The Kaiser-Peterson Health System Tracker has come up with a clever idea to show the effect of high deductibles–identify the date when on average people have exceeded their deductibles, which happens to occur this week. (KFF-Peterson Article) Just for a refresher, in addition to usually having to share in premiums for health coverage, individuals with private health insurance, whether through their employer or directly bought, must often share the cost of services. A deductible is an amount that the insured person must pay before there is any coverage under the policy. A copay is a fixed dollar amount applied to a specific service or product. Coinsurance is a percentage of the service cost that a covered person pays. In today’s world, you might have all three. There are a few services, largely preventive, that may be excluded from any cost-sharing. Deductibles are the most financially painful, because the consumer bears the entire cost of the service up to the deductible limit, and today those deductible limits can be several thousand dollars. Many high-deductible plans do have some kind of health savings account attached to them and employers often contribute to those plans, so the pain is eased somewhat. But you can see how deductibles would make especially lower and middle-income people think twice about seeking health care, needed or not.
In 2009, deductible freedom day was March 18, and it has obviously marched steadily upward in recent years. The average deductible for a single person was $533 in 2009, it was $1350 in 2018. Ten years ago about 59% of covered employees were in a plan with a deductible; today 85% are. These numbers all include those few lucky souls, mostly government employees, who have a zero deductible plan. While other forms of cost-sharing have also risen over this time, most of the total increase in out-of-pocket spending is due to deductibles. Over 50% of people say they have less in savings than the amount of their deductible, so the financial stress is easy to imagine. Because it takes several months for deductibles to be used up, there is an impact on utilization of certain kinds of services–many medical devices, medical equipment, even drugs. And patients put off elective procedures. So more seasonality builds up in health spending. At current rates of growth, deductible relief day will be in December in a few years, so having health insurance will be pointless, which should make single-payer people happy.