This is why high deductible insurance offers the best hope for cost control.
Too bad it becomes illegal in 2014.
Too bad it becomes illegal in 2014.
http://www.rand.org/health/projects/hie.html
Unfortunately, we never repeated the rand experiment, so it's a bit dated. For some reason we never tried repeating it before pushing massive changes in the law.
The RAND health experiment studied 30 measures of health. Two of them were statistically significantly improved - vision (due to free eyeglasses, p=0.001) and blood pressure (p=0.03).
Simple math shows that 0.97 ^ 30 = 0.4. This means that the RAND experiment had a 60% chance of showing an effect in at least one particular submeasure even if there was no effect in any of them.
(The result on eyeglasses is strong enough to avoid this effect, however. So we can conclude that free glasses help people see better.)
Converting to high-deductible is a problem if you're living at or above your means and are approaching middle age. But presumably regardless of your socioeconomic status, if you're just starting out in the market, given the choice between high- and low-, you're better served with high-.
Now, one could suggest that I change my plan to a non-high deductible one so that I don't have to keep that money sitting around in savings, but then my costs per month would go up $300, whereas my high deductible plan is entirely paid for by the company I work for. I don't go to the doctors nearly enough to that the extra money I spend per month would counter-act the amount I am paying out of pocket now because I never reach my deductible.
If you don't have an emergency fund (~$1000) and a few months of living expenses saved up, please try and do so.
* Low-deductable insurance is inherently more expensive.
* The difference in premiums between low- and high- deductible insurance gradually funds your HSA.
* When you're young and you start your HSA, you also happen to be actuarially less likely to need the money going into your HSA, so it grows to cover your deductible (or, the savings gradually displaces whatever you deposited to start your HSA; whatever).
In the presumed common case, your deductible is fully funded by your HSA which is itself fully funded by the difference in premiums over a few years. That's all money that would simply have been remitted to your insurer if you had a low-deductible plan. The high-deductible plan leaves you better off.
(There's also the more meta point that health insurance exists to keep you from being bankrupted by e.g. appendicitis, and not as a cost-saving plan for routine care.)
http://www.healthcare.gov/law/resources/regulations/preventi...
The fact that high deductible coverage may be possible for the non-"recommended" chunk of services is a good thing, however.
(I say "may be possible" since 3 actuarial firms couldn't read the law and come to an agreement on what it says.)
What's the difference between a $1K deductible and a $10K one? How's that going to make one bit of difference?
Consumers have no say in how much the procedures cost. There's no "price pressure" from anyone but the group buyers, those being the insurance companies and Medicare.
In the world joezydeco lives in. Apparently high deductible plans have already caused hospitals to change their procedures.
Consumers have no say in how much the procedures cost.
Consumers now have an incentive to shop around or try alternate treatments.
With a low deductible plan, their only incentive is to find the doctor they like the best or the hospital closest to their house.
When I'm rushed to the hospital after a taxi runs me down on my motorcycle, I'm not in a position to shop around.
When I'm sick with a flu and subsequent sinus infection, barely able to perform basic daily tasks without mental exhaustion, I'm in no position to shop around.
The wannabe-libertarian ideal doesn't work for healthcare.
People should be able to afford one deductible per year. Not sure what you mean by multiple hits.
I agree with yummyfajitas, but bottom line is, you should only get a high deductible plan if you can afford it. Thinking about a 5k bill as you head to the ER shouldn't be a problem then. If you can't afford it, d;not get it.
Of course, therein lies the problem: people who can't afford it choose it because its the cheapest. Its a problem, but banning high deductible plans for everyone is certainly NOT the solution.
The worst-case scenario with such a plan is that you end up with a chronic condition that requires extensive treatment every year, at which point it will cost you $5000 per year. Oh, and that's typically a per-family deductible, not per-person.
Just to put that in perspective, health care spending in the US as of 4 years ago was about $7400 per person. It's likely higher now. So if we managed to get into a situation where everyone was spending $5000/year on the deductible and $100/month on premiums, that would actually be less spending... and that assumes that everyone is sick all the time.
Now in practice, we won't get there; even high-deductible plans cost have more than $100/month premiums when you take away employer subsidies. But the point is that having high deductibles and HSAs that automatically get money put into them every year for those who can't afford to do so themselves is not a completely unreasonable approach to the situation. Actually getting the politics and details worked out could take some work, of course.
A little better...
"HSAs that automatically get money put into them every year for those who can't afford to do so "
That's encouraging too, although I bet it doesn't refill at the same rate as topping it up yourself?
I still think it's the wrong thing to do, though. I can appreciate the market pressure idea, but there are other ways to lower prices charged for procedures, and this way still involves people actually worrying about whether they have enough money for health care. Do Americans realize just how much mental angst they cause themselves actually devoting this mental energy to worrying about whether they will have enough money to make themselves not sick, if they get sick? All this pride or whatever at choosing clever HSA solutions or having an awesome work health care policy is simply relief at not having to worry about health care bills. It's not a value add, you're simply avoiding the horror of a double whammy: getting very sick and going bankrupt (or seeing your lifestyle change drastically due to budget concerns). It's the awesome opportunity to get completely fucked.
But if this HSA/whatever is some kind of compromise towards progress... well, hope it works.
That's encouraging too, although I bet it doesn't refill
at the same rate as topping it up yourself?
I think we Americans have a pretty good idea of how much the current situation sucks. The issue people worry about has three aspects (in a very oversimplified view):
1) How do we make it not suck for individuals? 2) How do we, as a society, stop spending 16% of GDP (and climbing) on healthcare? 3) How do we avoid some sort of explicit rationing?
People's worries are that a lot of proposed solutions for #1 seem to imply giving up on #2 or #3. I suspect the worries about #3 are overblown, but it's hard to say without doing an experiment of course.
Luckily, perhaps, experimenting on humans is considered acceptable in politics. ;)
And even if you did, one incident would wipe that account and you would need to replenish it ASAP.