Ever get an email from HR saying everyone's salary is going down by $500?
Most of us have. But instead of saying your salary is lower it says your deductible is increasing. Same difference: the benefits that tie you to your job and suppress your wages are worth less every year. https://t.co/KvBz9lNNt7
— Lara Schwartz (@Lara_Schwartz) May 16, 2019
I can see where she is coming from. I disagree with it in detail.
Increased deductibles have differential impacts conditional on prospective healthcare costs.
I am assuming that the counterfactual is constant deductible in year 2and a fixed compensation pie with elements (cash, insurance, 401(K) etc) shifted around for any number of reasons.
An individual who has healthcare costs in the future year that are below the current year deductible has no new exposure. They are no worse off. If anything they are slightly better off if we assume that there is an inverse relationship between deductibles and premiums and then assume that higher premiums means lower net cash compensation which assumes a constant compensation bundle whose components are merely shifted around.
An individual who has healthcare costs in the future year that is above the current year deductible is losing money. They will get a slight increase in cash compensation due to lower premiums but they will take a cut in income net of medical expenses because they are paying dollar for dollar the difference between the old deductible and their total medical spending. There is a narrow wedge of people in this category who will on net be better off but most people in this group will be on net worse off.
Increasing deductibles means, all else being held constant, lower net of healthcare take-home pay for people who have high medical costs in the policy year. Conversely, higher deductibles are great for people who barely if ever touch the medical system in the policy year. This policy decision has significant differential impacts as a function of prospective healthcare spending. Broadly, higher deductibles are good for employees who have the following attributes: young, healthy, childless, male. Again broadly speaking, higher deductibles are bad for employees who are some combination of: older, pre-existing conditions, have children, and female.
I am not sure if a lawyer would ever want to raise a case of sex discrimination on the basis of a company changing their insurance plan design, but there is a decent argument that could be made that the change in plan design has easily foreseeable disparate impact.
UPDATE 1 Talking to a couple of lawyers this morning and they are all saying that this would be a long shot argument at best.