Hitting The Iceberg Of Higher Health Care Costs
Hitting The Iceberg Of Higher Health Care Costs
The latest Kaiser Family Foundation survey of employer health benefits concludes that “workers are shouldering higher health care costs as more employers demand bigger out-of-pocket payments from employees before their insurance kicks in.”
According to the survey of 1,927 employers, “annual deductibles — the amount employees pay out of their own pockets for medical care before their insurance coverage starts — jumped an average of 29%, to $1,344, for those with family coverage.” “This is partly, but not entirely, driven by growth in consumer-directed plans such as those that qualify for a tax-preferred Health Savings Account,” the study concludes.
Consumer driven health care plans do increase out-of-pocket expenses. “We may be seeing the tip of the iceberg toward less comprehensive, skimpier coverage,” Kaiser President Drew Altman warned.
But under Sen. John McCain’s (R-AZ) proposed health plan, too many Americans may actually hit the iceberg. As a recent study published in Health Affairs points out, McCain’s plan would push more Americans into the unregulated individual health market place. But, since “it is much more expensive to sell insurance to millions of individuals,” a family that moves from the group to the individual market will experience higher costs:
The typical deductible in nongroup plans is about $2,750, compared to about $1,000 for group policies. Coinsurance rates average 26 percent in nongroup plans, compared to 20 percent in a typical employer-based plan. For plans with copayments, the average copayment in the nongroup market is between $30 and $40 per doctor visit, well above that of group plans. Many services are not covered at all. Thus, much of the apparent savings from shifting to nongroup coverage would be offset by higher out-of-pocket costs for care.
One Response to “Hitting The Iceberg Of Higher Health Care Costs”
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Observations:
“it is much more expensive to sell insurance to millions of individuals,”
If the US had ‘national health insurance’(automatically deducted from wages as so many other nations do) then there wouldn’t be any expensive selling required.
But how expensive could selling health insurance be in the first place? Does it really contribute that much to the overall cost to either the insurer or the insured? Advertising is a deductible expense. It seems to me that TV is the major health insurance advertising medium and it seems most of the ads placed in the cheapest programming slots. Selling insurance is not actually conducted on an individual basis. though closing the sale might be regarded as such.
For employers it’s their choice as to how much expense they incur in determining which plan they should offer which doesn’t seem like a remarkable expense to me.
Rather it seems to me the economy of scale argument would apply to the details of the policies, the coverage for each individual but then there ought to be no real difference between a group policy for 100 employees or 100 individual policies–statistically they all should exhibit the same kind of ordinary and special needs. The administration and use of the insurance should be much the same, surely?
September 26th, 2008 at 9:32 am