fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

New Study: Growing Health Insurance Deductibles Putting Greater Burden on Consumers

September 25, 2015 | FAH Hospital Policy Blog Team

Category: Spending Slowdown

This week, the Kaiser Family Foundation (KFF) released its annual employer health benefits survey, which highlights an ongoing trend of significant deductible increases that are growing faster than consumer wages and inflation.

In a Wall Street Journal blog post, Kaiser Family Foundation President & CEO Drew Altman explains that this year’s survey marks, quote, “a (remarkable) 10-year run of moderate increases, averaging 5%. But the slowdown in health-care cost growth has been all but invisible to average consumers because their out-of-pocket costs have been rising at a time when their wages have been relatively flat…. over the past five years deductibles have risen almost seven times faster than wages and almost three times faster than premiums*.”

The gap that has developed is depicted by a graph that accompanies the blog post:

Altman’s commentary on the dichotomous nature of national health care spending trends, and that of the individual impact on consumers (individuals and families) underscores the ongoing consumer paradox that is the result of a shift in insurance benefit plan design.  What that means in reality: consumers are feeling none of the impact of the historic national spending slowdown in health care that is projected to created some $1 trillion in Federal budget savings and has been fueled by record low health care and hospital price growth.  So while the national scene shows marked savings year-on-year, consumers are instead seeing year-on-year increases in their own out-of-pocket spending—be that insurance premiums or deductibles.

New York Times story on this year’s KFF survey points out several key cost increases in health insurance benefit plans for consumers, including:

  • Four of five workers who receive their insurance through an employer now pay a deductible
  • Deductibles have increased from an average of $900 in 2010 (for an individual plan) to more than $1,300 in 2015
  • One in five workers has a deductible of $2,000 or more
  • Health insurance premiums for individuals and families increased 4% this year

The Times story goes on to examine the impact of steadily increasing deductibles on utilization of care, with many patients foregoing necessary care when they are sick or facing chronic conditions.

“What concerns policy experts and employers is evidence that higher deductibles are making people forgo care, even when they have serious conditions…

A recent analysis by Truven Health Analytics of employers’ insurance claims showed that companies saw lower utilization, with fewer of their workers going to the doctor or getting lab tests, when workers had a high-deductible plan. But they also saw a decline in care for people with chronic conditions. In some cases, even when preventive care was covered under a high-deductible plan, workers were getting fewer mammograms and cervical cancer screenings.

‘There’s a real risk people won’t get the care they need,’ said David Lansky, the chief executive of the Pacific Business Group on Health, a West Coast employer group.”

Afraid that the cost of care they need will come out of their deductibles, consumers are forsaking critical care. This is a concerning result of the trends of health insurance plan design. And deductibles are just one facet of patient out-of-pocket costs that are deterring consumers from seeking care.

A 2014 study from the health care economics firm Dobson|DaVanzo examined overall economic impacts to the consumer, with many marked increases in out-of-pocket spending:

  • From 2006-2013, the average deductible for family coverage increased more than 75%, an increase of nearly $1,000.
  • In that same span, the number of workers with high-deductible health insurance plans increased more than 5 times, from 4% to 26%, with the typical plan deductible totaling more than a family’s available savings.*
  • Half of families enrolled in insurance plans have out-of-pocket limits exceeding $6000, a 32% increase from 2010 to 2013.
  • Employees’ share of medical costs (premium + out-of-pocket) grew by 42% — from $6,824 in 2009 to $9,695 in 2014.

The KFF survey is just the latest in a series of studies and reports that clearly show the growing financial responsibility consumers have for their health insurance coverage.  These yearly increases are having a negative impact, both on consumer fiscal health and physical health.

Consumers need to know their local hospitals are always there to provide the care they need. Providing access to care 24/7 is our top priority for anyone who walks through our doors.

*: bolding added for emphasis.