A single, 40-year-old nonsmoker making $35,000 a year in Terre Haute, Ind., can choose from 29 different health insurance plans on HealthCare.gov during the 2015 open enrollment period that starts Saturday. But a vast majority of those plans may ultimately leave that 40-year-old with high out-of-pocket costs.
Indiana is far from the only market where high-deductible plans are coming to dominate the available coverage choices. From 60% to more than 80% of plans in a given exchange market could be high-deductible options next year.
“I thought (high-deductible plans) would level off this year and they continue to grow,” said Brigitte Nettesheim, a principal at the Chartis Group who studies the health insurer segment. “They will still be a significant portion of the type of plan designs offered.”
The proliferation of high-deductible exchange plans highlights the core issue of insurance affordability, one of the basic tenets behind the Patient Protection and Affordable Care Act.
Those deductibles already are weighing heavily on Americans. A new survey from the Commonwealth Fund (PDF) found that three in five low-income adults and about half of adults with moderate incomes believe their deductibles are “difficult or impossible to afford.” About 13% of Americans spend 10% or more of their income on out-of-pocket healthcare costs as well.
“The results of this survey show that these trends toward greater cost-sharing, combined with little or no growth in median family income, have left many working Americans in the middle and lower end of the income distribution with large healthcare cost burdens,” the Commonwealth Fund authors wrote. “Cost-sharing in health plans is affecting people's medical decisions in ways that should be of concern to policymakers and the medical community.”
Twenty-four of the 29 available health plans for that Indiana resident are considered to be high-deductible health plans. The Internal Revenue Service defines a high-deductible plan for 2015 (PDF) as having an annual deductible of at least $1,300 for individual coverage and $2,600 for families. A bronze-level Anthem Blue Cross and Blue Shield plan for that Terre Haute resident, for example, costs $263 per month before tax credits. But the annual deductible is $6,300, meaning that the individual must pay $6,300 in medical expenses each year before any insurance kicks in.
A family of four in Flagstaff, Ariz., making $85,000 per year will be able to choose from 60 health plans, but 44 have high deductibles, according to results found on HealthCare.gov. For a single, 32-year-old smoker earning $55,000 per year in Pierre, S.D., 31 of 38 available health plans in the state carry high deductibles. And a couple in their 50s living in Pensacola, Fla., making a combined total of $100,000 annually can choose from 30 high-deductible plans out of a possible 44.
These types of plans have taken off in the employer space in recent years as more companies have tried to stem the tide of growing premium costs by putting more of the expense burden on workers. Employers also may be looking ahead to 2018, when the Affordable Care Act will levy an excise tax on so-called “Cadillac” employer health plans that offer generous benefits and little, if any, cost-sharing for employees.
The average employer-plan deductible last year was $1,217, far above the $584 average in 2006, according to the Kaiser Family Foundation. Gina Boscarino, senior policy director at healthcare consulting firm Breakaway Policy Strategies, said high-deductible policies were created in part to get workers more involved in their healthcare and be more conscious of costs. High-deductible plans were common for the 7.1 million people who acquired Obamacare coverage last year, and they will be even more prevalent starting this weekend.
A HealthPocket study found that bronze and silver plans—the two most popular options because of their lower monthly premiums—generally had high deductibles last year. Less than 5% of all exchange plans had no deductible.
Health insurers are offering more high-deductible plans as a tradeoff to keep premiums down. And the ACA's cost-sharing reductions could help more people with their out-of-pocket costs next year, Boscarino said. Those subsidies apply to those who earn between 100% and 250% of the federal poverty level The subsidies help pay for deductibles, copayments and coinsurance. But those reductions won't completely wipe out consumers' financial obligations.
Boscarino also said that, unlike most employer-sponsored plans, many exchange plans apply the costs of basic healthcare services to the deductible. For example, her firm found that 63% of silver plans and 83% of bronze plans last year subjected some or all prescription drug benefits to a deductible. About a third of all exchange plans did the same for primary-care and specialist visits.
“We will probably see it more so this year,” Boscarino said regarding deductibles for prescription drugs and doctor visits. “If people have to pay out of pocket up to the deducible, that could be potentially problematic.”
There's no consensus on whether high-deductible plans are achieving their goals of saving money and getting patients more engaged in their care. Several studies from the Rand Corp. have shown that people typically cut back on unnecessary and necessary care when they are in high-deductible plans.
Dr. Frank Wharam, an internal medicine physician at Harvard Medical School's Department of Population Medicine, and his colleagues have generally seen the same consumer decisionmaking. But they also discovered recently that the poorest and least-educated patients avoided the emergency department in a health crisis because of their high deductible.
“It's pretty concerning to see a reduction in these high-severity visits among just the lower-income group,” Wharam said.
But he emphasized that high-deductible plans can't be written off because of that, and the healthcare community must realize many people are just beginning to understand how high-deductible health plans work.
“You hope people are learning upfront, but it's extremely complicated,” said Wharam, who has studied high-deductible plans for the past decade. “This learning element is going to be something that is important over time.”
Experts say insurers and providers are the most influential players to educate patients about high-deductible plans and help them determine whether they are a reasonable fit. “If there's anything they can do to talk to patients more, or educate their insured folks more about some of those terms and concepts, they may end up with fewer situations where people are surprised about their out-of-pocket costs,” said Liz Hamel, the director of public opinion and survey research at the Kaiser Family Foundation.
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