How Much Is Enough Health Insurance Coverage?
In 2016, almost 91 percent of the U.S. population had some form of health insurance. Forty-nine percent had health coverage through their employer, while 33 percent was covered through Medicare or Medicaid. Another 9 percent got insurance through private insurers or other public agencies, leaving only 9 percent of the American populace without insurance.
Less than one in ten Americans goes without health coverage of any kind. That seems like a reasonable number considering factors like financial status, job displacement and freedom of choice, but if you examine the percentage of insured, you will discover some troubling details.
One of the key achievements of the Affordable Care Act, commonly known as Obamacare, was that it provided affordable health insurance to more than 20 million Americans since its passage in 2010. However, a large portion of these newly insured are living with less financial protection than they need.
According to the Commonwealth Fund, almost 28 percent of those with health insurance in the U.S. were underinsured. More than half of these underinsured had problems paying off medical bills, and 45 percent skipped medical care due to cost.
Skyrocketing Health Deductibles
One of the biggest reasons why so many Americans are underinsured is that annual deductibles are too high. More employers are offering workers health plans that have lower premiums but also much higher annual deductibles, and more workers—as well as private consumers—are buying into these plans in an effort to save money.
Since 2011, the average family health insurance premium has only gone up 20 percent, while premiums rose 31 percent between 2006 and 2011, and 63 percent from 2001 to 2006. The slow rise in premiums in recent years is almost entirely attributable to employers switching to high annual deductible health plans.
Between 2011 and 2016, the average annual deductible for workers rose $486 to $1,478, an almost 50 percent leap. This means that people who are covered through an employer health plan are paying less to maintain their health coverage, but if they need to see a doctor, they are having to pay more of the expense themselves.
Unfortunately, the hidden costs of such high annual deductibles often prevent policyholders from accessing needed health care. With almost half of all workers on health plans with more than $1000 in annual deductibles, almost 41 percent report that they are unable to afford a $400 medical expense. This serious financial obstacle is creating other hidden costs; as more people avoid seeing a physician, many life-threatening conditions are going undiagnosed which will likely lead to much greater expenses when treatment is required.
Employers Are Recognizing the Problem
The switch to health plans began in 2003, when the Bush administration made changes to the tax code that allowed businesses to change their employee health plans. More companies made changes when the financial crisis hit; in an effort to save money, they skimped on employee premiums, saddling workers with more of the financial responsibility. The Affordable Care Act also added to this trend by offering tax subsidies to assist in signing up for health plans that often had unaffordable deductibles.
However, more companies are recognizing that putting such a financial burden on their workers that impacts their health is also deleterious to the organization. Although lower premiums may save the business a few dollars, it also jeopardizes the health of key workers as well as their financial stability. If workers stop taking medications or seeing their doctor, then their productivity at work could be impacted. If they can’t afford medical care, then they may lose their position due to bankruptcy or seek employment with a more generous company.
That is why some companies are taking action. The investment company JP Morgan has implemented a new health plan for employees making less than $60,000 a year that virtually eliminates annual deductibles. The pharmacy chain CVS adopted an employee health plan with high deductibles five years ago, but the company realized that high costs were preventing some workers from taking medications. CVS began offering free drugs to workers and has broadened the program recently; the company now recommends to its corporate clients that they do the same.
How to Live with High Deductible Health Coverage
If you or your spouse is enrolled in a health plan with high deductibles, there is still some hope. If both of you are young and healthy, then this kind of plan may be ideal for you. If you are unlikely to get sick, then you should save the money you might have spent on higher premiums for the coming years when a health plan with lower out-of-pocket costs makes more sense.
Use free services where you can. Almost all health plans provide for free annual checkups and preventive care like immunizations and mammograms. Just make sure that your physician knows you want the free care.
If you want to save money for any future health care expenses, then one of the smartest ways is a health savings account. Many employers have made them available to employees as a way to defray high deductible costs, but you can also set one up independently if you desire. You can save up to $3,400 for an individual or $6,750 for a family every year. You can roll over any funds you don’t use, and all deposits are tax-free.
You should also learn to shop around for the most cost effective health care service providers. This may not be easy since most providers rarely disclose their prices to the public. You may wish to check with your insurer to learn who is offering the best deals.
Finally, if you are concerned about coverage gaps in your current health plan, you should consider a supplemental health insurance policy. These plans are usually very affordable and cover out-of-pocket expenses including deductibles, copayments and coinsurance. Furthermore, they may also cover medical services that your primary plan doesn’t.
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