High-Deductible Plans ‘Quiet Revolution in Health Insurance’


bjbjLULU JEFFREY BROWN: Next, a growing change
in the way Americans are buying and receiving health insurance. NewsHour health correspondent
Betty Ann Bowser reports. BETTY ANN BOWSER: Dennis Adams is what the insurance industry
calls a young invincible. DENNIS ADAMS, professional dancer: I figured nothing would happen to
me. When I was 26 or 25, when I got the plan originally, I had never had surgery, I had
never broken a bone, I had never been in an ambulance, I had never been to the hospital.
BETTY ANN BOWSER: So when the non-profit Oberlin Dance Company of San Francisco offered a new
type of health insurance three years ago, the 27-year-old professional dancer didn’t
think twice. He signed up right away. It was a high-deductible insurance plan that traded
lower monthly premiums for higher out-of-pocket costs to employees. In this case, Adams would
have to pay $2,500 up front before his health insurance would kick in, if he needed it.
Then, the unthinkable. DENNIS ADAMS: I got hurt. BETTY ANN BOWSER: During a performance
like this, Adams tore his ACL. When he need an MRI to determine how bad the damage was,
the provider demanded the $1,600 test be paid for up front. Adams was stunned, but, even
worse, he didn’t have the money. Of the growing number of companies that are going to high-deductible
plans, about 23 percent of them offer employees some type of rainy-day option, usually called
a health savings account, or HSA. And even though the dance company is a non-profit with
a tight bottom line, it puts $100 a month in each employee’s account. The 30 people
on the plan can also contribute to it tax-free, and the money rolls over year after year and
from job to job. In the end, workers comp paid for Adams’ treatment because the injury
happened on the job. But for the young dancer, it was a teachable moment. He went back to
a traditional plan with higher monthly premiums. Dr. Drew Altman, president and CEO of the
Kaiser Family Foundation in Palo Alto, calls this a reshaping of the insurance market.
DR. DREW ALTMAN, President and CEO, Kaiser Family Foundation: Well you know, I think
we ve been so focused on health reform in Washington, what we have missed is there is
a quiet revolution happening in health insurance out in the country. BETTY ANN BOWSER: According
to Kaiser, last year, 31 percent of workers covered by their employers offered this type
of insurance, with a deductible of at least $1,000. Enrollment has tripled, up from 10
percent, in five years. DR. DREW ALTMAN: They don’t have a lot of weapons to throw at their
rising health care costs any longer, so they have really no choice but to go in this direction,
especially the smaller employers, who are getting hit especially hard by rising health
care costs. So, we re seeing this quiet revolution in what health insurance really is. It’s changing
in the country and it has big implications for people. PHIL LEBHERZ, founder and chairman,
LISI: The logic is that, if you have a higher deductible, as a consumer, you’re going to
pay more attention to the marketplace and how much people are charging you for their
services. BETTY ANN BOWSER: Phil Lebherz is the founder and chairman of LISI, an agency
that provides support for health insurance brokers throughout California. About a third
of his employees are on these types of plans. And, Lebherz says, their rise in their popularity
comes down to economics. PHIL LEBHERZ: This move to high-deductibles is really, at the
bottom line, an economic market adjustment to lowering the cost of the actual health
insurance premium, putting some risk, or some emphasis, from a consumer standpoint, and
some interest in people’s trying to stay healthy, so that it protects them and protects the
company at the same time. What we’re seeing is a change in the financing of health care,
not an erosion of the coverage. The coverage is still there. In fact, there’s more coverage
than ever. BETTY ANN BOWSER: That’s why, in 2009, the dance company’s finance manager,
Charlene Folcomer, recommended they start offering a high-deductible plan with lower
premiums. About a third of the company’s 100 full-time employees opted in. CHARLENE FOLCOMER,
finance manager, Oberlin Dance Company: So, it’s made a huge savings for us. The employees
that are on it stay with it because they’re getting used to it. They have to do what it
takes to keep their health care costs down now. BETTY ANN BOWSER: But a new study found
people on these types of plans sometimes put off medical care, more often than those in
traditional low-deductible plans. The study’s lead author is Dr. Alison Galbraith, a pediatrician
at Harvard Medical School. DR. ALISON GALBRAITH, Harvard Medical School: What we found was
that, in families in high-deductible plans, there was a much higher prevalence of delayed
or foregone care due to cost, compared to people in the non-deductible plans. And an
interesting thing was, it was — there was the suggestion that actually it wasn’t necessarily
the chronically ill family members who were delaying care. BETTY ANN BOWSER: But, Galbraith
added, these plans can work well for some people. DR. ALISON GALBRAITH: Ideally, the
best person in a high-deductible plan, well, it’s a healthy person who doesn’t need a lot
of care. And for those types of people, they’re great plans. So that’s why some families will
want to buy them, because it may be the only affordable option for them. BETTY ANN BOWSER:
Lauryn Menard, an administrator for the dance company, is one of those ideal candidates
for this type of insurance, and she’s happy with it. LAURYN MENARD, Oberlin Dance Company:
I feel like I’m getting good coverage for me. I’m young, I’m healthy, I’m savvy. I know,
you know, what my costs are going to be per month. I know those costs. I know what my
expected medical costs are, so — so, I — and I feel like, if something were really worrying
me, I could totally go to a doctor. BETTY ANN BOWSER: But even Menard admits she now
sometimes puts off going to the doctor to save money. LAURYN MENARD: I do get headaches
about once a month, and they can get really bad. And I still haven’t gone to see a doctor
about it. And I don’t know. I haven’t made plans to yet. It’s like, I’m kind of trying
to cheat the system a little bit, because it’s like, if I don’t go and it’s not really
serious, then I’m saving money. BETTY ANN BOWSER: With this so-called quiet revolution
already well under way for thousands of Americans, Altman is pushing the industry and the country
to take stock. DR. DREW ALTMAN: We really need to have a national discussion about whether
this is a good thing or this is a bad thing. Or it may mean — I think what it really means
is, this is okay for some people if you are pretty healthy. But we have to worry about
what these very high deductibles, $2,000, $3,000, $4,000, $5,000 deductibles, is that
really even insurance coverage? BETTY ANN BOWSER: The number of Americans enrolling
in high-deductible plans is expected to rise as long as the cost of health premiums also
continue to climb. JEFFREY BROWN: Online, you can find our list of the top 10 things
you need to know about high-deductible insurance plans. Plus, you can submit your questions
via Facebook or Twitter or on our website, and we ll post answers from experts next week.
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