The health insurance deductibles are too damn high

I think we may have found a new cause for this dude. (Image Credit: "Jimmy McMillan Blue 2 2011 Shankbone" by David Shankbone - Own work. Licensed under CC BY 3.0 via Wikimedia Commons)

I think we may have found a new cause for this dude. (Image Credit: “Jimmy McMillan Blue 2 2011 Shankbone” by David Shankbone – Own work.)

According to a new analysis from the Kaiser Family Foundation (KFF), many households don’t have enough readily-available savings to cover common deductibles contained in health insurance plans. The non-profit organization pulled data from the Consumer Finance Survey to assess financial viability for meeting these obligations, and broke down their findings by relative federal poverty line status, household, and type of coverage.

The broader picture is, at once, troubling and unsurprising:

8699-figure-4And here’s KFF’s accompanying summary:

Overall, three in five (63%) households have enough liquid financial assets to meet the lower deductible amounts while one-half (51%) can meet the higher deductible amounts (Figure 4). These percentages are similar for single-member and multi-member households, but vary significantly by family income. Only 32% of households with incomes between 100% and 250% of poverty can meet the lower deductible amounts, while one-in-five can meet the higher deductible amounts. In contrast, 88% of households with incomes over 400% of poverty can meet the lower deductible amounts and three-in-four (79%) can meet the higher amounts.

The ability to cover the cost of a deductible is, predictably, easier for those with more income. But even with a mid-range deductible (an amount far less than what I saw shopping on healthcare.gov for individual plans without subsidy assistance) less than two-thirds of those earning 250 percent to 400 percent of the federal poverty line have the financial liquidity to cover their obligations. For a family of four in 2013 that would’ve been an annual household income of $58,875.00-$94,200 — which is not exactly destitution. I often frame my commentary with an outlook towards lower-income policy challenges, but this type of information should definitely concern those (ahem, Dems) who’d like to focus on middle class political pitches.

It almost goes without saying that low-income households face a higher burden in this matter. Roughly a third are able to cover their mid-range deductible, and only 20 percent could pay in the higher-range — and frankly this is probably more common because it would most likely accompany lower monthly premiums. Individuals and families at the bottom end of the income spectrum are going to be much more price sensitive on this point. This should give great pause to those who advocate introducing a lower-metal tier in the federal marketplaces, what would be a ‘copper’ level if you will, to drive such premiums even lower. They would almost certainly include deductibles far and above what’s listed here, and would further prove what KFF concludes in their analysis, that “as we extend private coverage to more families with lower incomes and limited resources, we need to be cognizant of their financial capacity to use the coverage that they are being asked to buy.”

If you’re looking for how much “skin in the game” could be too much in term of future health care reform efforts, this is a fair picture to keep in mind. As my mom often told me when things were rough ‘you can’t squeeze blood from a stone.’ So maybe our policy should reflect that well-trodden truism.

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One response to “The health insurance deductibles are too damn high

  1. Pingback: On health care coverage and skin in the game | Punditocracy·

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