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OPINION - The next health care problem: paying the deductible

by Chris Conley

NEWS BLOG (WSAU)  Suppose you had car insurance with a $50,000 deductible. If your car skidded off the road and crashed into a building, you’d be responsible for the first $50,000 in damage. Only then would the insurance cover the rest. If you didn’t have the money, the property owner would have to sue you to try to collect.

Of course those kinds of auto policies aren’t available. Deductibles usually range between $500 and $2,000 – just high enough to prevent frivolous claims. And for most policies the deductible applies only when you are collecting for damages, not someone else.

You are, de facto, uninsured or under-insured if you have no way of paying your deductible. Your policy is worthless if you can't pay that amount before your coverage kicks in.

Now consider what’s happening with health insurance. Bronze plans – the most affordable – have deductibles that were unheard of before ObamaCare. The average deductible is $12,500. At that level the people signing up for these policies should be means tested before they’re allowed to sign up.

Suppose a family of four is living on $45,000 a year. They’re a lower-middle income household. In Wisconsin they would not qualify for BadgerCare, but would qualify for generous tax subsidies that would pay for almost all of their health coverage in the ObamaCare exchanges. But this family would also have little or no disposable income. They’d likely sign up for the bronze plan instead of having to pay small monthly premiums out of their household cash-flow for a more expensive silver or platinum policy.

But if someone in this hypothetical family should get sick – a broken leg, perhaps – they might have to pay $5,000 out-of-pocket. There’s no way they'd that much money on-hand. One medical “incident” would wipe out all of their disposable income for a year. And they’d have to weather two or more similar medical bills before their insurance pays dollar-number-one. And then, under a bronze plan, their policy pays 60-cents out of every dollar. The other 40-cents is their problem.

This is like having no insurance at all. The insured can’t afford their end of the bargain. And many of these families may not be insurance savvy. How much they have to pay out-of-pocket could be a surprise.

Under this scenario, a family with insurance would be sued by the hospital to collect the uncovered part of the bill. Imagine the spot this household would be put in. They’d think… we did the right thing. We signed up for ObamaCare. Now we’ve gone to court and are having our paycheck garnished by the hospital. And all this is happening to us while we have insurance.  As this happens over and over again the medical community they’ll either demand that these high-deductible bronze plans no longer be offered, or they’ll push for a single payer system. Emergency rooms will figure out quickly enough that treating a low-income bronze plan family is no different than the old days when they’d have to treat people without insurance and no way to pay.

It’s cruel to ask families to pay insurance premiums when they won’t ever actually get benefits from their policy. They’d still face financial ruin over their medical bills – exactly what ObamaCare was supposed to prevent.

Chris Conley
12.9.13 

Image:  Man on stretcher, by U.S. Navy [Public domain], via Wikimedia Commons.