Higher deductibles affecting healthcare

More companies push higher-deductible plans

As employers' profits nose-dive with the economy, health insurance deductibles, co-pays and premiums for workers all rise.

Experts and healthcare providers say the seesaw is influencing the way patients use doctors and hospitals and turning some decisions on which insurance plan to choose for 2009 into a cross-your-fingers proposition.

"People can't afford full-priced insurance, so they're opting for the high deductible, and then they're praying they don't get sick," said Dr. Serena Friedman, a general practice doctor in Simi Valley, noting the problems begin when the prayers go unanswered. "They put paying the doctor at the bottom of the list of the bills they're going to pay. It's getting worse month by month and year by year."

Data on health plan choices people are making for 2009 isn't available, but a study by Families USA said the average cost of premiums in California rose five times faster than the median income from 2000 to 2007.

Nationwide, premiums have more than doubled over the past decade, according to the Kaiser Family Foundation healthcare research group.

The rising cost and slumping profits cause employers to seek policies that have more affordable premiums but require people to pay more for care before treatment is covered.

Just less than one of five workers with insurance this year nationwide had plans with deductibles of at least $1,000, according to a Kaiser Family survey released in September. In small companies, more than one of three people had deductibles of $1,000 or more.

"Employees look at it as a takeaway," said Donald Jones, a Thousand Oaks insurance agent and president of the California Association of Health Underwriters. "They say, ‘I had a $500 deductible and now I have a $2,500 deductible.'"

'What's the point?'

The highest deductibles are often accompanied by health spending accounts that are exempt from federal taxes. Employers and employees make contributions to the accounts that can be used for any kind of care. Money not used within one calendar year rolls over.

Advocates say the plans allow people to stockpile money for future health needs while paying less in premiums. The plans typically cover preventive care and offer 100 percent coverage after deductibles are met, providing protection against huge bills.

Insurance providers said there's a gradual increase in the companies that are pushing high-deductible savings account plans, but the Kaiser Family survey shows only 8 percent of the nation's workers were covered by the plans this year.

Some observers cite reluctance from employers. Others point to workers scared of deductibles that can range from $1,150 to $5,800 for individuals.

"People wonder what's the point of getting health insurance if I have to spend a thousand or a couple of thousand of dollars to get benefits," said Anthony Wright of the Health Access California advocacy group. "There might be a good answer to that, but it's a hard sell to make."

Jones said that in Southern California more companies are sticking with traditional HMO insurance plans because the prices are still competitive. But many of the companies offering managed care are pushing more of their costs onto workers through higher co-pays and deductibles.

The rise in deductibles means some people will have to bring more than their insurance cards when they visit the doctor's office. They'll need money in order to get care.

"We'll treat them like a cash-pay patient," said Dr. Lewis Kanter, an allergy and immune disease specialist in Camarillo.

Cash can mean flexibility

Kanter said when people with high deductibles pay up front, doctors have more flexibility in offering discounts on prices contracted with insurance providers.

"I might give them 20 to 25 percent off on services if they give cash," he said. "We'll frequently play ‘Let's Make A Deal.' I'd rather give it to them at a discounted price instead of having them say I just can't afford it and not get it."

Some doctors in Ventura County expect to refer more patients to county programs for people who can't afford healthcare. They talk about handing out pricing lists that show where people can get the least expensive medicine.

Friedman said many doctors perceive the increase in deductibles and co-pays as more proof of a healthcare system that rewards insurance company executives at the expense of doctors and patients.

"Your plumber gets paid more than your doctor, and the doctor has your life at stake," she said, noting insurance companies might pay her $65 or less for a fairly complicated office visit. "Your hairdresser gets paid more."

High deductibles mean doctors who aren't paid up front have to collect from patients who can't afford to pay. That's one of the economic pressures forcing primary care doctors out of business, Friedman said.

"The frustration with the economics of healthcare has made me lean in a different direction. I now have a second profession," said the doctor, who makes wine in the Paso Robles area.

Tests, surgery postponed

Higher insurance deductibles may be one reason Los Robles Hospital & Medical Center in Thousand Oaks is busier at the end of the year and relatively quiet in January and February, said President Jim Sherman. People may put off elective procedures until they've paid off their deductible.

Doctors throughout the county tell stories of patients who postpone MRI scans and tests for cancer because their insurance won't cover the cost.

At Los Robles, patients with high deductibles are asked to pay before being admitted for most scheduled surgeries. But federal law mandates hospitals provide care to people who come to the emergency room.

Sherman said higher deductibles and co-pays may contribute to the costs of uncompensated care at the hospital.

"It's been rising about 5 percent a year," he said.

Insurance providers said high deductible plans are designed to get people to rely more on the preventive care that's often fully covered. They said the goal is to get people to shop for healthcare procedures like they do any other expenditure.

"They'll be acting more and more like consumers," said John Nelson, co-chief executive officer of Warner Pacific Insurance in Westlake Village. "They'll ask more and more questions of doctors and hospitals of what things cost or what are the alternatives. We know what it costs to fix a car, but we can't figure out what it costs to have a baby born?"

Gary Claxton, vice president of the Kaiser Family Foundation, predicted many doctors and insurers will resist revealing costs because they want to be able to charge their current rates.

The trend of consumers shouldering more insurance costs could be altered in the healthcare reform proposed by President-elect Barack Obama, Claxton said. But without that type of restructuring, he doesn't see change coming.

"As the economy just went to hell, this is not a time where employees are going to be able to negotiate for better benefits," he said.