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ACA Fail Fractal
Americans Feel Crushed by ACA High Deductible Plans

In the age of Affordable Care Act, now that almost everyone has health insurance, no one has to worry about being crushed by large unplanned medical expenses, right? Not true, according to a new Associated Press survey covered in the Washington Post. The survey found that one out of four respondents with private health care plans worry that they would not be able to afford to pay for an unexpected medical procedure, especially a more serious and expensive one. At issue are high deductible plans, which can leave the insured with high out-of-pocket costs. More:

Such plans already represented a growing share of employer-sponsored coverage. Now, they’re also the mainstay of the new health insurance exchanges created by Obama’s law […]

Nineteen percent of all privately insured adults said they did not go to the doctor when they were sick or injured, because of costs. Among those with high-deductible plans, the figure was 29 percent […]

Only about half of those surveyed said they had a strong understanding of what their plans cover […]

Plan-switchers who said they are paying more outnumbered those who are paying less by 45 percent to 29 percent. Of those paying more, 11 percent said they are getting higher-quality care for their dollar.

The public angst over high deductible plans is a shame. Not only are they good for the health care system as a whole, they can also help consumers make more rational health care decisions. When your insurer or another third-party payer picks up the full tab of your procedure, you’re more likely to consume more health care than is necessary, and you’re less likely to shop for the best price. Study after study has shown that the rise of high deductible plans has contributed to the slowdown in national health care spending.

But high deductible plans are only a fix for our system if other reforms are also in place to help bring down costs, educate consumers, and promote price transparency. Without price transparency, for example, high deductible plans are more likely to keep Americans away from medical care altogether, rather than encourage them to shop smartly for it. And the same holds true for consumers who don’t know or aren’t sure about what their plans cover. In isolation, making people pay more of their bill out-of-pocket will bring down costs, but it won’t bring them down enough to make the added out-of-pocket burden tolerable for most.

The first “A” in “ACA” stands for “affordable”, but the act does little to solve the problem of cost, which is the problem that matters most to the average consumer. Given that fact, discontent with our health care system will continue to simmer and even occasionally boil over. Liberals will meet that latent discontent with the single payer pivot; conservatives will meet it with a variety of different ideas. But either way, the era of health care reform is just beginning—and we hope that the next round of reform does a better job at attacking the cost problem head on.

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  • Boritz

    “Without price transparency, for example, high deductible plans are more
    likely to keep Americans away from medical care altogether, rather than
    encourage them to shop smartly for it.”

    Price transparency only helps so much. You can’t afford what you can’t afford with or without a transparent price. Many now feel that “I can’t afford to get sick under my ACA coverage.” and with good reason. Cost/affordability is rightly identified.

    • B-Sabre

      I agree that not everybody is going to be able to afford proton therapy for cancer treatment, but I think there are enough examples (including several discussed on this site) where hospitals take advantage of the lack of transparency in costs to increase their margins by overcharging for routine and mundane care. Several years ago I had a bicycle accident and ended up fracturing my left forearm. After a trip to the emergency room, I had some painkillers and a sling. And the sling was approximately 6′ of fabric tape, about 2 sq ft of cotton fabric, and a cheap metal buckle. All for about $20 according to my bills. I took a look at the sling, and decided I could probably manufacture one for about $1 in an industrial setting.

      • FriendlyGoat

        Hospitals could dispense the same aspirin sold at Dollar Tree, where you get 140 full-strength pills for a dollar, and charge patients accordingly too. But they don’t.

  • Andrew Allison

    ACA was, and is, misrepresented: it’s catastrophic insurance (in both senses). The deductibles and subsidies are what make the insurance premiums “affordable.” Simply put, there’s a choice between high deductibles and unaffordable premiums. About the best that we can hope for (short of major surgery on the act itself) is that the deductibles will encourage people to shop for routine care and, if the demand for routine care declines, so will its cost. It’s ridiculous to think that people can shop for urgent care, so some other method of introducing competition (transparency) is called for. Insurance companies, which in some case are already doing so, are the logical source.

    • qet

      I’m not sure if you want urgent care to be provided by the low-bidder. As for routine matters, I agree, and the bit in the WaPo article about how some people had not sought care when sick or injured is some evidence that professional care for them was not really required in those circumstances, so the disincentive worked as intended.

    • FriendlyGoat

      It’s better for hospitals and hospital doctors if you’re under-insured on the low end than if you’re under-insured on the high end. That’s because the ACA leaves providers with less uncompensated care and likely fewer patients discharging large medical debts in bankruptcy. Why are we surprised that this is a side-effect of a law in the age of lobbying.

      Medicare works the same way. All the patients eventually pass away, regardless of the medical interventions. Can we imagine a modern society where the wives, children and grandchildren of the deceased are all hounded endlessly for the bills from over-priced end-of-life care? Can we imagine the hospitals just writing off most of it?

      You are, of course, right for mentioning transparency. It is the greatly under-used tool to drive affordability of anything.

      • Andrew Allison

        You’re right, of course, that ACA was written by and for the insurance and hospital industries (the latter of which gravely miscalculated by investing heavily in demand which has not materialized). I trust, however, that you recall the vote on this absolutely dreadful piece of legislation.

  • Sibir_RUS

    Largest Public Pensions Face $2 Trillion Hole, Moody’s Says The 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities, showing that investment returns can’t keep up with ballooning obligations, according to Moody’s Investors Service.
    And this is only the statistics of the 25 largest. Bloomberg gave a breakdown on the problems of individual States in 2012.
    For example, in Illinois the pension funds have only half of the needed money.
    For 2014 detailed statistics are not available, but most likely the picture is even more deplorable.
    It is the negative consequences of Quantitative Easing.
    When the FED prints dollars (QE1, QE2,QE3…) and actively buys the bond market, bond prices go up. For the government (Treasury) this is good since they can get money at low interest rates, but for other buyers of bonds, which in contrast to the FED do not have printer for dollars, it’s bad.
    In 2008, the portfolios pension funds and insurance companies were filled by bonds with a normal income, however, five years of “Quantitative Easing” a large part of their portfolios turned into a “dummy”, which brings about 2.5% per annum while these organizations need to get at least 5-7% (in some cases, 9%)just to continue to pay pensions.
    «you should also realize baby boomers are retiring in record number»

    This applies not only to pensions but also to pay for medical operations, production of medicines and subsidies on food.
    If the printer will continue to spit out new dollars (QE4, QE5,QE6…), cutting thereby yield bonds, the U.S. economy will experience a social disaster:
    – pensions will no longer be paid
    – the health system is collapsing completely,
    – a significant part of social programs and subsidies will remain without funding.

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