But in interviews, a number of consumers made it clear that premiums were only one side of the affordability equation.“Our deductible is so high, we practically pay for all of our medical expenses out of pocket,” said Wendy Kaplan, 50, of Evanston, Ill. “So our policy is really there for emergencies only, and basic wellness appointments.”Her family of four pays premiums of $1,200 a month for coverage with an annual deductible of $12,700.
Americans are having a difficult time adjusting to the new, old “major medical” health coverage of the 1950s and 1960s characterized by high deductible health plans that are rapidly increasing among individual and employer-paid health coverage. For decades starting in the 1970s, “health insurance” was managed care HMO plans that functioned as pre-paid medical care for lower cost care as well as insurance in the traditional sense of the word cover unexpected, high cost events such as accidents and heart attacks requiring surgery and hospital stays. (The California HealthCare Foundation recently issued an updated interactive chart showing the shift from cash to private insurance paid physician and clinical services from 1960 through 2013.)
Now it’s more just plain insurance as it was in the pre-HMO days. Americans are once again paying directly out of pocket for routine and minor care. And they’re not happy about it as this story illustrates. It doesn’t jibe with their expectations relative to the fourth word of the Patient Protection and Affordable Care Act: affordable.
Aside from the difficulties associated with going “back to the future” with major medical plans, people are likely to have a difficult time grasping the value of paying a high premium for catastrophic coverage. They are naturally going to figure if they’re covering what’s known in health insurance as “first dollar” care costs until the deductible limit kicks in, then the premium should be quite low since that is where most of the utilization occurs. It shouldn’t approximate the amount of a monthly housing payment as in the example above. What’s telling here is Ms. Kaplan’s age. The Affordable Care Act allows the use of age as a factor in setting premiums. Once people reach age 50, premium rate-wise the individual health insurance market can be nearly as unfriendly to over 50s as it was before the Affordable Care Act market reforms took effect in 2014.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email