The insurance companies are implementing a strategy that will help lower health insurance premium increases over time, and their strategy is going to be tough to accept for the general public. This strategy is through silver plans, which give most of insured larger deductibles and cost sharing responsibilities. On the surface this enrages the average person who in the perfect world would have no deductible, or costs associated with going to the doctor. “Why would I pay for health insurance if I have to pay out-of-pocket when I go to the doctor” is the typical response when picking a plan. People have grown accustomed to this because it is the way it has always been, until recently. Well, insurance companies have figured out that this old system of low deductibles will not work long term if we want to keep health insurance costs reasonable. Insurance companies are now even pricing these silver plans to be enticing to the consumer. Fundamentally there is no way to avoid this initial outrage of the insured because it is change, which most people do not accept willingly.
These actions are necessary for a couple of reason that will help ensure the stability in health insurance premiums. One of these reasons is that if a person knows that they will have to pay for some of the costs when going to the doctor. Then they are less likely to see a doctor for ailments that can be treated without seeing a doctor. With a free or low cost doctors visit often times the patient will go see that doctor for an ailment that is minor and does not require a doctors services.
The other is a more obvious reason, and that is if the plans were to remain the same with low deductible and low of pocket costs then the premiums would reach unaffordable levels. After all the medical costs we accrue as a nation are astronomical, and the money does need to come from somewhere. In saying that, this solution will actually decrease the spending that we create on medical services by deterring our overuse of going to the doctor. Insurance companies hire employees called actuaries to help determine these risks. What their actuaries have told them is that people with larger deductibles and cost sharing are less likely to see a doctor. In turn this helps the entire system that cannot afford for everyone to see a doctor for just a minor illness.
Simply going to the doctor twice a year for a minor illness will use the entire premium paid by an average individual for an entire year. Let alone some of the much larger bills that will likely never be paid for by a person’s premiums. It’s not a matter of the insurance companies or Obamacare that is driving up healthcare costs. Instead it is the overuse of the healthcare system and how expensive going to the doctor has become as medical science has advanced. This is not because of insurance companies, but rather the costs of medical equipment and other related costs. Do you want to use a doctor that saves money by using less than adequate equipment or services? Or how about a doctor who is less qualified, and who offers discount rates because of his limited education?
The vast majority want their cake, which is lower deductibles and copays, but they also want to have lower premiums for that coverage. When they realize that this is not possible they immediately look at Obamacare to blame. In actuality the entire system was heading for this train wreck long before because medical costs greatly outweigh the premiums that are paid in by health insurance premiums. Take just one patient who is in ICU and can quickly rack up 100’s of thousands of dollars in doctors’ bills. One of two things happens in this instance. They have medical insurance and pay far less in monthly premiums than their insurance had to pay out for hospital and doctor bills. The other option that happens all too often is the person is not medically insured and now has a bill that would likely never be paid in full by the patient. This can result in even more things that hurt our entire economy as whole, such as medical bankruptcy or unpaid doctors’ bills.
The solution is to keep the monthly premiums for health insurance at a manageable cost but let the patient pay for the first portion of their coverage motivating them to not see the doctor unless it is truly necessary. Much like if we have car insurance and have a minor dent we do not make a claim because it will not only be covered under the deductible, but it will also higher our premium costs in the long run. I take this stance not to prove any one right or wrong, but rather to bring up a discussion that has a lot of give and takes with no one solution. Next time you are going over your health plan complaining that the coverage is not what it used to be take a step back and realize that at least you cannot be declined for health coverage and your plan will not run out of money when you need it the most.
-Written by Timothy Hirsch, Omni Insurance Brokerage
