Why high deductible individual plans rated a poor value

A Kaiser Family Foundation survey published Thursday of people who buy insurance in the non-group market found that while many people may choose higher-deductible plans so they can pay a lower premium, they aren’t all that happy about it. It may just be the only way they can get a premium they feel they can afford.As the chart above shows, 37% of people with high-deductible plans described their plan as an “excellent” or “good” value for what they pay, compared with 68% of people with lower-deductible plans saying the same. A high deductible was defined as $1,500 or more for an individual and $3,000 or more for a family. Sixty percent of those with higher-deductible plans rated the value of their plan as “fair” or “poor.”

Source: The ‘Value’ Trade-Off in High-Deductible Health Plans – Washington Wire – WSJ

A couple of observations re this item by Drew Altman, president and CEO of the Kaiser Family Foundation:

1. The U.S. is moving back to the future and toward the “major medical” model of the 1950s and 1960s. Those plans were high deductible plans by design because they covered large and unexpected medical expenses. Routine care was paid out of pocket. Since the advent of all inclusive, HMO-style plans in the 1970s and 1980s, people have become accustomed to not paying for this level of care directly out of pocket. Hence, today’s high deductible plans are likely to be seen as providing poor value for the premium dollar spent.

2. For generally healthy people age 50 and older who ensure their health by maintaining healthy lifestyle habits, the amount of the premium they are asked to pay for high deductible plans seems like a poor value. Since they are effectively self insuring for the first several thousand dollars of medical care they might use in a calendar year, the relatively high premium charged for a high deductible plan doesn’t seem like a fair tradeoff that takes into account their efforts to reduce their likelihood of utilizing medical care. This is particularly likely to be the case for healthy over 50s who earn too much to qualify for advance tax credit premium subsidies for high deductible plans sold on state health benefit exchanges.

 


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Frederick Pilot

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