High deductibles and Obamacare derangement syndrome
We’ve remarked before on the tendency of businesses and others to use the Affordable Care Act as a scapegoat for changes in their healthcare benefits or in the healthcare landscape that have other causes -- such as their own greed or long-term trends.
Galen Benshoof, a guest contributor at theincidentaleconomist.com, identifies a good case of what we might call Obamacare derangement syndrome -- the conviction that everything that happens in healthcare today must have been caused by the ACA.
Benshoof’s example involves rising deductibles. His jumping-off point is a recent review of a book by Ezekiel Emanuel, one of the ACA’s architects, by David Goldhill in the Wall Street Journal. Goldhill is a businessman who, judging from his earlier writings, is predisposed to expect the ACA to fail -- in fact, prefers catastrophic coverage to almost all other forms of health insurance.
In his review, Goldhill cites “the rapid spread of high-deductible insurance among employers and on the exchanges” as “one of the immediate unanticipated consequences of the ACA.”
Benshoof calls him on this misstatement. The truth is that the rapid spread of “high-deductible” health plans (based on IRS regulations, that’s technically any plan with a deductible of $1,250 per person and $2,500 per family, or above) is very much an artifact of the pre-ACA healthcare landscape. Indeed, one of the goals of the ACA is to relieve the economic pressures that prompted employers to jack up deductibles on their employees toward this level every year.
The evidence for rising deductibles as a pre-existing condition of American healthcare is incontrovertible. As the Kaiser Family Foundation reported in 2012, the percentage of workers in employer plans with a single deductible of $1,000 or higher had risen to 34% from 10% since 2006; in the same period the percentage with deductibles of $2,000 of higher had risen to 14% from 3%. The average deductibles for all employees had nearly doubled to $1,097 from $584.
The underlying idea, of course, is to shift healthcare expenses from the employers to the employees, while discouraging usage by the latter. There’s another driver: the high-deductible trend, as we reported back in 2008, owes much to a libertarian insurance entrepreneur named J. Patrick Rooney, who saw business opportunity in the sale of tax-advantaged health savings accounts. A Republican Congress obligingly passed a law providing a tax advantage to HSAs -- if they were paired with qualified high-deducible health plans (also sold by Rooney).
The point is that calling high-deductible plans as outgrowths of the ACA is just dead wrong. If anything, the trend to higher deductibles has moderated somewhat since 2010, when the act was passed.
Moreover, the latest enrollment figures on Obamacare suggest that there may be some consumer resistance to high deductibles under the new law. Some 80% of all those who have enrolled in plans nationwide, according to federal statistics released today, have chosen a silver plan, meaning deductibles of $2,000 for singles and $4,000 for families, or gold or platinum plans, which have no deductibles. Only 18% have opted for bronze plans, which offer lower premiums, balanced by deductibles of $4,500/$9,000.
So there’s nothing in Obamacare itself that encourages the spread of high deductibles; the law actually gives many Americans more options to avoid them, and a fair percentage are taking those options. The spread of high deductibles has been encouraged by the insurance industry. Blaming Obamacare is just scapegoating.