The Commonwealth Fund has a new study out on people who have insufficient insurance in that their deductibles or total out of pocket expenses are more than 10% of their annual income. These policies are better than nothing, but they are effectively hit by the bus policies as they provide high cost care coverage but they don’t help to pay for a simple broken wrist that happened as you fell out of a tree while hanging upside down and landed on a crab apple. It’s better than nothing, but it is insufficient to promote actual good health and well being.
New estimates from the Commonwealth Fund Biennial Health Insurance Survey, 2014, indicate that 23 percent of 19-to-64-year-old adults who were insured all year—or 31 million people—had such high out-of-pocket costs or deductibles relative to their incomes that they were underinsured. These estimates are statistically unchanged from 2010 and 2012, but nearly double those found in 2003 when the measure was first introduced in the survey. The share of continuously insured adults with high deductibles has tripled, rising from 3 percent in 2003 to 11 percent in 2014. Half (51%) of underinsured adults reported problems with medical bills or debt and more than two of five (44%) reported not getting needed care because of cost. Among adults who were paying off medical bills, half of underinsured adults and 41 percent of privately insured adults with high deductibles had debt loads of $4,000 or more.
I think we need to divide the underinsured into two distinct populations as they have very different policy recommendations. The relatively healthy individuals who are looking for insurance against falling out of a tree, or cat accidents or other random acts of bad luck. Here is the policy solution is to either increase non-individual HSA contributions with a potential public or employer provider kicker, allow for people to borrow against future HSA savings. or reduce deductibles. Liberal preference order would most likely be lower deductibles, higher non-individual HSA contributions, and finally enabling borrowing against future HSA savings at low interest rates, while conservatives who care about health policy (they meet at the Silver Springs, MD Denny’s on the 3rd Thursday of the month in the left back corner booth) would probable have the oppositie preference order, and tea baggers will just point and laugh at people in pain.
As a side note, this description of underinsured applies to most individuals and two person families who make between 200% and 300% FPL and buying Silver policies on Exchange. This is one of the probable gripes that the almost working poor working class has about PPACA as someone making 199% FPL has half the total exposure as someone making 201% FPL if they both buy the 2nd Silver.
The other population that we have to consider are people with chronic conditions that need to be actively managed. Chronic conditions means that person will face the same hit next year, and the year after that, and the year after that. Expecting them to hit a deductible means expecting a lot of people to be medically non-compliant, a lot of people to go deeper into non-resolvable debt, and a lot of providers taking bad debt losses until a person gets above the deductible limit.
They have a situation where they need to have ongoing, low level medical interventions, therapies, prescriptions and monitoring visits to prevent big acute crisis. The big acute crisis will max out an individual’s deductible in the first half an hour of treatment while the ongoing maitenance and prevenatative care regime is a death of a thousand cuts that could add up to $2,000 in cost sharing out of a $3,000 deductible. If someone is very well-off, they can afford that, but if someone is doing just well enough to get by, the trade-off between following a prescription fully or cutting some pills in half or skipping the lunch time dose entirely to pay the rent while hoping everything will turn out to be okay(ish) is tempting as in most cases, things will be okay(ish).
Here the policy options are different. The goal of an insurance company should be to avoid the big, expensive acute crisis interventions for two reasons. First, it is expensive, and secondly, it is a massive drain on the quality of life of individuals to spend time in the ICU or recovering from preventable surgery.
One of the more interesting ideas is a twist on value based insurance design. VBID attempts to reduce the member cost of high value care to encourage people to use more of it, while having high cost sharing on low value care to discourage utilization. Condition specific VBID could be useful. Here is how that would work.
A person signs up for Plan X with a $2,500 deductible and $3,000 out of pocket max. It does not matter if they sign up on Exchange, at work, Medicare Advantage etc. They pay the standard community rate for their age/geography. They complete a health assessment and authorize the insurer to do a claims dive against state level all-payer databases. Using the risk assessment and the claims dive, the insurer determines if that person has a chronic condition. For instance, they could determine that the individual is a Type 2 diabetic with hyper tension. Under most traditional plans, that information is used to connect the individual with a risk manager or care coordinator who then encourages the member to see a doctor or helps them make little changes to their life style in order to better manage the disease.
VBID plans would still link members to care coordinators, but they would do more. Benefits would change. Services that are directly tied to treating the specified chronic condition would have the insurance company picking up the most if not all of the costs. The member would see their test strips and hyper tension mediciation be no cost-sharing as well as an annual visit to their cardiologist and endocrinologist be “free” from their point of view. At the same time, if they get hit by a bus or receive a cancer diagnosis, they would still be on the hook for the $2,500 deductible and $3,000 total cost-share. Insurance would still function as insurance against random events while VBID transforms the current policies from a discount card to insurance against acute crisis events.
VBIDs would be a nasty plumbing problem for insurance companies to build out as it would require significant complexity of benefit design interacting with claims payment, provider network acceptance, member education and clinical feedback, but the disparate chunks of information needed to make such a system work already are floating around at most insurers.
rikyrah
this is such a complex system. Thanks for explaining things to us.
MomSense
I can see how a VBID would be extremely helpful for me. Right now I’m putting off lab work because it turns out the tests that are done in my medical provider’s office are sent to an out of network 3rd party and therefore really expensive and not covered.
There are some tweaks we could make to the PPACA if we had a legislative branch that cared at all about governing or their constituents.
Richard Mayhew
@MomSense: Can you request that your doctor send your tests to a different lab? VBID might not be too useful for out of network care (different set of contracting/obligation issues)
Richard Mayhew
@MomSense: Actually we could see VBID as part of a Wyden Waiver at the state level. Maine won’t do it as long as LePage is in a veto position, but MAssachusetts could do it?
MomSense
@Richard Mayhew: @Richard Mayhew:
I think this lab travels to all the off sites and picks up the tests. I’ll probably just go to the hospital but the last time I tried the wait was loooong with all the seniors arriving before it even opened. At least now I know why the seniors are all going to the hospital for lab work.
It’s still probably cheaper to miss work and go to the hospital than it is to pay the 3rd party.
One of the reasons I’m planning to move to Massachusetts is because of the mess LePage is making, and not just with healthcare. Taxation, education, environment, energy policy — all messes. Small population states like Maine do not recover quickly from 8 years of disaster.
Jim
I had to chuckle when you mentioned “cat accidents” as a random act of bad luck. Maybe not as frequent as car accidents, but my cat-owning friends frequently trip over their pets, and it’s especially bad when it happens on the stairs. :-)
Luthe
The other issue with VBID plans is determining what issues are “chronic.” Is the high blood pressure or pre-diabetus someone gets under control through diet and exercise ‘chronic’? What about addictions? Does the alcoholic who has been sober five years get the same coverage as the one fresh out of rehab who needs biweekly therapy? And then there’s depression. How long does a depressive episode have to last before it goes from ‘situational’ to ‘chronic’?
As someone with chronic depression, income < 200% FPL, and really crappy employer-sponsored coverage, I just sucked it up and bought a Silver-level Exchange plan with a fairly low deductible and decent prescription coverage. It costs me twice what the employer-sponsored plan would, but it covers cat-accidents, hypothetical buses, and my depression much better than the sponsored plan.
Richard mayhew
@Luthe: we actually had that discussion of when does depression get categorized as chronic this week… For Mayhew, claims or Rx activity related to depression for 9 of past 12 months