Dilemma over deductibles: Costs crippling middle class
Alexandria Burris, Laura Ungar and Jayne OfDonnell
11:33 a.m. CST January 5, 2015 - Shreveport Times
Regina LaVarry, of Shreveport, uses mustard and vinegar as home remedies to
help manage her high blood pressure. She also takes half of the prescribed
dosage of her diabetic medicine to stretch it. Sometimes, she won't take the
medication for several days to make it last.
Her reason for doing this is the $500 health insurance deductible — which she
can't readily afford on an hourly wage of approximately $11 an hour. Add to that
co-pays for medication and other out-of-pocket expenses she must pay for health
care, LaVarry finds herself choosing between whether to buy medication or pay
other bills.
"I have to be cautious and make sure I don't go to the hospital," she said.
"Because let's say I have to go see the doctor, I might not have the $25 co-pay
so I have to treat myself at home."
Physicians such as Praveen Arla, who helps his father run a family practice
in Hillview, Kentucky, are witnessing a reversal of health care fortunes: Poor,
long-uninsured patients are getting Medicaid through Obamacare and finally
coming to his office for care. But middle-class workers are increasingly staying
away.
"It's flip-flopped," says Arla. Patients with job-based plans, he says, will
say: "'My deductible is so high. I'm trying to come to the doctor as little as
possible c What is the minimum I can get done?' They're really worried about
cost."
It's a deep and common concern across the United States, where employer plans
cover 60 percent of working-age Americans, or about 150 million people. Coverage
long considered the gold standard of health insurance now often requires workers
to pay so much out-of-pocket that many feel they must skip doctor visits, put
off medical procedures, avoid filling prescriptions and ration pills — much as
the uninsured have done.
In recent Commonwealth Fund survey found that four in 10 working-age adults
skipped some kind of care because of the cost, and other surveys have found much
the same. The portion of workers with annual deductibles — what consumers must
pay before insurance kicks in — rose from 55 percent eight years ago to 80
percent today, according to research by the Kaiser Family Foundation. And a
Mercer study showed that 2014 saw the largest one-year increase in enrollment in
"high-deductible plans" — from 18 percent to 23 percent of all covered
employees.
Meanwhile the size of the average deductible more than doubled in eight
years, from $584 to $1,217 for individual coverage. Add to this co-pays,
co-insurance and the price of drugs or procedures not covered by plans — and
it's all too much for many Americans.
Rhonda Stanford, another Shreveport resident, said she has a wellness checkup
once a year.
Other than that, Stanford considers her Blue Cross Blue Shield health
insurance a reserve for catastrophic life events such as major illnesses or
injuries. Stanford has a $5,000 deductible she must pay out-of-pocket first
before her insurance, which only covers major medical expenses, picks up 80
percent of the cost.
Minor medical costs, not covered by the insurance, are paid out-of-pocket,
said Stanford, who's three adult children also are covered under the plan.
"Fortunately, we haven't had any catastrophic health events that have caused
us to reach that deductible," she said.
Meanwhile, Holly Wilson of Denver, a communications company fraud
investigator who has congestive heart failure and high blood pressure, recently
went without her blood pressure pills for three months because she couldn't
afford them, given her $2,500 deductible. Her blood pressure shot so high, her
doctor told her she risked a stroke.
And LaRita Jacobs of Seminole, Florida., who gets insurance through her
husband's job and has an annual family income of $70,000, says $7,500 a year in
out-of-pocket costs kept her from dealing with an arthritis-related neck problem
until it got so bad she couldn't lift a fork. She's now putting off shoulder
surgery.
"How did we get to this crazy life?" asks Jacobs, 54. "We're struggling to
pay our bills like we were struggling when we first got started."
Why is this happening? Many patients and doctors blame corporate greed — a
view insurers and business leaders reject. Some employers in turn blame the
Affordable Care Act, saying it has forced them to pare down generous plans so
they don't have to pay a "Cadillac tax" on high-cost coverage in 2018. But
health care researchers point to a convergence of trends building for years: the
steep rise in deductibles even as premiums stabilize, corporate belt-tightening
since the economic downturn and stagnant middle-class wages.
"It's a case of companies trying to offer workers health insurance and still
generate profit," said Eric Wright, a professor of sociology and public health
at Georgia State University. "But whenever costs go up for the consumers across
the board ... it promotes a delay in care."
Others disagree, saying that when people pay for their care, they shop more
intelligently. Chris Riedl, Aetna's head of product strategy for its national
accounts, says her company's research does not indicate that insured patients
are showing up sick in emergency rooms with long-neglected illnesses — which to
her means, "intuitively, they're not avoiding care."
