Two Things That Won’t Go Away – Even if the ACA Does

I’m delighted to announce the launching of Fontenotes, an e-newsletter focused on all the changes in health care- and what those changes mean for each of us.

Every other week I’ll be publishing brief articles that will explain something that is changing in our health care system- and why- and where all of this change is headed.

Today I’m going to start with two insurance practices that are causing a lot of confusion- high-deductible plans and narrow-network policies.

The Supreme Court’s pending decision in the King v. Burwell case threatens the survival of the Affordable Care Act [ACA] by challenging federal subsidies allowing millions of people to buy insurance on the Exchanges. The opinion from the Supreme Court resolving that issue (one way or the other) is expected the end of this month. In the meantime the country at large is still settling into a new era of insurance reform under the law- not always with positive feelings. In the midst of this unsettled time I would like to address two things the public hates about their insurance plans: high-deductibles and narrow networks. Americans have been led to believe the ACA created both- but it did not. Accordingly, killing the ACA will not stop these increasingly common industry practices.

High Deductible Insurance Plans
Many Americans are waking up to the reality of high deductible insurance plans, which are policies where the insurance will not kick in until the first health care expenditures- perhaps as much as $5,000 if not more- are paid by the patient. The net effect is families are paying out-of-pocket for office visits, prescriptions and other health care when they were accustomed to a small copay. Healthy people may not require enough care in a year to trigger the insurance they purchased- leaving them with a new experience of being “on their own” when getting regular check-ups and good preventive care. People who have greater need- such as families with a child who sustained an injury or a parent with a newly diagnosed disease – will eventually see their policy assist them – but they still need to get through the high deductible before they will get any relief. This is undeniably causing hardship for many households.

The difficulty of this adjustment is clear- what is not is where high deductible plans come from. The insurance industry loves to blame them on the ACA- but high deductible coverage is an insurance industry practice that predates the ACA by at least six years, as demonstrated by the 2003 Congressional creation of Health Savings Accounts, which by definition include a high deductible insurance policy as part of that program.

Another misperception is that the ACA mandates high-deductible insurance- but again that is false. In order to meet the low cost of plans as required on the Exchanges many of the policies offered are high-deductible plans- but that is not true of all ACA policies. Nor is it true that high-deductible plans exist solely in the context of the ACA. Employers have increasingly turned to high deductible policies to help defray the exponential increase in cost of offering health care benefits to their employees (the average employer-plan deductible more than doubled between 2006 and 2014). These are private choices by private employers- and are not mandated or controlled by the ACA.

Narrow Networks
Many Americans are also experiencing frustration trying to find a doctor who will care for them. It has become increasingly common for insurance companies to control their costs by reducing the number of physicians (as well as hospitals) available to patients covered by a policy. The physicians (and hospitals) cut out are those deemed to be more expensive- in effect the company is trying to steer their policy holders to cheaper care. In the insurance industry this is known as “running a narrow network”.  As an example, in 2013 United Healthcare removed 2,200 physicians from those available to their Medicare Advantage patients in Connecticut.

The practice is actually an old one- anyone who remembers the “closed model” HMOs of the 1990s will remember the public backlash over that attempt to drive people into narrow networks on an industry-wide basis. Those same companies often now blame the reoccurrence of narrow networks on the ACA-implying that the reduction of available care is mandated by the law- but that is not true. In fact the brewhaha over the ACA has just provided insurance companies with an excuse to return to a favored industry standard.

Waiting for the Decision
In the next few weeks we will have an answer about the future of the ACA when the Supreme Court releases its decision in King v. Burwell. This is happening at a point in time when many people are discouraged and angry about insurance industry practices that have become common in recent years. To the extent they are aware that the ACA may not survive many people anticipate returning to “the good old days” of easy access to care with minimal out-of-pocket outlay. This is an understandable hope as these are often the same people who are getting hurt by their high-deductibles and narrow network policies. The pain they feel is real- but as they may soon find out- killing the ACA is not the cure for what is ailing them.


What Does This Mean?

Deductible = The amount you owe for covered health care services before your health insurance or plan begins to pay.

For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services. (Healthcare.gov)

Exchanges = Health Insurance Marketplaces in each state where people who don’t have insurance through their job or a government program like Medicare or Medicaid can buy private insurance.

Federal Subsidies = To make coverage obtainable for families that otherwise could not afford it and to encourage broad participation in health insurance, the Affordable Care Act (ACA) includes provisions to lower premiums and out-of-pocket costs for people with low and modest incomes. (Kaiser Family Foundation)

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