Understanding the “Costs” of High Out-of-Pocket Health Plan Deductibles0

In the world of health insurance, a high deductible plan requires significantly higher out-of-pocket expenses for health care in exchange for a lower monthly premium.  The California Health Interview Survey defines “high-deductible” plans as having out-of-pocket deductibles of $1,000 or more for individuals or $2,000 or more for families, and can exceed $5,000 annually.

A new report from the University of California at Los Angeles’ Center for Health Policy Research estimates that as many as three million Californians are enrolled in such health plans. Requiring deductibles in excess of $5,000, these health plans can cause enrollees to delay medical care and create financial hardships for families. According to the report “Profiling California’s Health Plan Enrollees: Findings from the 2007 California Health Interview Survey“, however, these plans may be the only viable option for many Americans.

The study found that 3 of the 32 million insured in California were enrolled in high-deductible plans in 2007.  For members enrolled in preferred provider organizations (PPOs), 28 percent reported plan deductibles in excess of $1,000.  In health maintenance organizations (HMO), 14 percent high deductibles. According the report’s lead author, Dylan Roby, a Center research scientist: “Many Californians can’t afford higher-premium plans, especially in the current economic climate. But the alternative – high-deductible plans – may cost less initially, but can cost thousands of dollars when you need health care.  When that much money is on the line, a health emergency can also become a financial emergency.”

As states nationwide begin to establish the necessary health insurance exchanges required by the Patient Protection and Affordable Care Act (PPACA), such a study is important to understand health care reform’s potential impact on these high-deductible plans. The new state exchanges most likely put a limit on out-of-pocket deductibles at $2,000 for individuals and $4,000 for families, although the scope of benefits offered under these exchanges remains to be seen.[audio:http://hospitalstay.com/wp-content/uploads/2010/10/2-04-Easy-Money.mp3|titles=Easy Money]

“Consumers need information to choose the right coverage so they receive the care when needed, not just when they can afford it,” said Sandra Perez, director of the California Office of the Patient Advocate.  “Thus, it is essential that a consumer have access to reliable information and helpful decision-making tools to make an informed choice when selecting a health insurance plan.” To assist consumers, the Office of the Patient Advocate provides cost worksheets and other related information on its Website.

The report provides a detailed look at the enrollment, characteristics, disease conditions, health status, health care use and barriers to care among members of private and public health plans in California.

Some of the findings in the study include:

  • California remains the leader in HMO enrollment in the nation, with approximately half of all Californians enrolled in an HMO compared with 21 percent nationally.
  • Medi-Cal HMO enrollment increased by 245,000 to 2.4 million Californians in 2007, driven by the movement of Medicare and Medi-Cal enrollees into managed care.
  • Over 15 percent of all adults in health plans reported experiencing serious psychological distress in the past year; lost productivity from mental health issues is prevalent, especially among the publicly insured.   The cost of treatment was cited as a barrier to mental health treatment for over 30 percent of adults in health plans.

A copy of the full report can be found here.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.