Most Americans can shop for health insurance only in a narrow window, the “open enrollment” period that generally overlaps with pumpkin spice season. For seniors, Medicare open enrollment began last month and runs through December 7, and most companies allow employees to change their insurance options at some point in the autumn.
Shopping for health insurance can be dizzyingly complex: understanding what physicians are covered (and how) is critically important, as are similar questions about which medicines are covered (and how).
In addition to who and what is covered, consumers should include deductibles as part of calculus, as the deductible defines exactly how much financial pain an insured individual must suffer before getting the full benefit of his or her policy. They also should consider variables such as out-of-pocket maximums.
But many Americans simplify the process by looking at only one number: how large is the monthly premium they’re asked to pay? The idea that premiums are the only number that matters was reinforced last month when Kaiser Family Foundation headlined their voluminous assessment of employer-sponsored insurance with the news that premiums were flat in 2022.
Media followed suit. CNN said that meant this was “good times” for policyholders. Axios said the numbers were a sign that this year was “stable.”
But all of this attention around premiums obscures the larger – and potentially more damaging – trend of more Americans paying for more of their medical care themselves. According to the same KFF survey, average deductibles for individuals rose about $100 for those who have deductibles.
And yet, this crisis in cost-shifting is often ignored. CNN said deductibles “only inched up.” But that’s not right: the number was almost 6% higher than 2021, and it was the biggest jump since 2016. Taking the longer view, the average deductible has tripled since 2006. It’s hardly a matter of inches.
The problem with skyrocketing deductibles is twofold. First, there is extensive literature that shows that forcing patients to share more of the cost of their health care leads them to avoid the health care system altogether. Deductibles don’t discourage low-value care. They discourage all care, and that too often boomerangs back into poor outcomes. (Or, in the simple terms the New York Times used in a headline this summer: “Deductibles Are Ridiculous.”)
Second, rising deductibles place additional burden on the sickest patients, given that patients are only socked with deductibles (and other cost-sharing) when they seek medical attention. It’s exactly backwards from the way that insurance is supposed to work.
So what can be done to deal with dizzying deductibles? For consumers, it starts with awareness. Nearly half of all Americans can’t properly define what a deductible is, so education is key. Assessing insurance options based not only on the month premium number but looking more broadly at how deductibles and other out-of-pocket spending might impact personal finances is critical.
For employers, deductibles might be an unavoidable part of the benefit packages that are offered by insurance companies, but there are ways of thoughtfully reducing the anti-patient reality of the practice. The government allows many critical preventative services to be offered without a deductible, and new research funded by NPC suggests that carving out those exceptions has only a minimal impact – if any – on premiums.
It's clear that health care is best when education, transparency and fairness all align, making the examination of deductibles – why they exist and why they’re growing – critical to building a more equitable system for all.
Sharon Phares, PhD, MPH, is Chief Scientific Officer of the National Pharmaceutical Council (NPC) and Rochelle R. Henderson, PhD serves as Vice President of Research.