter of practice and policy, we need to stop burdening people with the expense of necessary care.
As recently as a decade ago, less than 15% of Americans were enrolled in high-deductible health plans. Since then, American employers have turned to such plans to hold down the costs of the benefits they offer their employees. High-deductible health plans hold down employer expenses by shifting costs to employees. First, employers save money because the first $5,000 of each employee’s healthcare expenses come out of those employees’ pockets. Second, high-deductible health plans dissuade employees from receiving medical care. That saves employers money by lowering overall healthcare expenditures.
Both of these ways of saving money harm Americans. The shift of expenses from employer to employee is a huge financial burden on low- and middle-income Americans, for whom an unexpected $5,000 expense creates financial distress. High-deductible health plans put many people one illness away from missing their next mortgage payment.
High-deductible health plans frequently force people to decide whether to seek medical care. When facing high out-of-pocket expenses, people often avoid necessary medical care. They stop taking important medications or wait out troubling symptoms that require urgent intervention.
Consider what happens when people with diabetes get forced into high-deductible health plans by their employers. When they begin experiencing complications from their diabetes—perhaps early vision problems or symptoms suggesting the onset of heart disease—they hold off on receiving tests to evaluate those symptoms. People with high-deductible plans receive less testing than those with more generous coverage. That might save money in the short run. But what about later, when they experience retinal bleeding or clogged coronary arteries?
The turn towards high-deductible health plans has harmed Americans financially and medically. The federal government should disincentivize employers from pushing people into such plans by scaling back tax breaks for employers that provide only high-deductible plans to their employees.
Americans deserve insurance plans that cover them for what counts.
