High Deductibles Breaking U.S. Healthcare

 

More Americans have health insurance today than before ObamaCare. But the U.S. healthcare system is still broken.

If you can’t afford the deductible, what good is your insurance? That’s the question many families are asking themselves when they face healthcare decisions. High deductibles are making expensive treatments like surgery and physical therapy unaffordable for many of my own patients.

According to the Federal Reserve, about 40 percent of Americans can’t afford an unexpected $400 medical expense. The graph above shows the rise in deductibles in recent years.

John Tozi and Zachary Tracer, writing in Bloomberg, say since the early 2000s, employers have mostly embraced high-deductible health plans. The thinking has been that requiring workers to shoulder more of the cost of care will also encourage them to cut back on unnecessary spending. But the 2008 recession put added pressure on the family to hold down expenses. Many families put off routine care or skipped medications to save money. The result is a pent-up need for medical treatments even as deductibles are rising even higher.

The truth is that even for many middle class families, these high-deductibles are unaffordable. The result is delayed or neglected medical treatment.

Why are deductibles rising so fast?

The bottom line is that ObamaCare is a failing healthcare system that can’t provide good medical treatment at an affordable price. The reasons for this are many but the main problem is community rating. The architects of ObamaCare elected to scrap the traditional pricing structure of health insurance using actuarial analysis in favor of a community rating system.

Community rating forces insurers to spread the risks of pre-existing medical conditions over only three price levels rather than the usual six. Simply put, high-risk patients, usually older, pay less than the actual cost of coverage while young and healthy individuals must pay more than the actual cost. This unpopular method of pricing was supposed to work because ObamaCare mandated that everyone purchase health insurance or pay a tax penalty. But millions of healthy young people rejected this mandate, preferring to pay the nominal tax (if held accountable) rather than purchase expensive health insurance they didn’t need.

As ObamaCare continues to fail, with more and more Americans refusing to purchase expensive insurance, premiums and deductibles are rising even faster for those who do purchase insurance. This situation cannot continue much longer.

To lower healthcare insurance premiums and deductibles, a new healthcare system, free of the onerous regulations like community rating in ObamaCare, must be implemented. When Democrats stop trying to preserve a failing system they implemented, and recognize single-payer is not the solution, Americans can look forward to affordable healthcare insurance once again. Until then, look for your healthcare premiums and deductibles to continue rising. That’s the sad truth.

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