But many doctors contend it's only a matter of time before the middle class
begins crowding ERs. They say putting off care can be dangerous, exponentially
more costly and, if it continues and spreads, can threaten the health of the
nation.
Monitoring the trend
'Can I stop taking this
medication?'
Praveen's father, Mohana Arla, says being forced to pay so much out-of-pocket
"is as good as not having insurance" in an era of ever-rising health care costs.
Inpatient care last year averaged $17,553, and insurance plans require people to
pay a portion of that even after meeting their deductibles, up to an
out-of-pocket maximum that can easily exceed $10,000 a year for families. Median
household income in the U.S. is around $53,000, and the average American has
less than $6,000 in savings, according to a 2012 report by Pitney-Bowes
Software. A quarter have no emergency savings at all, Bankrate.com reported in
June.
"Health expenses tend to come up unexpectedly, or if you have a chronic
condition, they come up relentlessly," adds Karen Pollitz, a senior fellow at
Kaiser. "People put off care or they split their pills. They do without."
Mounting evidence backs that up:
•Nearly
30 percent of privately insured, working-age Americans with deductibles of at
least 5 percent of their income had a medical problem but didn't go to the
doctor, the Commonwealth Fund found. Around the same percentage skipped
doctor-recommended medical tests, treatments or follow-ups.
•Nearly
half of middle-class workers skipped health care services or fell into financial
hardship because of health expenses, according to a survey by the Associated
Press and NORC Center for Public Affairs Research.
•Use
of hospital care among insured workers has been dropping since 2010, and use of
outpatient care, such as doctor visits, dropped slightly for the first time from
2012 to 2013, according to insurance claim data analyzed by the Health Care Cost
Institute.
•Medical
professionals across the USA see the reality behind the research. The Arlas'
patient load used to be 45 percent commercially insured and 25 percent Medicaid;
those percentages are now reversed. Stan Brock, founder of Remote Area Medical,
which runs free clinics around the nation, says the group's volunteer workers
found that around 7 percent of patients who came to one of the clinics had
job-provided insurance — and some waited for days just to keep a prime spot in
line.
Patients often do a sort of medical and financial triage when they get sick.
Jacobs, a former college professor, says every time a doctor suggests a new
test, procedure or medication for her severe arthritis, she asks herself: "'Is
it critical?' You're always playing the odds ... And I'm constantly asking my
doctor: Can I stop taking this medication?"
When her shoulder started hurting a couple of years ago, she had an X-ray but
put off the recommended MRI for two years. It worsened, and she couldn't move
her arm without pain or lift her right hand above her head. She finally got that
surgery in October but is now forgoing a shoulder procedure, opting for less
expensive physical therapy and planning to "tough out the pain."
"You don't want another surgery c another bill," she says. "It may be more of
a problem later, but that's the risk you take."
While all out-of-pocket expenses play a role in such decisions, experts say
the driving factor is the deductible, which averages $2,000 or more for single
coverage for nearly one in five workers and from around $2,000 to $4,500 for
families, depending on the type of plan. Companies may help fund health-savings
accounts to pay some of these costs, sometimes with only a few hundred
dollars.
"I can remember when $1,000 was considered a high-deductible plan. Now that's
become kind of the norm," Pollitz says. "We're kind of in high-deductible
land."
The cost shift extends to workers in government jobs, long known for
bountiful benefit packages. Though LaVarry works at the Shreveport Police
Department taking non-emergency reports, she's not a civil service employee.
Instead, LaVarry's primary health insurance is through the city. She says
it's not enough to cover a pending operation she must have. In anticipation of
future medical bills and the time she'll take off from work, LaVarry purchased a
supplemental health insurance in November.
Lee Curry, a sheriff's deputy in Bullitt County, Kentucky, says his county
health plan comes with a $1,500 deductible, which keeps him from going to the
doctor at all.
"Health insurance doesn't cover much of anything until you cover your
deductible," says Curry, 54. "It puts a burden on you. You've got to have the
money to be seen."
Is Obamacare to blame?
Stagnant salaries also skew
budgets
LaVarry said she first signed up for health care coverage after the
Affordable Care Act passed.
"I realized after taking that on it made me short on my rent or other bills
that I have to pay," she said. She takes medicine for diabetes, high blood
pressure and was recently taken off her cholesterol medication. She said they
range in cost from $4 to $10. But given her pay, she'd have to work at least one
hour to cover the co-pay for a $10 prescription.
"Sometimes when it's time for a refill I have to borrow the money to get it
filled," she said.
Since the ACA took effect, "there's been an accelerated movement" to these
types of health plans, says Brian Marcotte, president and chief executive
officer of the Washington, D.C.-based Business Group on Health.
Marcotte, whose group represents 400 large employers, says that the looming
Cadillac tax is one factor but acknowledged that managing health care costs is
another.
