Consumer-Directed Health Insurance: The Next Generation
An interview: John Rowe, a physician, is chairman and chief executive officer of Aetna, one of the nation’s largest insurance companies. James Robinson is the Kaiser Permanente Distinguished Professor of Health Economics at the University of California, Berkeley, School of Public Health.
Health Affairs
December 13, 2005
The Limits Of High Deductibles
Robinson: One of the criticisms of high-deductible products is that they are financially more onerous to high users of care than they are to the healthy. Healthy people don’t need much medical care, and so they won’t use much, whereas sick people do need medical care, and they spend more. High-deductible products reduce the subsidy from the healthy to the sick that operates through low-deductible health insurance.
Rowe: At this point, you know, we’re talking about two percent or so of the insurance pool being enrolled in these products, and so we haven’t reached the tipping point.
Robinson: How far, as you and your colleagues think about this, will the deductibles increase?
Rowe: Employers are still raising them. We haven’t hit the limit of cost sharing… Some people consider increases in the deductible to be a bad sign and believe there will be significant pushback from employees and that it won’t go much higher. But my sense is that for many employers, raising the deductible is the alternative to not offering insurance at all. And so I would not be surprised to see much higher deductibles in the small-business and middle markets. I don’t think you’ll see that in the larger corporate accounts, however.
We’re talking as if the products are uniform in the marketplace in high-deductible health plans, but they are not. In the market you see two very different types. You see plans such as the Aetna plan where the deductibles are moderate and where preventive services and medications and other things are out of the deductible and reimbursed on a first-dollar basis. But then you can also find, on the Internet, products with a $10,000 deductible-very-high-deductible health plans with nothing out of the deductible [in terms of preventive services and drugs]. Those are not the kinds of products we at Aetna think are in people’s best interest. Those are not the products that we sell.
Robinson: That’s an interesting distinction.
Rowe: They are giving high-deductible health plans a bad name.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.583v1
Comment: Checking the Aetna website for California, plans available include, amongst others, California PPO 5000, California High-Deductible PPO2 (HSA Compatible), and California PPO Value 5000. If you remain within the Aetna network of providers, these plans have a deductible of $5,000 for individuals and $10,000 for families. For care obtained out-of-network, the deductibles are $10,000 for individuals and $20,000 for families (plus fees beyond Aetna’s allowable schedule). The only listed services for which the deductible is waived are an annual routine OB/GYN exam (but no maternity visits), and up to $200 for an annual physical with a $25 or $50 copay (though in some plans the pharmacy deductible may be lower).
These may not be the kinds of products that, in Dr. Rowe’s words, “we at Aetna think are in people’s best interest,” but they do sell them.
By pretending that Aetna is not part of the problem, I would say that Dr. Rowe is himself giving “health plans a bad name,” and quite deservedly so. Even the best of the private insurers are catering preferentially to insurance purchasers rather than patients, by marketing products that abandon their primary role of providing financial security for those with health-care needs.
Clearly it is time to dismiss the private insurers as the stewards of our health care dollars. By establishing our own, single-payer, national health insurance program, we would establish policies that would ensure that health-care dollars be spent on… health care!