High Deductible Plans Benefit Some, Headache for Others
One of the biggest financial burdens individuals and businesses face is the rising cost of health care. In order to ease that weight, some people and employers have been turning to High Deductible Health Care Plans. They keep monthly premiums low by requiring patients to spend a significant amount of money before their insurance kicks-in. As WUWM’s LaToya Dennis reports, those high deductible plans can pay off, but are a gamble.
Laurel Landis signed up for her employers’ high-deductible health care plan, because she thought it would be a great way to save money.
“You can pay a regular premium but its high. It’s $145 per month,” Landis says.
Instead, her monthly payments are only $42, but Landis has to spend $4,000 of her own money before her insurance starts paying. Then, it covers 75 percent. She says all was well until she encountered a few health problems.
“I had an abnormal pap smear and I had blood in my throat,” Landis says.
The 51-year-old says the blood in her throat led to sheer panic.
“I had to have like a two part CT scan, which took 10 minutes and ended up costing me about $6,400,” Landis says.
Landis also ended up seeing an ears, nose and throat specialist at a cost of $150 dollars. While she’s thankful the results came back normal, she has had to make a few lifestyle changes in order to pay her medical bills.
“I didn’t take a vacation that I normally take every year. It meant a lot of changes, I’m still paying it off,” Landis says.
Landis says the verdict is still out on whether she will sign up again for the high deductible plan.
But not all employees have an option. Nicole Richard is the HR Manager for a Menomonee Falls company called Tailored Label Products. For the second year now, the company is offering workers only one health insurance option.
“We have a single coverage deductible, which is $5,000 and then we have a family coverage deductible, which is $10,000,” Richard says.
However, Richard says the company helps employees foot the deductible.
“For a single individual, under our health reimbursement arrangement the HRA, they may only be paying $1,200 out of pocket,” Richard says.
Employers offering high deductible plans typically arrange health savings accounts for workers, allowing them to save money to cover the cost of an illness.
Richard says of the company’s 69 employees eligible for its insurance plan around 50 take part. She says they seem to be adjusting.
“In the past we did have a co pay. It was $35 for primary and $50 for a specialist. Now they go to the doctor’s office and they see that a doctor’s visit is $100 and they’re responsible for that $100. So they’re making more educated choices,” Richard says.
While Richard believes workers with high deductible plans are becoming more judicious when seeking health care, Dr. Brian Ewert says they may actually be avoiding valuable treatment.
“We do have stories of people who have those types of plans who when they finally present after months of symptoms we find that they have severe disease that could have been treated differently if seen earlier,” Ewert says.
Ewert is president and CEO of the Marshfield Clinic.
“We also have patients who when the provider recommends a certain panel of lab tests, the patient wants to go test by test and decide whether they’re absolutely necessary,” Ewert says.
Ewert says nationally, there has been around a 5 percent decrease in outpatient services over the last two years. He says the local decline has forced the clinic to eliminate 120 positions.
Scott Weltz is a consulting actuary with the business-consulting firm Milliman. He says high deductible plans can get a bad rap, but are beneficial for some patients.
“Chronic health care users actually spend less with these plans if they have very high health care expenses because if you’re tapped out after $2,000, if that’s your out of pocket maximum that may be less than if you were paying say a $25 co pay every time you went to the office,” Weltz says.
Weltz says the other people who can benefit, are those who end up not needing to visit the doctor. They save on premiums and can funnel pre tax dollars into a health savings account, lowering their taxable income. No matter your opinion on these high deductible plans, Weltz says one thing is clear – businesses are eyeing them.
“I’ve seen some studies that say by 2013, 2014 well over 50 percent of employers will be offering these plans,” Weltz says.
However, the Affordable Care Act could signal the end of high deductible plans. The law requires insurance companies to spend 80 percent of premiums on medical care. But to reach 80 percent, insurers cannot count any medical services patients paid for themselves.