The new year is often a time for recuperating from the holidays, setting resolutions, and starting over on their deductible. A healthcare deductible is an amount you pay for services covered by your plan before your insurance starts to pay. Many patients are concerned about meeting their deductibles at the start of the year. Nevertheless, price transparency can help.
Price transparency allows people to make more informed decisions about their health care. Instead of going to the doctor for a procedure or treatment and wondering how much it will cost, price transparency lets patients know the costs associated with their medical care, avoiding unexpected bills and financial stress. Even worse, the lack of clarity can lead to overcharging and price gouging issues, as patients cannot compare prices and negotiate with providers.
For many individuals and families, high deductibles can make it difficult to afford necessary medical care, leading to delays in seeking treatment or avoiding care altogether. Even if people obtain the care they need, they may feel the financial strain of their high deductible after paying a significant portion of their health care costs out-of-pocket. Many Americans faced an impossible choice: delay or avoid preventative care, which can cause severe and costly health problems down the road, including mental health issues due to anxiety and stress about the cost of care.
It is only getting worse: the average deductible for people who buy insurance has increased tremendously in recent years. Deductibles for individual plans on the Affordable Care Act (ACA)/Obamacare have grown significantly since 2014. According to a study by the Kaiser Family Foundation, the average deductible for an individual plan in 2014 was $1,217, while in 2020, it was $4,358.
The ACA drove up costs in a variety of ways. One is that the increased regulations and mandates included in the law led to higher health insurance premiums for some individuals and small businesses. Additionally, some individuals switched plans to avoid complying with the law’s requirements. For example, the law required that all plans cover a minimum set of essential health benefits, such as behavioral health services and maternity care services, which increased the overall cost of insurance. Additionally, the ACA’s requirement that insurance companies cover individuals with pre-existing conditions also contributed to higher premiums, as it increased the risk and costs for insurance companies.
Additionally, some individuals were forced to switch from their existing plans to new ones that met the ACA’s requirements, which were more expensive and provided less coverage than their previous plans, leading to some paying more for health insurance than before the ACA.
Instead of improving health coverage for Americans, the law has led to some insurance companies leaving the market and thus further decreasing lacking competition in some areas leading to less choice and potentially higher consumer costs. It happened partly because of the ACA’s requirement that insurance companies cover individuals with pre-existing conditions, which increases their risk and costs. The increased regulations and mandates also raised the cost of compliance, which some companies may have yet to be able to afford or chose not to participate in the market.
The ACA has also led to increased healthcare spending, contributing to the rising national debt. Deductibles have risen dramatically since the ACA was implemented. In 2020, “the average deductible for a silver plan offered on Healthcare.gov was $4,500, up from $2,425 in 2014.”
There is a variety of ways that insurance companies can help patients with high deductibles who are not receiving care at the beginning of the year due to cost. One solution is offering a health savings account (HSA) or a flexible spending account (FSA) to help patients save and pay for their healthcare expenses. These are often paired with high-deductible plans that also offer lower premiums, which is best for people who do not anticipate high medical costs, and is an excellent option for young, healthy individuals. Another solution is offering a tiered network of providers, where patients can choose to receive care from providers who have agreed to lower costs in exchange for more patients. Additionally, insurance companies can offer telemedicine services, which allow patients to receive virtual care from a healthcare provider without incurring additional costs.
Further, insurance companies can incentivize patients to receive preventive care by offering discounts or credits for their deductible for annual check-ups, screenings, and vaccinations. They can offer programs that provide discounts on prescription drugs for patients with high deductibles and can help make prescription medications more affordable for these patients.
Insurance companies can offer a reference-based pricing program that sets prices and makes care more affordable for patients with high deductibles. Another option is providing hardship programs for patients facing financial difficulties who cannot pay for their healthcare expenses. This can include payment plans, temporary premium reductions, or financial assistance to help cover the cost of care. It is important to note that these solutions may vary depending on the insurance company and the plan.
The Affordable Care Act included many new regulations that were intended to help people but served to increase healthcare costs. However, there are some things insurance companies cannot do to offer patients lower premiums or out-of-pocket expenses. For example, insurers cannot provide pricing discounts based on sex, age (to a degree), or health status. They cannot offer plans that do not cover all of the features that the federal Department of Health and Human Services deems “essential”—even if healthcare consumers do not see these as essential or desirable.
While there have been ongoing severe efforts for greater price transparency since the Trump administration, much is still to be done. Lawmakers at the state and federal levels can codify rules requiring price transparency from hospitals and other healthcare actors (including insurance companies). Lawmakers can do more to ensure these rules have been complied with.
At the beginning of the year, many people face resetting and high deductibles, but price transparency is critical all year round. A recent report showed that due to increasing average deductibles, most Americans—80%—will not meet their deductibles. For these price-sensitive patients, everyone from policymakers to healthcare providers can do more to provide better information so that patients can shop, compare prices, make informed decisions, plan, and save money.