Last month I reported in my blog that two big game changers for 2014 will be data transparency and the high health insurance deductibles.   The more I am watching the consumer response to the ACA,  Website and otherwise, the more I am starting to realize that the issue of high insurance deductibles may be changing the game even sooner than I had thought.

As long as health care costs continue to rise, employers will be unable to afford the increases, and we should expect to see cost shifting to the individual.  These come in the forms of higher copays and deductibles— both of which give rise to a higher out of pocket expense.  Last month I talked about how 2012 has seen a huge rise in the average deductible for health insurance. 

And guess what!  Just today on all the news channels we are finally seeing coverage of the deleterious effects of high deductible health care insurance from the perspective of the individual patient.

It is now clear that the exchanges are further moving this process along… and at an alarming rate.  In order to keep monthly premium costs in check, many are opting for higher deductible plans.  Consumers are aghast when they find out the potential maximum out of pocket expense in these plans.  One person reported today that the total out of pocket for their family in a calendar year will now be $10,000!  Yet it is the only way the plan is “Affordable” (as in ACA) for the average consumer. 

Equally alarming is the fact that so far the Medicaid enrollment is outpacing the individual enrollment by a 5:1 ratio.  Put economically, the likely consumers are outpacing the low-risk contributors by far too large a ratio for the present risk pools to be cost-effective.  That translates into much higher premiums next cycle…… and the only way out for the consumer may be even higher deductibles.  And the process will continue.  I foresee major issues over the next few months as these plans actually become effective and the consumers truly start paying out of their own pockets.  The testimonials that are being reported in the news today are just a drop in the bucket compared to what we will be seeing come the first of the year when the plans are actually in force.

This will have an untoward effect for the providers of health care.  Hospitals, physicians and other care providers will be taking on a “de facto” risk for the amount of the deductible.  It is far harder to collect from the individual patient than from the insurance company.

Additionally, this will drive medical decision-making more onto the individual patient.  Patients may be less likely to receive non-emergent medical care, postponing medical care until it is absolutely necessary– increasing the total costs even more. Even now physicians are reporting that some patients are less likely to obtain needed tests or follow up at routine times because of the out of pocket expense.

The payors have been trying to manage utilization for years, with some success– typically by beating up on the delivery system.  Oddly enough, the individual consumer may now be able to reduce overall utilization– at least for non-emergent care– in an even more effective manner.

The good news is that finally the cost curve may be bent by the actual consumer, at least initially.  I am fearful that this short term cost gain may result in even larger costs in the long run.

Stay tuned…..

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