Friday, October 14, 2016

Higher Deductibles - The Black Hole of Coverage

In a recent post on Health Leaders Media, there was an interesting argument presented that these higher deductibles will backfire on insurers.  The idea is that as deductibles continue to climb, people will feel that they are not really benefiting from having insurance policies.  They will make decisions on health care based more and more on financial impact as opposed to health.  This in turn will force many people to not spend money on less critical health conditions. 
"The problem with high deductible health plans is you are shifting the decision making to the least informed, which is the consumer," says [Mike Ducote, chief operating officer of CirraGroup, a company that assists consumers with healthcare debt resolution]. "We're having to make these calls purely based on the dollars. I don't think that's a good recipe for success."
What does this mean?  Avoiding treatment for less severe medical issues can often lead to serious complications requiring even more extensive treatment.  So instead of reducing the costs of medical spending in our country by catching and treating illnesses at an early stage, higher deductibles are actually contributing to higher medical costs.

This is a nasty Catch-22.  To bring insurance costs down, deductibles continue to rise.  But these could create higher medical spending by discouraging early treatment.  Such higher spending will make the insurance companies look to contain their costs.

How do they do that? Increase deductibles and raise premiums.

Mandated coverage under the ACA was supposed to fix this due to the penalties for not having coverage.  The calculation can be complicated.  But in some cases, as detailed here, it can be cheaper to pay the penalty than it is to have coverage with a high deductible.  The number of such cases is likely to increase as the deductibles continue to rise.  If so, then this would create the very black hole of health insurance that everyone is trying to avoid.  

So, when deductibles are so high that it feels like a person doesn't have any coverage at all, then the consumer demand for such policies will decrease.  Higher deductibles may seem like a viable cost containment strategy when, in fact, it could backfire on insurers in a big way.

I'm sure most people would consider it a victory if deductibles and premiums just stayed where they are without any increases.  It would be more of a victory to consumers if deductibles fell even if premiums rose.  Hopefully there will be some smart people at the insurance companies to realize the diminishing returns of higher and higher deductibles.

Monday, October 10, 2016

Pre-Existing Conditions...Pre-Obamacare. Remember Them?

I am so f***ing tired of politicians claiming that Obamacare is an obvious disaster and failure without explaining why they think so.  It's true that it's not perfect.  Insurance rates and deductibles are rising.  Networks of available doctors are shrinking.  But how would you feel if you had type 2 diabetes and couldn't get coverage at all!

Doesn't anyone remember what it was like to have insurance companies tell you that your pre-existing conditions were being excluded from your policy for 1-2 years or that they were charging you double or, worse yet, they were denying issuing a policy entirely?

I have pre-existing medical conditions.  My family has them.  In fact, most everyone I know has one or more health issues.  Here are some sobering stats:

  • ~50% of all Americans have one chronic condition
  • 1 in 4 Americans have two or more chronic conditions
  • 7 out of 10 deaths in the U.S. in 2010 were due to a chronic condition

Change the word "chronic" to "pre-existing" and you'll see just how big an issue this is.

I suspect that most of the ACA critics are covered under group policies that did not permit  pre-existing conditions to prejudice rates or coverage.  Certainly politicians who decry ACA are all covered under such policies.  I wonder how they would feel if they were forced to carry individual policies (not group) and were at risk for such exclusions.

So if the ACA is repealed, some politicians believe that increased competition between insurance companies will prevent pre-existing exclusions from returning.  Without mandated coverage, I highly doubt that.  There was plenty of competition before the ACA  and that did nothing to prevent these exclusions.

So try to remember what it was like before the ACA only 6 years ago!  Then see if your finances could survive an emergency treatment for pre-existing condition (after you have been denied coverage) or not.

I can already hear my critics saying that the rising deductibles are like being denied coverage.  But even the higher deductibles that ACA plans now have will be a pittance if you have to have any type of surgery for a chronic condition that was denied coverage.  

So, please remember.

Friday, October 7, 2016

PSA Tests vs. a Poke in the...

Very publicly, Ben Stiller wrote last week about how a PSA test probably saved his life.  On the surface it seems like a no-brainer to get a PSA test every year much like it would be for a woman to get a mammogram every year after a certain age.

However, recommended test frequencies have changed for both tests and in the wrong direction, in my opinion.  The logic appears to be similar to both tests in that very early detection can lead to surgical solutions when less drastic (and less costly) solutions might suffice.  These procedures can have possible adverse side effects which, arguably, could have been avoided.  I can completely understand why there is an increase in cancer surgeries.   The "C" word still generates a knee-jerk fear that often leads people to say, as some of my friends have said, "Just cut the damn thing out."

The reality, at least with prostate cancer, is that it usually has a very slow growth rate and early detection does not show a significant positive impact on the survival rate.  According to the American Cancer Society, the 5 year survival rates (the typical bench mark for all types of cancer) are:

  • The 5-year relative survival rate is almost 100%
  • The 10-year relative survival rate is 98%
  • The 15-year relative survival rate is 95%

I don't know the statistics for all types of cancer.  But this seems about as good as it gets.   And these statistics were based on the traditional, annual PSA and other prostate examinations.  

But the other statistics from ACS about prostate cancer are sobering:
  • Prostate cancer is the 2nd most common cancer for American men (behind skin cancer)
  • 1 in 7 men in the U.S. will be diagnosed with prostate cancer during their lives
  • Prostate cancer is the 2nd leading cause of cancer deaths in men (behind lung cancer)
So, as a layperson, I simply can not see the logic of preventing the earliest possible diagnosis of cancer. If the recommendations to lower the frequency PSA and prostate cancer are designed to reduce the costs and the potential complications of unnecessary procedures, then, perhaps, I think it's up to physician's to help patients developed a reasoned response to a diagnosis of prostate cancer.