"Is High Deductible Coverage Worse than Being Uninsured?" By David Himmelstein, M.D.
Access to health insurance is not the same as access to health care. Forcing modest-income families to buy insurance policies with huge deductibles, co-payments and co-insurance may help hospitals, but leave patients even worse off than when they were uninsured.
For the much-vaunted monthly premium of $175 (that’s for a young person, for someone my age it’s $347), you can get “coverage” through The Connector. But the coverage comes with a $2,000 deductible. And even after you’ve reached the deductible you’re stuck with 20% of the bill for inpatient care, outpatient surgery, physical therapy, etc. The real insurance only kicks in after you’ve spent $5,000 out-of-pocket for covered services. (Non-covered services don’t even count toward the deductible. So if you tear an ACL playing soccer and need 6 months of physical therapy, you’ll be responsible for all those bills after the first 3 months – about $2500 on top of the $5000).
For window dressing, the coverage allows you cut rate doctor visits - $25 each time – and drugs have their own complex deductibles and co-payments. But once you sort through the fine print, the message is clear: If you’re actually sick you’re in deep financial trouble.
OK, the coverage is lousy. But how does that translate into patients being worse off and hospitals better?
Someone my age making $30,000 will lay out $4,164 annually for this coverage, equivalent to the total value of their bank account and other “financial assets” (according to the Federal Reserve’s Consumer Finance survey). They’ll have nothing left to cover the copayments, deductibles etc. Whereas before they might have had a small nest egg as a cushion for medical bills, now that nest egg is gone - and insurance won’t kick in until they come up with another $2000.
Hospitals will, as before, have trouble collecting from such patients, but the insurance will pay the lion’s share. Hospitals, which previously collected nothing on a $50,000 bill, will now collect $45,000. Mass. General’s surplus - $300 million last year – seems likely to grow.
One last note. High deductibles don’t fall evenly on patients. The sick pay more. Older people pay more because they’re sicker. And women pay more – on average about $1000 more each year – because they have babies, breasts and uteruses that require more expensive care than men.
Any reasonable consumer protection agency would label the Connector’s high-deductible coverage as “defective.” Instead, our government is enshrining these fraudulent and discriminatory plans as official policy.
David Himmelstein is an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program
This program aired on April 27, 2007. The audio for this program is not available.