A Positive Unintended Consequence of ObamaCare
Get ready for high-deductible insurance: 
ObamaCare is likely to make high-deductible policies more common. Companies that face penalties if they don’t offer coverage are seeking inexpensive health plans to fulfill the law’s requirements. According to a survey by consulting firm Towers Watson of businesses with at least 1,000 workers, 79 percent intend to offer a high-deductible policy next year. At almost a quarter of the companies, it will be the only offering available. In August, FedEx (FDX) told its 225,000 U.S. workers it would provide only high-deductible coverage in 2014.
That’s good; people will start to see that the horror stories associated with higher deductibles are overblown in practice and realize how smart those plans are.
Right. For many people high-deductible policies are the best option.
I agree with Amy. That could also force more price transparency as people are forced to pay for their own incidental and preventative care, leading to less market signal distortion.
Exactly. The market operates best when consequences are born by the decision-maker.
The Physician is the decision maker. When I went through Cancer treatment my doctor told me what treatment I was going to receive. My only decision was to say okay you are the doctor and you know what’s best.
That is the problem in the medical market. There is no contractual “Meeting of the Minds” yet the consumer is supposed to absorb the costs.
Erik,
Well said.
One of the biggest problems with so many of the discussions about the healthcare crisis is the assumption that the physician and patient are on equal footing.
First, when a person is acutely ill he or she is in no physical, nor psychological, position to question the physician’s treatment plan. It is an unrealistic, and cruel, expectation.
Second, even when a patient has the opportunity to do research, the information available is not on par with that to which the physician has access. Full texts of peer reviewed articles online are expensive. Most patients are left with sales pitches shrouded in “information,” or patient forums where it is difficult to separate the good from the drivel.
Third, so much of what we discuss about patient utilization is based upon retrospective review. Example: two patients go to the ER with severe chest pain. Patient #1 is diagnosed with a heart attack, Patient #2 with really bad indigestion. We call out Patient #2 as abusing the system because, retrospectively, the etiology was benign even though the symptoms were identical.
High deductible health plans do not, ultimately, reduce healthcare costs. They just kick them down the road. The patient with a family history of cancer who avoids screening because of out-of-pocket spending will save the system money today, but will cost the system much more years from now. Unfortunately, in the meantime, advocates of these plans will be congratulating themselves on a job well done.
Aren’t we worried, though, that people won’t fully realize the benefits because it’ll be perceived as employers trying to skimp on insurance rather than marketed as the smart solution it is?
The idea that these types of plans will be perceived or criticized that way is part of what makes healthcare such a difficult issue when it comes to presenting arguments to the public – it’s an easy one to demagogue but much harder to actually explain and communicate all of the ins-and-outs, consequences, and effects of such a complicated topic.
Well and people think that we are comparing free-market health care with government run, neither extreme is true. Health care is one of the least free markets in the United States. It is really difficult to determine and convey cause and effect when the structure of the system is so distorted.
The majority of the population has no idea what the consequences of Obamacare are. Of course they are going to point their finger at their employer.
Sooner or later, everyone will be against this horrible healthcare plan.
ObamaCare is such a magnificent mess that it is nearly impossible to untangle for an expert, much less a layman. Don’t waste your time trying to untangle it for people, just cut the point: free-market health care will fix all of these problems.
Like a Gordian Knot? Where is Alexander?
Free market-health care will price many people out of the market. What do you do for those who cant afford the price set by the supply and demand curves?
Create some sort of funding program?…
Maybe, Eva, but I still think Jane is right. The people who were going to think that will anyway. The more open-minded folks are who we’re really targeting.
Unfortunately everyone votes.
Some even vote more than once.
Unfortunately there are no competency test required to vote.
Who would have thought. However perverse this may sound, forcing people to take greater responsibility for day-to-day medical decisions is good way to restrain costs. I really wish firms would provide funds in an HSA to make the transition easier. I have no delusions that HSA deposits are free. But, maybe having HSAs would motivate more people to compare costs while seeking the case they need.
when some of the population lives in rural areas, there is only one choice. high deductibles are great if you don’t have to use the product. as a consumer, you only have one choice for a hospital provider in almost all rural areas(pop < 8000). Conversely, rural hospitals take of all consumers that show up at an emergency room,
hence, high deductibles make it almost impossible for the hospital provider to collect its money.
High deductibles are fine as long as there is underlying protection. Instead of cash, which requires a 1 to 1 ratio, through our work with Milliman, we are realizing that similar paid-up benefits accumulate under the deductible through the insurance, pooling principle (which cannot be done with cash).
‘We are ablke to get the same paid-up benefits for every family member for 20% of the premium the employee pays!
Don Levit
Don’t forget that deductibles and company’s don’t apply to preventive services.
I hate auto spell check. That should have been deductibles and copays.