Wednesday, December 3, 2014

Affordable Care Act High Deductible Health Insurance Policies Causing Insured To Delay Getting Medical Care: ACA Is Lowering Total Healthcare Costs By Lowering Healthcare Use Instead of Market Based Efficiencies From Competition Lowering Each Medical Procedure Cost

From The Wall Street Journal, "More Cost of Health Care Shifts to Consumers: High-Deductible Insurance Plans Prompt Some to Delay Treatment" by Stephanie Armour:
For the [Affordable Care Act] exchanges’ 2015 policies, which went on sale last month, “bronze- level” plans have an average deductible of $5,181 for individuals, up from $5,081 in 2014, according to a November report from HealthPocket, which publishes health insurance market analyses. Bronze plans generally cover 60% of consumers’ medical expenses.

While surveys show steeper out-of-pocket costs lead some people to defer even routine medical care, economists say the trend brings an important upside: It is helping fuel a period of historically low growth in health-care spending, which eases the federal deficit.
"There has been a steady increase in deductibles and the main effect is to reduce use," said Drew Altman, president of the nonprofit Kaiser Family Foundation. "The gradual shift to consumers having more skin in the game is encouraged as part of national policy, and it’s having an impact."
One in three Americans said they or a family member delayed medical care because of costs in 2014, according to a report last month by survey company Gallup. That is the highest percentage since Gallup began asking the question in 2001.
Not too long ago, a 50 inch plasma HDTV cost $20,000 and a 20 inch LCD HDTV cost $5500. Today, a 32 inch Samsung LED HDTV cost less than $200 and a 60 inch Vizio cost less than $800 (both are around a 96 percent reduction in price). Imagine that the US government decided that the US consumer was spending too much money on HDTVs and decided to decrease HDTV total spending by lowering the number of TVs purchased. If the US government had limited HDTV sales, HDTVs would be much more expensive today and many people would either choose to spend their money on other things or decide they could not be able to afford HDTVs.

Lowering total cost by lowering usage through government intervention is not the same as lowering the unit cost through competition. With a lower unit price through competition more people can buy the product or service. Lowering total cost without a lower unit price reduces the number of users and still leaves many who cannot afford to buy the service or product.

The Affordable Care Act does not foster medical care competition with the resulting lower unit cost of medical procedures. Instead the ACA policies lower Medicare reimbursement rates and indirectly increase consumers out of pocket expenses through higher deductibles. Both policies have the same effect of lowering medical usage. The first by limiting the supply of doctor appointments available and the second by making routine medical care unaffordable to many.

Increasing out of pocket costs to consumers is a good start to increasing competition in the medical profession, but there are so many other barriers to market based competition in the medical field that increasing the out of pocket costs is likely not enough by itself to be effective in lowering the unit cost of medical procedures.

1 comment :

  1. Deductibles that are paid during the last 3 months of policy period may be applied to the next year Health Insurance Deductible‏. This is simply the balance that the insured person must pay before the insurance firm will pay the cash agreed upon the policy. Patients should always be alert of deductible costs to reject exorbitant charges that may or may not be covered. What happens if the patient pays $2500 into the insurance coverage deductible in the last 3 months and the patient continues to need care through the New Year? This is when the carryover becomes a problem. If the deductible is not meet in the last 3 months, the balance paid into the deductible will “rolled over” to the next year. This will stop patients from spending exorbitant amount of finance before the insurance firm pays.