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High Deductibles for Limited Eligibles

April 2009

Annette B. Ramírez de Arellano, DrPH

One would think that private health insurers in the U.S. would be on their best behavior in order to impress policymakers on their ability to provide comprehensive, affordable, quality care to the population at large. Yet their current products reflect an insensitivity to public needs and a disregard to anything other than their bottom line.

Health insurance “deals” are virtually inexistent. When Kaiser Permanente, an otherwise reputable insurer with a long history, advertises “Affordable health plans as low as $47 a month,” — unbelievable at first glance — it is imperative to focus on the superscript numbers that hover over most statements describing the offer. These refer to footnotes which, in the smallest of prints, provide the details which consumers need to know. These tell us that the plan has a high-deductible: $8000. In other words, consumers have to spend $8000 out-of-pocket before the plan “kicks in.” In addition, you have to be

  • a single male
  • resident of DC
  • between the ages of 18-19

in order to qualify for this plan.

This sliver of the population — defined by gender, marital status, age and geography — has been singled out as a “good risk” in order to provide a come-on that is misleading at best, deceptive at worst.

The small print does not point out the hazards of such high-deductible plans. These are most often designed to offer fewer overall benefits to healthier, younger, and wealthier customers. They leave their beneficiaries exposed to costs they may not be able to meet. Moreover, by siphoning those that need fewer services, they leave females and others who are older and in greater need of health care to other plans, which then have to increase their premiums to cover their higher risks. These plans therefore alter the traditional role of insurers: instead of pooling risks, they are “reinventing themselves as money managers — providers of financial vehicles through which consumers pay for their own care.”

In addition, these high-deductible plans work against any attempt at cost-control. Insurers have little incentive to control the prices charged by medical providers, because that is the patient’s problem. And, while high deductibles may increase cost-consciousness among enrollees, these people lack information on quality and cost, as well as the bargaining power to negotiate a better deal for themselves.

While plans such as the one advertised by Kaiser may be attractive to a particular demographic, they are certainly not the answer to the growing numbers of uninsured. To the extent that they shift costs from the healthy to the sick and from the young to the old, they work against the very principles of social insurance: pooling of risks, shared responsibility and a commitment to full coverage and making care affordable to all.

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