Kaiser Permanente follows the market
Contra Costa Times
Apr. 29, 2004
Kaiser adds deductibles to some insurance plans
By Judy Silber
Kaiser Permanente is the last large insurer to add deductibles to individual insurance plans purchased by people without coverage through work. By forcing consumers to pay for more of their care, deductibles lower monthly premiums…
“If we don’t follow the market, people will lose access to health care”, said Christine Paige, Kaiser’s senior vice president of marketing. “We have members who have been here their entire lives. We don’t want to abandon them as the market changes.”
Kaiser has set its deductibles relatively low compared with what’s offered by other insurers. Other insurers offer plans with deductibles as high as $5,000. But Kaiser’s deductible will be $1,500 for individuals, $1,000 or less for small employers and $1,000 initially for large firms.
But Karen Pollitz, a senior health policy researcher at the Health Policy Institute at Georgetown University, noted that deductibles contradict Kaiser’s mission of removing — rather than erecting — barriers to care.
“It’s too bad because Kaiser wrote the book on managing health care and disease,” Pollitz said. “I think they just made their task a lot harder.”
For people who don’t visit the doctor often, deductibles can lower overall out-of-pocket costs by decreasing the amount paid for monthly premiums.
But for those in need of care, deductibles add to their cost burden. Pollitz worries that will discourage people, especially those with chronic diseases, from seeking care.
Kaiser felt pressure to offer the deductible plans because it was losing members, Paige said. They (high-deductible plans) are an industry standard for the individual market, and employers are increasingly considering them as an option to stabilize premiums.
http://www.contracostatimes.com/mld/cctimes/business/8547735.htm
Comment: Rather than addressing health care costs, insurers and purchasers have narrowed their attention to the price of health insurance premiums in order to make health insurance affordable. The tragedy is that, as health insurance plans become more affordable, health care is becoming much less affordable for precisely those individuals with significant health care needs because of the dramatic increases in out-of-pocket expenses that they are facing.
Kaiser Permanente did not have much choice. Their competitors, especially Blue Cross and Blue Shield, have dominated the market with low-premium,high-deductible plans. Individuals with significant needs were selecting Kaiser because of its comprehensive coverage. By concentrating high-cost patients within their plans, Kaiser was faced with the prospect of driving premiums up even further and then losing market share because of unaffordable premiums (the “death spiral” of insurance premiums). Using standard market principles, they were forced to offer a competitive-market insurance product.
The marketplace, by making health plans affordable, has made health care unaffordable for those who need it. The unintentionally perverse, amoral nature of market dynamics has established the principle that the marketplace is not the proper environment to guide the financing of health care.
In sharp contrast, a universal program of social insurance would ensure that health care would be affordable for all who are in need. Isn’t that what we should be striving for?