Until recently, health insurance deductibles have proven to be quite a catch 22. On one hand, Americans would rather not have to pay a deductible or co-payment before receiving healthcare; however, it’s simultaneously impossible to ignore that deductibles have helped to make health insurance more affordable and, for some Americans, possible to have at all. Bernie Sanders recently released his proposed health care plan featuring the promise that no American would have to pay a deductible again. Although light on the details, this part of the plan would mean removing something that has been working its way into the health care market since the early 1990s. Deductibles can be significant for some when an average out-of-pocket cost of around $1000 required before coverage kicks in. This is something that has been tolerated due to the standing argument that it makes health care more affordable overall. But is this actually the case? The truth behind the purpose of deductibles is something we do not often get to see up front. The fact that most Americans can’t afford steep deductibles has been one reason to reassess the system but the main question now appears to be: Are deductibles actually helping with health care spending, or deterring it?
In this article featured in the New York Times, Michael Chernew, a professor of health policy at Harvard, stated “If you make something free, people will spend a lot on it.” Recent research is now supporting this idea as studies have shown that more required out-of-pocket costs may be responsible for a downturn in health care spending altogether. Researchers are now beginning to agree that high deductible plans are not what they have been thought to be in the past. Multiple randomized experiments are showing that over time, people who pay more health care bills out of their own paychecks choose to use less health care, while people who have everything covered by insurance tend to utilize healthcare more because they have insurance available. Another important factor is that in comparing these two groups of people, those who were choosing to receive less health care were no less healthy than those taking advantage of using more. What could this mean about the future of health care deductibles? No one is sure at this point. According to some health economists, including Michael Chernew, it may require “smarter” albeit more complicated forms of health insurance. These plans would utilize economic incentives to reduce unnecessary health care spending without deterring necessary care for patients.
We are interested to hear what you think about the possible new direction of health care and the role that deductibles and co-pays have. If you have a moment to read the more in depth New York Times article on this subject please leave us your thoughts in the comment section.