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Taming the deductible: Health insurance's not-so-hidden cost


@patriciaborns  When Dennis Adams' non-profit dance company offered a health insurance plan with a lower monthly premium, the 20-something Californian jumped at the chance. So began a PBS look at the quiet rise of high deductible health plans, where the trade-off for low premiums is high out-of-pocket deductibles of $2,500 to as much as $20,000 before benefits begin.

In order to make their pricing more palatable to consumers, insurance companies use high deductible plans, often coupled with health savings accounts where you can stash money tax-free to help pay the deductible if, as happened to Adams, you become injured or ill.

The chart below shows graphically what PBS called the "quiet revolution" -- a skyrocketing growth in the out-of-pocket deductibles people must pay before they can tap into benefits. From 2008 to 2013, while premiums rose roughly 30 percent, deductibles rose almost 80 percent. The result, as the Washington Post reports, is an unprecedented amount of medical indebtedness among Americans with high deductible healthcare plans offered through their employers.  

One of the less talked about promises of the healthcare plans coming to the exchanges on Oct. 1st is -- or was -- a limit on what an insurance company can require consumers to pay in out-of-pocket costs. Plans purchased on the exchange must cover at least 60 percent of the allowed medical expenses. The annual out-of-pocket spending was not to exceed $6,350 for individuals or $12,700 for families. And the plans had to offer benefits like doctor's visits and wellness screenings you could use right away, without satisfying a deductible. 

For employees in group plans, that changed in a little-discussed delay that the Obama administration has granted for some insurers to continue offering plans with unlimited deductibles until 2015. As the New York Times reports, "many group health plans will be able to maintain separate out-of-pocket limits for benefits in 2014. As a result, a consumer may be required to pay $6,350 for doctors’ services and hospital care, and an additional $6,350 for prescription drugs under a plan administered by a pharmacy benefit manager."

Individual health plans will still have the benefit cap. But in the large employer sector where insurers make most of their profits, the high deductible bear is proving harder than the Obama administration counted on to wrestle to the ground.


Premium rates versus deductibles




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