According to the Kaiser Family Foundation (KFF) out-of-pocket costs associated with high-deductible health plans lead to skimping on and delaying needed care. In another article published on the same day KFF essentially makes the same argument: high-deductible plans can lead to high out-of-pocket medical bills. The latter was an attempt to discredit President Trump’s most recent proposal to fund health accounts directly rather than extend the enhanced subsidies. Yet, the above arguments ignore what made high-deductible plans so common: Obamacare. Moreover, Obamacare is not a guard against high out-of-pocket costs. In fact, it is largely the cause of high out-of-pocket medical bills. The following is from KFF Health News about skimping on care:
The initial rationale behind such high-deductible plans was to encourage people to become wiser health care shoppers, said McCoy, an associate professor of medicine at the University of Maryland School of Medicine in Baltimore. And they can be a good fit, proponents say, for people who don’t use a lot of medical care or who have cash on hand for a health crisis.
But while people with an excruciating earache will seek care, McCoy said, those with unhealthy blood sugar levels might not feel as urgent a need to seek treatment — despite the potential long-term damage — given the acute financial pain.
People do not delay medical care just to save money. They also delay care due to the hassle of seeing a doctor. Part of the problem is not enough doctors, but also not enough price transparency to shop for care. Hospitals are supposed to make prices readily available but most fail to do so. Furthermore, health plans have done nothing to assist consumers who want to compare prices. Even with enhanced subsidies premiums are so high that most people choose bronze (30%) or silver plans (56%) that only cover 60% and 70% of costs, respectively. The average deductible for bronze plans is nearly $7,000. In 2025 the average deductible for silver plans is more than $5,000. Anyone with significant health problems enrolled in Obamacare will find themselves on the hook for substantial cost sharing.
Most insurance is a way to pool risk. Your risk of an auto accident is pooled with others of similar risk. Your premiums are a function of the sum of all probabilities which are used to calculate your expected cost. You may choose higher and lower deductibles depending on your tolerance for risk. That is most insurance, not ACA plans. Obamacare was purposely designed as a vehicle to shuttle money from those with lower risk to those with higher risk. As a result, those with lower risk have an incentive to choose high-deductible plans because plans with lower cost-sharing are exorbitantly expensive compared to their risk. Only about 10% of ACA enrollees get more benefits out of their plans than they pay in. Technically 80% to 90% of enrollees would be better off forging coverage but it is impossible to know whether you will fall into the unlucky 10%.
Congressional Republicans are wise to try something different than heavily subsidizing ever-rising insurance premiums. Insurers know consumers are less price-sensitive to premium increases when 75% of premium increases are borne by the government. If consumers control some of the cash used to pay their subsidy, they are likely to be more price sensitive. They may seek our plans with HSAs. High-deductible health plans work well with health savings accounts (HSAs). The theory is that high-deductible plans are cheaper than low-deductible plans. The premiums saved can (should) be saved in an HSA for use to pay cost-sharing. One problem is that Obamacare erased much of the savings for high-deductible plans.
High-deductible health plans are here to stay. Health insurance premiums have gotten so expensive that few people can afford to just splurge for the more expensive plans with less cost-sharing. Policy analysts who lament the lack of affordable health plans that feature lower cost-sharing have themselves to blame. When health coverage is purposely designed to be a bad deal for more than 80% of the population, it is no wonder that those 80% choose the least expensive plans they can find.
Wow Devin, you’re aging and confused. America’s oldest health insurance company is now Allstate Health Solutions; they acquired TIME. The average cost of employer-based insurance exceeds $38,000 annually per family, with a $7,000 deductible for those in Texas. A 29-year-old couple in Dallas with three children can purchase Allstate’s guaranteed-renewable, zero-deductible individual insurance for $5,160 per year, which is more than 80% less! Plus, they get a zero-deductible policy. Of course, these individuals need an HSA to become self-reliant, because the government can’t do it for them.
Thanks Ron.
I am not sure about this, but I believe the Allstate plan is a fixed benefit program. If you are hospitalized the plan pays $6000 or something similar.
Also the plan might not be available in lots of states, including MN which is mine.
Congress was idiotic to erase the maximum payment rules for health insurers. Paying million dollar claims has helped destroy the
ACA marketplace.
I like that you are searching for alternatives., anyways.
The KFF articles seem like they should have been written before Obamacare passed. My last high-deductible health plan had a $2500 deductible. Shouldn’t ACA plans be called something else? Ultra-high or something?
I always thought the use case for health savings accounts had to do with heavily tax-subsidized Employer Sponsored Insurance, in that they bypass some of the incentive to use ESI coverage as tax-advantaged pre-paid purchasing plan for mundane expenses. I suppose the same should apply for ACA or other subsidized risk-pool-type coverage, but I don’t good see a reason for HSA funding outside of these two situations.