By REED ABELSONSEPT. 22, 2015
Beth Landrum put off getting an M.R.I. that her doctor had recommended after the deductible on her family’s health plan increased to $3,300 a year.
It may not seem like much — just an extra hundred dollars or so a year.
But the steady upward creep in health insurance deductibles has easily outpaced the average increase in a worker’s wages over the last five years, according to a new analysis released on Tuesday by the Kaiser Family Foundation.
Kaiser, a health policy research group that conducts a yearly survey of employer health benefits, calculates that deductibles have risen more than six times faster than workers’ earnings since 2010.
“It’s a very powerful trend,” said Drew Altman, Kaiser’s chief executive.
Four of five workers who receive their insurance through an employer now pay a deductible, in which they must pay some of their medical bills before their coverage starts, according to Kaiser.
Those workers’ deductibles have climbed from a yearly average of $900 in 2010 for an individual plan to above $1,300 this year, while employees working for small businesses have an even higher average of $1,800 a year. One in five workers has a deductible of $2,000 or more.
The nation’s largest health insurers are engaged in a round of consolidation, and consumer advocates worry that the mergers will result in even higher costs for coverage. A Senate hearing on Tuesday scrutinized the merger plans .
While the Kaiser survey examines plans provided by employers, Mr. Altman said many of the insurance policies being sold under the federal health care law through the state exchanges also rely on high deductibles to keep premiums low. Some employers also increased their deductibles to reduce the higher costs associated with the law.
The law may be prompting even more changes by companies, in order to have workers shoulder more of their medical costs.
The prospect of the so-called Cadillac tax, a new tax created under the law on high-price health plans, is causing more companies to consider changes like increasing the size of their employees’ deductibles. The tax, which is expected to go into effect in 2018 but faces widespread opposition, could change the steady increase in deductibles into a “spurt,” Mr. Altman said.
But asking employees to cover more of their medical bills through high deductibles raises questions about whether some workers, especially those with expensive, chronic conditions, are being discouraged from seeking the care they need.
Companies have traditionally relied on higher deductibles to reduce premiums, both to lower their own costs and to reduce what they take out of the employees’ pay for coverage, said Laurel Pickering, the chief executive of the Northeast Business Group on Health, an employer group. “Clearly, it’s the go-to solution,” she said.
The average annual deductible and the share of people who have deductibles have been increasing.
Total premiums are increasing modestly. The cost of a plan for both a single person and a family rose an average of 4 percent this year, according to Kaiser, well below the double-digit increases that were the norm a decade ago.
The average cost of a family plan rose to $17,545, with employees paying an average of $5,000 toward their premiums.
But as wages have stagnated, the steady increase in deductibles is squeezing an already beleaguered middle class. While employers have generally felt some relief from the burden of ever-rising health care costs in recent years, workers are feeling increasingly vulnerable to high medical bills.
Some are making difficult choices about what care they can afford. About two years ago, Beth Landrum, a 52-year-old teacher, who is insured through her husband’s job as an engineer, saw the deductible on her family’s plan increase to $3,300 a year.
Ms. Landrum decided to delay having the M.R.I. her doctor recommends she get every three years. Ten years ago, she had a noncancerous brain tumor that required surgery and radiation. “My doctor’s really mad at me because I haven’t had the M.R.I.,” she said, but she and her husband say they need to save toward the cost.
She is particularly concerned because they could owe thousands of dollars in medical bills if something unexpected happened, like a hospital stay, because their current plan asks them to contribute much more toward the cost of care. “It’s really scary,” Ms. Landrum said.
Employers also justify the higher deductibles as a way to make sure workers have a financial stake in choosing their doctor or ordering a test. “It truly is to engage employees as better health care consumers,” Ms. Pickering said.
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A higher deductible puts more of the onus on the employee to decide whether a doctor’s visit or test at a certain facility is worth it, said Robert Reiff, who heads the employee benefits consulting business for Lockton Companies, an insurance brokerage firm that advises midsize companies.
Employers “are putting more decision-making authority in the employees’ hands,” he said. Many more clients are offering high-deductible plans, he says, frequently accompanied by a savings account that the employee can fund as a way of helping pay for medical bills. In some cases, employers may also put some money in those accounts.
To help employees make better decisions, companies are offering them online tools that show workers the cost of a particular test or doctor’s visit before they go. Many are also providing employees with access to a doctor or a nurse over the telephone or computer as an alternative to a costly doctor’s visit or trip to the emergency room.
Consumers who have to pay the higher deductibles may feel they had little choice about needing care. Matt Freedman, 34, chose a plan last year that had a $6,000 deductible. “I knew it was a risky plan,” he said, but he considered himself healthy and unlikely to accrue sizable medical bills. After minor surgery, however, he developed a serious infection that led to a hospital stay. “You never think something terrible is going to happen,” he said.
People who buy coverage through the state marketplaces may also face high deductibles. Rebecca Bullard, 27, chose a plan this year with a $6,000 annual deductible so she could afford the $129 a month in premiums. When she worried that she had cracked a rib after playing roller derby, she chose to ask friends on social media about what to do rather than go to the doctor. Although she had a plan with a $2,500 deductible before, she had not been worried about what she would pay out-of-pocket. “Now I don’t even want to go to the doctor,” she said.
What concerns policy experts and employers is evidence that higher deductibles are making people forgo care, even when they have serious conditions.
“It may be tamping down on unnecessary care, but we’re seeing a lot of evidence of skimping on necessary care,” said Sara R. Collins, vice president for health care coverage and access at the Commonwealth Fund, a nonprofit group that conducted a survey last fall about the effect of out-of-pocket health care costs on consumers.
Forty percent of people with private health insurance whose deductible equaled 5 percent or more of their income said they had decided not to go to the doctor when they were sick or had chosen not to get a test or go to a specialist, according to the survey.
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. Many of the companies he works with are now hesitant to raise deductibles much higher. Those employers believe “we’ve gone as far as we should go,” he said.
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