Companies have cited the ACA for cutting medical benefits in other ways. For
example, United Parcel Service partly blamed the law when it removed thousands
of spouses from its plan because they are eligible for medical coverage
elsewhere.
But DeAnn Friedholm, director of health reform for Consumers Union, says
she's skeptical when employers point to the ACA. "This isn't new," she says.
"Companies have been cutting back on benefits and cutting costs for
decades."
Sara Collins, vice president for Health Care Coverage and Access at the
Commonwealth Fund, says two ACA requirements — keeping children under 26 on
their parents' plans and covering preventive care — didn't add much to
companies' health care tabs, partly because most already covered preventive care
such as physicals and mammograms. Pollitz says the ACA actually holds down the
consumer burden by capping out-of-pocket expenses at $6,300 a person — which,
although that amount is "more than most people have in the bank," is better than
no cap at all.
Experts point out that the ACA requires preventive care to be covered fully
and exempt from deductibles — although surveys show many workers still forgo
screenings and physicals because they're unaware of this or know they can't
afford follow-ups if illnesses are found.
Several experts say the consumer crunch has less to do with the health system
overhaul than stagnant salaries. The average hourly wage is nearly identical to
what it was 50 years ago in today's dollars: $19.18 in 1964 compared with $20.67
in 2014, according to U.S. Bureau of Labor data analyzed by the Pew Research
Center. Meanwhile, U.S. health spending ballooned from 5 percent of gross
domestic product in 1960 to 17 percent in 2013.
"People are very close to the line in terms of their budgets," Collins says.
"What consumers are really seeing is their incomes have grown even slower than
the slower growth in health care costs" in the past few years.
Insurers also blame the cost of care, saying that can't be absorbed just by
premiums. But Wilson and other patients put much of the blame on insurers.
"Insurance is all about the dollar," Wilson says. The never-ending cost shift
to consumers "is something that basically all kinds of people screwed up ...
Obamacare is a step in the right direction. But it's not enough. I expected more
out of it than I got."
The ugly side effects
A spiral of painful debt
When consumers skip care, they enter a downward spiral that imperils their
physical and financial health.
Jennifer Ross, an arthritis sufferer in Florida insured through her husband's
job, says she recently made the wrenching decision not to take a medication that
might allow her to get around without her wheelchair. The $2,400-a-month
medicine would cost her $600 a month out-of-pocket even with insurance, and she
simply can't swing it. To make matters worse, Ross' 12-year-old daughter was
recently diagnosed with arthritis, too.
"It's a no-win situation," Ross says.
LaVarry, in Shreveport, opted for supplemental insurance to help cover the
cost of pending surgery. She said she would rather pay for additional health
insurance than be straddled with gaps in health insurance coverage.
Her daughter also helps with out-of-pocket expenses when she can, LaVarry
said.
"Even though I work, it has costs me more to go to the doctor than it did
before I got insurance coverage," she said.
Surgeon Paul Ruggieri of Fall River, Massachusetts, says his patients with
high-deductible plans often blanch at the out-of-pocket cost to electively treat
two common ailments he sees regularly — gallstones and hernias — until they
become potentially dangerous and costly emergencies.
If the procedures are done electively, patients are required to pay half of
the cost upfront; a hernia repair done laparoscopically would cost about $4,000
at a surgery center. That's often about the amount of some patients'
deductibles, so they would have to pay the full bill out-of-pocket. If the
procedure is done at a hospital, even laparoscopically, it can cost as much as
$17,000. If patients delay and are rushed to the emergency room for the
procedure, the hospital would charge at least two to three times the amount of
the surgery, Ruggieri says. It would also mean a two- to three-day hospital stay
vs. two hours for the elective procedure, and much longer at-home
recuperation.
Paul Ruggieri, with medical assistant Monica DePonte, is a surgeon who sees a
lot of hernia and gall bladder patients who put off care until it becomes an
emergency.
Ruggieri sees the same issues with gallstones, which are simple to treat
electively before they get so painful a patient can't stand it anymore and heads
to the ER.
When patients do get needed care, some find themselves in massive debt. Kim
Brown, an administrative assistant in Louisville who was earning about $40,000 a
year, owes many thousands — the bills are still coming, so she doesn't know
exactly how much — after battling thyroid cancer. She says her annual
out-of-pocket costs are $7,500, and she also has to pay 15 percent for things
like hospital stays. No longer able to work because of her illness, she
reluctantly signed up for Medicaid and will likely declare bankruptcy.
'Skin in the
game'
The push for preventive
care
"I've worked for 35 years. I never wanted to go on Medicaid," says Brown, 50.
