When it comes to what you get for what you pay, unless one is a so-called low wage earner who is heavily subsidized, he or she is getting much less coverage for a lot more money. Deductibles, the amount individuals must pay out-of-pocket before their insurance kicks in has surged to a budget-busting 67 percent for employer-sponsored health-care plans since since ACA was signed into law in 2010, according to Henry J. Kaiser Family Foundation. This year, as more ACA costs are incurred by insurance companies and individuals alike, the average deductible for a bronze plan through ACA has topped $5,700, this according to research from plan comparison site Health Pocket. Soaring deductibles largely affect working class and middle class Americans and their children because they are less likely to receive government subsidies.
Benjamin Handel, assistant professor of economics at the University of California, Berkeley, put it like this. “When consumers have more cost sharing, do they spend less? We’re finding yes.”
The other side of the coin is that Handel and his team don’t know if it’s because Americans are becoming thriftier doctor shoppers or just aren’t going to the doctor as much unless it’s an emergency.
“Then you have to ask how is spending going down: Is it because consumers are acting in a sophisticated manner and shopping for providers and prices and reducing quantities of wasteful care, or are they viewing this as a fairly blunt instrument?” posed Handel.
Meanwhile, small business owners are finding it much more difficult to provide insurance for their families, let alone the families of employees. Others, including members of Congress who passed the partisan bill, didn’t understand what was in it and assumed the Affordable Healthcare Act would be affordable.
“I got really frustrated,” said Mikey Shiwnath, 27, who signed up in 2015 for a health-care plan with an $8,000 deductible after starting his own bookkeeping business. The plan was the cheapest he could find at the time. “I thought that’s why you had insurance: you had it, and you didn’t have to pay on top of it. I was like, ‘Wait, I have to pay up to $8,000 first?'”
Shiwnath and other small business owners and employees are simply skipping doctors’ visits because of the unaffordable deductibles. Shiwnath said he ultimately had to cancel his coverage last summer because the penalty would be less than the policy with its high deductibles. “It was nerve-wracking,” said Shiwnath, who decided to purchase another policy in 2016 because penalties for not carrying insurance have greatly increased.
Turns out most Americans are cutting back on spending more because of the high deductibles and premiums than any other theory. Handel, Kolstad and their co-authors conducted a so-called “natural experiment” tracking a large employer that was transitioning from a generous health-care plan to one with a high deductible. The resulting research found consumers did cut back their spending as much as 15% but those reductions came from cutting back on valuable healthcare, such as preventive services and imaging services that scan patients for diseases in order to catch them in their early stages.
After the two-year study, Kolstad warned it is too early to understand the effects of high premiums and high deductibles on the average American but his scholarly opinion was decidedly moved a certain way.
“This moved my opinion toward thinking that people are reducing quantities in a haphazard way,” Handel concluded.
