I’m a fan of high-deductible health plans, but the premiums under Obamacare are too high compared to the benefits. Plans should be able to offer annual and lifetime caps on benefits to reduce premiums further. Obamacare’s ban on annual and lifetime benefits is what allowed drug prices and the price of some medical procedures to reach the stratosphere. In addition, with hospitals acquiring physician practices many consumers are being steered to hospital owned facilities which have higher prices.
Price gouging, charging fees far above what is normal, is increasingly common in our health care system. Patients need some recourse when they are ambushed by hospitals, PBMs and other providers. A proposal by Robert Hertz is medical courts with binding arbitration to resolve consumer disputes. One concern is how poorly the independent dispute resolution process has worked for insurers being fleeced by out of network providers. Providers are winning 90% of disputes, with awards often many times in-network rates. In one case a provider was awarded a fee of six hundred times the usual rate for a simple procedure. Health plans cannot appeal excessive awards, and arbitration firms are not held responsible for awards far more than usual & customary rates. The No Surprises Act of 2020 protects consumers from balance billing but not against premium hikes due to outrageous provider fees. Medical arbitration courts would need guidance that neither favors patients nor providers. Currently, courts tend to favor providers even though similar business models would be considered highly unusual (or fraudulent) in other sectors of the economy.
Various media outlets have reported that a few million Americans have dropped their Obamacare plans after Congress did not extend the enhanced ACA subsidies. Millions of those who remain in Obamacare chose high-deductible plans that made them semi-affordable but exposed them to thousands of dollars in cost sharing. Politico reports that Republicans see so-called high-risk plans as the future of health insurance. Politico had this to say:
The shift since January was driven by GOP lawmakers’ decision at the end of December to reduce the help the government provides to people who don’t get insurance through work, but instead buy it in the Obamacare marketplace. The reduction in those subsidies sent Obamacare customers searching for plans that cost less.
There’s a catch: The cheaper plans don’t cover the first several thousand dollars in sick visits, drugs and surgeries a patient needs. Nearly 4 in 10 Obamacare enrollees are in these “high-deductible” plans now, compared to 3 in 10 a year ago.
The number of people in high-deductible health plans has quadrupled to more than 40% in the last 20 years. The increase is partly due to ACA regulations that ban pricing health insurance for risk. Thus, a way to compensate (besides jacking up premiums for everybody) is to price first dollar coverage extremely high, while steering people to high-deductible plans. If the first $5,000 to $8,000 in care is paid out of pocket, enrollees with marginally poor health must cover that cost themselves. Insurers are only at risk for the 10% of enrollees who will experience a major medical problem, with the other 90% subsidizing their cost. More from Politico:
But many people opting for the plans do so because the cheaper premiums are the only way they can stay insured, and the average amount enrollees are spending out of pocket on health care has ticked up as the plans gained popularity.
There are other benefits to high-deductible plans besides lower premiums. One theoretical benefit is encouraging enrollees to act more like consumers. The problem is that consumers lack decision-support tools to shop for medical care. They lack the knowledge of how to compare prices. Providers do not post prices in ways that make comparison shopping easy. Plans are not required to facilitate shopping, such as featuring reference pricing.
Another problem is that not everyone has a health savings account (HSA) to pay for medical care under their deductible. However, progress has been made. The amount of money deposited in HSAs has risen more than fifty-five times in the past 20 years. Republicans are trying to increase the number of accounts. One proposal is to provide consumers with a subsidy directly into an HSA rather than directing subsidies to health insurers. This could allow more people to purchase high-deductible plans while having some funds available for doctor visits and prescription drugs. Patients would then face a donut hole before their deductibles are met and care becomes almost free. That is a great idea.
Read more at Politico: Republicans see high-risk plans as the future of health insurance