"It's horrible. I paid for insurance for all those years, and still ended up in
this situation."
Insurers, employers and others say that many stories are the exception and
that high deductibles generally encourage consumers to seek the best value for
their dollar.
"By having deductibles, it puts skin in the game," says Divya Cantor, senior
clinical director for the insurer Anthem in Kentucky.
Joel Diamond, a Pittsburgh primary care doctor, thinks high-deductible plans
are a smart choice for people who can't afford higher premiums and are generally
in good health.
He cites the case of a young woman who couldn't afford insurance on her own
who stopped having periods and went to the emergency room with severe headaches.
Diamond discussed doing testing for possible ovarian and endocrine problems.
When blood work showed abnormal levels of the hormone prolactin, he recommended
an MRI to rule out a pituitary tumor. Her bill for just a few hours in the
emergency room was $15,000, something that will take her years to pay off.
If she had had a high-deductible plan, he says, it would have paid for a
large chunk of the cost, and her debt could have been a third to half as
much.
"We don't have car insurance for windshield wipers and oil changes, but we
need it for the catastrophic stuff, just like our health care," says Diamond,
who is also chief medical officer for the health care IT company dbMotion.
Aetna's Reidl says her company allows people to compare prices easily on its
website. Some tests, for example, could cost hundreds of dollars or less at some
hospitals and thousands at others.
Aetna, the first national insurer to move to high-deductible plans — which it
coined "consumer-directed plans" — more than a decade ago, says the plans help
employees and employers save money.
Reidl says she has heard the criticism that they "may cause some individuals
to put off care," but counters that Aetna members with these plans get routine
preventive care and screenings at higher rates than those with other plans. And
their employers save an average of $208 per employee per year after they switch
to high-deductible plans.
"We've seen that over 10 years consistently," she says.
Aetna recommends companies pair the plans with health reimbursement or
savings accounts — which allow employees to set aside tax-free money to use for
cost sharing — to ease the burden of out-of-pocket costs on employees.
But Wendell Potter, who used to work in public relations in the insurance
industry and has since written a book about the experience called "Deadly
Spin," says insurers who study high-deductible plans are "not disclosing
everything they find."
"They do these reports based on their populations to try to sell more of
these plans to employers," he says. Population-based reports don't necessarily
reflect the fact that "individuals and families are having to file for
bankruptcy because they are in their plans."
Potter left his public relations job at Cigna in 2008 in part because "I was
expected to be a champion" of high-deductible plans. He says these plans are
"taking us in the wrong direction ... back to a system that we would have
thought the ACA prevented."
The future
Will time heal all?
There are no signs high deductibles are going away. The Centers for Medicare
and Medicaid Services last month cited these plans as one of the reasons health
care spending hit a record low in 2013. But CMS statistician Micah Hartman says
his office is "not looking forward to what the impact would be going forward" if
consumers who delay care need far more expensive emergency care later.
Meanwhile, experts say Americans will need to take further steps to control
their health costs.
Wilson, the Denver patient, says that after her doctor scolded her for
stopping her blood pressure pills, she now takes them daily. But keeping up with
her six medications is a constant struggle given her $33,000-a-year income, so
she copes by asking for samples from the doctor, using a prescription discount
plan and sometimes buying just a few pills at a time.
Doctors and doctor groups say such individual coping strategies can be
helpful, but action is needed on a national level. The American Academy of
Pediatrics recently came out with a policy statement saying high-deductible
plans "may be a less desirable way to lower health care costs than other means c
even if 'other means' require more work by government, insurance companies and
other health policy participants."
They say policymakers should consider requiring that the plans cover only
adults, not children, as adults may suffer more from reduced care. The group
also suggests exempting outpatient care from deductibles and requiring employers
to put a lot more money in health-savings accounts that go with the plans.
Oncologist Ezekiel Emanuel, the former special adviser for health care policy
to the director of the Office of Management and Budget, says insurers and
employers moved to high-deductible plans rather than trying to come up with "a
more intelligent plan design."
Emanuel, who is considered an architect of Obamacare, says that he is "not a
fan of high-deductible plans" and that what's needed are "smart deductibles"
that don't discourage people from using the services they really need to stay
healthy. He cites the preventive care visits that aren't subject to deductibles
under the ACA.
Higher deductibles, he says, should apply to "discretionary services" like
knee replacements and low or no deductibles should be for important treatment
such as for insulin or ophthalmologist visits.
But Wright, the Georgia professor, says he doesn't see any major changes on
the near horizon.
"I wish I could be optimistic, but I'm not sure," he says. "There's a lot of
reason to be worried about the future."
Story updated at 11:32 a.m. to correct earlier version. Regina LaVarry
uses mustard and vinegar to manage her high blood pressure.