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Soaring deductibles make health care unaffordable

May 6, 2019

Topics: Quote of the Day

By Noam N. Levey
Los Angeles Times, May 2, 2019

Soaring deductibles and medical bills are pushing millions of American families to the breaking point, fueling an affordability crisis that is pulling in middle-class households with health insurance as well as the poor and uninsured.

In the last 12 years, annual deductibles in job-based health plans have nearly quadrupled and now average more than $1,300.

Yet Americans’ savings are not keeping pace, data show. And more than four in 10 workers enrolled in a high-deductible plan report they don’t have enough savings to cover the deductible.

One in six Americans who get insurance through their jobs say they’ve had to make “difficult sacrifices” to pay for healthcare in the last year, including cutting back on food, moving in with friends or family, or taking extra jobs. And one in five say healthcare costs have eaten up all or most of their savings

The conclusions are based in part on a nationwide poll The Times conducted in partnership with the nonprofit Kaiser Family Foundation, or KFF. Two Washington-based think tanks — the Health Care Cost Institute and the Employee Benefit Research Institute — provided supplemental analysis.

The conclusions are based in part on a nationwide poll The Times conducted in partnership with the nonprofit Kaiser Family Foundation, or KFF. Two Washington-based think tanks — the Health Care Cost Institute and the Employee Benefit Research Institute — provided supplemental analysis.

And it is feeding resentments and deepening inequalities, as healthier and wealthier Americans are able to save for unexpected medical bills while the less fortunate struggle to balance costly care with other necessities.

Hardest hit in the cost shift are lower-income workers and those with serious medical conditions such as diabetes, heart disease and cancer — who are more than twice as likely as healthier workers, according to the Times/KFF poll, to report problems paying medical bills and to say they’ve cut back on spending for food, clothing and other household items.

“There has been a quiet revolution in what health insurance means in this country,” said Drew Altman, the longtime head of the Kaiser Family Foundation. “This happened under the radar while everyone was focused on the Affordable Care Act.”

The 2010 healthcare law — often called Obamacare — provided landmark protections to Americans once shut out of health coverage. But as Democrats and Republicans fought over the law, Altman said, neither focused on the rapid run-up in costs for people covered through work.

“We forgot that most people get their insurance through an employer, and for them, the issue is medical bills that they increasingly cannot afford,” Altman said.

This wasn’t how the high-deductible revolution was supposed to play out.

Twenty years ago, amid a backlash against HMO restrictions on people’s ability to choose their doctors, high-deductible plans were billed as a way to empower patients and free them from the unpopular constraints of managed care.

Even then there were red flags: As far back as the 1970s, a landmark study by the California-based Rand Corp. had found that requiring people to pay more out of pocket caused them to cut back on medical care they needed as well as on unnecessary services.

Backers of the high-deductible strategy nevertheless argued that patients, given “skin in the game,” would become active consumers who would force drugmakers, hospitals and other medical providers to rein in prices.

“The thing that caught people’s imagination was this idea of unleashing American patients as consumers,” said Dr. Arnie Milstein, medical director of the California-based Pacific Business Group on Health, an organization of large companies, including Boeing, Safeway, Walmart and Wells Fargo.

Employers, desperate for a way to control healthcare spending, saw an opportunity to hold down costs.

Many of the first companies to offer high-deductible plans gave employees seed money for medical savings accounts, with the idea that the cash would help workers pay their deductibles. Within a few years, the George W. Bush administration — backed later by Congress — carved out tax benefits for the accounts.

As high-deductible plans caught fire, however, many employers saw they could save even more by not contributing to their employees’ accounts.

The change left workers responsible for saving for healthcare on their own.
Yet government data show that most workers haven’t had extra money to set aside.

“In the real world, average people are living paycheck to paycheck,” said Helen Darling, the former head of the National Business Group on Health, a leading employer organization focused on health benefits. “Unfortunately, that never got through to the policy debate.”
Moreover, the vision of legions of patients becoming engaged shoppers pushing down prices has turned out to be a mirage.

In a major reversal from 15 years ago, six in 10 Americans with job-based coverage now call affordability the most important feature of a health plan, outranking previous top concerns such as a broad choice of doctors and hospitals and a wide range of benefits.


Kaiser Family Foundation/LA Times Survey Of Adults With Employer-Sponsored Health Insurance:


By Don McCanne, M.D.

Several politicians who got on the single payer Medicare for All bandwagon are now backing off saying that people should be able to keep the insurance they get at work. But why? Health care under employer-sponsored plans has become much less affordable for those who happen to need health care. It isn’t working the way most people think it should, and the majority believe that the government should do something about that.

The design features of single payer Medicare for All make the insurance itself affordable for everyone by using progressive tax policies, while eliminating the financial barriers at the point of care, ensuring that everyone has affordable access to care. The current employer-sponsored plans are going in the opposite direction – health care that is less and less affordable, especially for those with needs. Our politicians need to know what the public thinks about that since they don’t seem to be listening those of us who are providing them with the grim facts.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

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Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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