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By Steven Edmondson

It is my opinion the high deductible health insurance policies are illusory.  According a recent news article, average premiums for family coverage is $12,680 per year.  In the past attempts to slow the increasing cost  (i.e. increasing premiums paid for coverage, health care plans with high deductibles were developed.  In fact, the number of persons enrolled in these high deductible plans (plan with deductible of $1000 or more increased from 12% to 18%.  Despite this trend, premiums continued to rise and in many situations rose faster than wages.  Although this type of policy may make coverage more affordable, it discourages utilization.  This is a windfall for the insurer, the company continues to collect premiums without incurring liability for coverages.   Utilization is discouraged because an individual must pay a large sum for basic preventive health care services and minor medical issues.  In effect there is no coverage.  The only medical care covered is either a major medical expense from hospitalization or surgery.  When you consider that the majority of the “risk pool” is employed and presumably healthy, the selection seems to favor the insurer.  At a time when the economy is struggling and many are without the means to pay high deductibles this type of policy would seem to be counterproductive to promoting the health of the nation.  Please comment with your thoughts.

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One Comment

  1. I disagree. The fact that premiums have increased does not prove that these policies are illusory. Without the high deductible they might have gone up even more. Premiums for low deductible policies are rising too. One useful experiment would be correlate the rate of premium increases with the size of the deductible. And, yes, utilization may be discouraged by high deductible policies; but that may not be a bad thing. If the failure to price at marginal cost is inducing overconsumption of certain medical services, high deductibles can be a good thing. Also, to the extent someone knows their medical expenses will exceed the deductible, the deductible is not a deterrent to consumption. This is one reason that copays and coinsurance are more of a deterrent. Whether that’s a good thing or a bad thing depends, I suppose, on whether you think it mostly deters needed medical care or whether it deters medical care whose costs exceed benefits.


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