High Deductible Insurance Angst

In Popeye cartoons, the hamburger-loving character Wimpy would always say "I'll gladly pay you Tuesday for a hamburger today".  This sort of entreaty will become the new medical office mantra for poor patients with high deductible insurance plans.  The underlying problem is that these individuals will continue to have no available funds through Tuesday, and beyond.  Those who cannot afford high deductibles will likely seek care elsewhere (or no where), once the door to the doctor's office becomes shuttered by these huge tolls.

Let's look at some definitions of a high deductible health plan, a co-pay, and a health savings account.

• High-deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan.  Being covered by a HDHP is also a requirement for having a health savings account.  Some HDHP plans also offer additional "wellness" benefits provided before a deductible is paid.  High-deductible health plans are a form of catastrophic coverage, intended to cover for catastrophic illnesses.
• Co-pay is a payment made by a beneficiary (esp. for health services ) in addition to that made by an insurer.
• Health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP).  The funds contributed to an account are not subject to federal income tax at the time of deposit.  Unlike a flexible spending account (FSA), funds roll over and accumulate year to year if not spent.  HSAs are owned by the individual.

When the HDHP was introduced, it included a significant ability to save money through an HSA where the  individual could theoretically manage their own healthcare expenses through a tax-deductible vehicle.  any money not spent can remain in personal interest bearing account and spent, if needed, at a later date.

However, as of 2015, the HSA permissible maximum contribution is being diminished from $6,500 to $2,500 annually.  this leaves the individual with a minimal tax advantage. 

How does the Affordable Care Act fit in?

 

The ACA intends to provide subsidized coverage with high deductibles with no tax benefits.  One might initially think that people selecting this coverage would expect to pay a reasonable monthly payment.  However, when huge deductibles and required co-pays are added to the total cost of insurance, the cost of a policy becomes unaffordable.

 

Think of it this way:  the ACA "insured" now becomes a de facto self-pay patient until the deductible is met.  Hence, there will be many defaults on what would otherwise have appeared to be reasonable and manageable monthly premiums.  Patients are simply not going to be able to pay huge deductibles, monthly premiums, AND continue to get care.  Something is going to have to give.  Over the coming year, we will see this play out, and likely CMS will create some adjustments and workarounds to counteract this present course.