Cheap health insurance means higher deductibles

Maryalene LaPonsie | November 9, 2010

If you are struggling with costly health insurance premiums, you may be tempted to increase your deductible. After all, it is one of the easiest ways to bring your health insurance rate down. But you may want to think twice before making that call. Health care experts say it could end up costing both your wallet and your health more in the long run.

How high deductibles create cheap health insurance

Long ago, at a time that is but a distant memory for most of us, deductibles were counted in the hundreds instead of the thousands. You may have had to pay $250 out-of-pocket for doctor visits or prescription drugs before your medical coverage would kick in. Now, the LA Times reports that nearly 20 million workers -- a figure that has tripled in the last four years alone -- have deductibles of at least $1,000.

Companies use these high deductibles to reduce their risk. They are counting on you never reaching that deductible or least waiting until the end of the year before you hit that magic mark when your health insurance starts picking up the tab.

While small businesses are increasingly using high deductibles to lower their employee benefit costs, the lion's share of these policies are sold on the individual insurance market. It is there that you can find average deductibles of $2,500 for individuals and $5,100 for families, according to the Kaiser Family Foundation.

Some plans even feature deductibles coming in at a staggering $10,000. At that level, these plans are less about health insurance and more about catastrophic coverage in case you become seriously injured or ill.

Affordable health insurance means minimal health care?

It stands to reason that many members of these high deductible plans may be searching for ways to reduce their costs. Many are already paying hundreds in premiums, despite the high deductible, and an extra $300 for a physical and some lab work might not be in the budget.

This is a problem since instead of catching medical problems early, patients on high deductible plans often wait until their symptoms become acute or a disease has progressed from being easily treatable to life threatening. Mammograms, colonoscopies and blood work are some of the first items to go when individuals are paying for their entire medical cost out of pocket. Prescriptions to treat high blood pressure, diabetes or other chronic illnesses can also be a casualty of high deductible plans.

The federal government has stepped in to offer some relief by mandating that certain preventive services be covered by health insurance companies without any cost-sharing. That means that starting this past September, those annual physicals and other routine care will be covered entirely by your insurer without any deductible, co-payment or co-insurance attached.

In addition, the federal health reform will cap deductibles beginning in 2014. At that time, health insurance companies will be limited to imposing deductibles of $2,000 for individuals and $4,000 for families. Combined with the free preventive care, the reform provisions should help keep families healthy. Or they may push premiums back up and out of reach for many -- only time will tell.

Tags : health reform, high deductible health plans, catastrophic coverage

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