Average individual deductibles on employer-sponsored health insurance polices rose to $1000 this year, up from $500 in 2007. For people with individual health insurance, these numbers probably seem like a bargain. Our clients in Colorado have literally hundreds of options for coverage, but $500 is the lowest deductible offered by most carriers; some don’t offer deductibles below $1000. Off the top of my head, I’d say that the average individual deductible among our clients is around $2000 – $2500.
But most Americans get their health insurance from their employers, and three digit deductibles have been the norm for a long time. As companies struggle to pay for health insurance for their employees, the obvious solution is to increase deductibles and copays, and offer HSA qualified plans in trade for lower premiums. This is preferable to dropping the coverage all together, but the burden it places on families should not be underestimated. Combined with the higher premiums that companies are increasingly passing on to employees, and all the other economic strain that Americans are under right now, it’s absolutely plausible to assume that the 100% increase in health insurance deductibles will result in more people skipping needed medical care because of financial worries.
Increasing deductibles are also a reality for people with individual health insurance. This article from the Chicago Tribune details the health insurance and medical history of Mickey Trznadel. The 55 year old pays over $500/month for his health insurance, with a $2500 deductible (he used to have a $1000 deductible, but the premium increased to $665/month, and raising the deductible was his only option). He’s a diabetic, but doesn’t test his blood sugar because the test strips are too expensive, and his $25,000 annual income will only stretch so far. It’s not just employees with group health insurance premiums who are seeing hikes in deductibles and premiums. For those with individual health insurance, an increased deductible is usually a personal choice (as opposed to a decision made by an employer) but it’s generally a choice made out of necessity when the premiums on the lower deductible become unaffordable.
Mickey’s story is unique because the health insurance carrier (Blue Cross Blue Shield of IL) is able to comment on the case and provide specific numbers, thanks to many release waivers that Mickey signed to allow them to do so. (Normally when we read stories like this, there’s a disclaimer stating the the insurance carrier involved is unable to comment because of privacy regulations). In the 20 years he’s been with his current insurer, he’s paid $73,212 in premiums. Over that same period, his insurer has paid $83,157 in reimbursements to providers for his care. Mickey is upset – and justifiably so, considering that his premiums will eat up more than 20% of his gross pay next year, in addition to a deductible that is equal to another 10% of his income. But looking at the numbers, he’s still come out ahead by having been insured over the last 20 years. The article didn’t mention negotiated network rates, which is an often-overlooked benefit of health insurance. The insurance company paid $83,157 for Mickey’s claims, but the actual billed amounts were undoubtedly much higher. If you have health insurance, look carefully at your next explanation of benefits and see what the provider billed and what the insurance company is paying (with the difference written off if you went to an in-network provider). Had Mickey chosen to skip health insurance, he would have been responsible for far more than $83,157 because the Blue Cross Blue Shield network negotiated rates would not have applied.
Mickey’s story is an example of how our health care problems run far deeper than increasing health insurance premiums. Nobody likes to get the letter in the mail from the health insurance company, detailing the rate increase for the coming year. But if we had to pay for all of our own health care, we’d feel some sticker shock there too.