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The Future of Health Insurance Is Now -- and It's Not Pretty

Posted by John McDonough  November 30, 2011 06:00 PM

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Monday's front page Globe story on tiered health insurance networks combined with high cost sharing, "Tiered health plans cutting costs, restricting options," offers a sobering view of the present and future of health insurance in Massachusetts and the United States.

It is already happening, as the Robert Weisman/Chelsea Conoboy story makes clear. To keep premiums as low as possible, health insurers are putting hospitals, physicians, and other providers into higher/lower cost tiers where patient cost-sharing balloons when patients use non-preferred, more costly providers, even when patients have long-standing relationships with those care providers, and even when the lower cost provider can't provide equivalent services.

And cost sharing of all sorts, especially deductibles and co-insurance, is rapidly rising. As the chart below from the Kaiser Family Foundation shows, between 2006 and 2011, the percentage of workers facing deductibles greater than $1,000 has tripled among all firms, and risen from 16 to 50% among firms with 200 or fewer workers.

2 - Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, By Firm Size, 2006-2011.jpgAnd the percent of workers with deductibles greater than $2,000 has grown from 6 to 28% in the same period. Yikes. 

It is not difficult to understand why this is happening. Most consumers and employers are driven first and foremost by lower premiums. When picking a plan, network restrictions and cost sharing are secondary considerations. For most enrollees, the choice pays off and they benefit from the lower premiums. For a smaller portion, they lose, having to sever an existing relationship with a physician or hospital, and/or facing significant debt in spite of having health insurance. Most often, the losers don't know they are in that category until they face the unexpected.

It is easy to bash the insurers, but we're all part of this game. And a state-by-state review of average deductibles (from the Commonwealth Fund) shows Massachusetts with the fourth lowest deductibles of the 50 states in 2010.


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Unfortunately, our future looks much more like Wyoming than it does Hawaii. Can it get worse? Yes. Unlike the rest of the country, the 2006 Massachusetts health reform law set limits on how much consumers can be exposed to out-of-pocket cost sharing. And the federal Affordable Care Act will copy these limits beginning in 2014. But the limits are not cheap, and are set at the same limits as for high deductible health plans.  In 2012, that's no more than $6050 for an individual and no more than $12,100 for a family. So there is a LOT of potential for much higher cost sharing in all our futures.

It does not have to be this way. The U.S. health system was not created by a divine being; it was set up and allowed to develop this way by humans. People in other advanced nations look with amazement at how exposed we leave our citizens to medical debt. The ACA will help when it comes to policies out there now with deductibles as high as $30,000 (yes, they are out there); but it still leaves economically vulnerable people one illness away from disaster.

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We all deserve better.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »

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