A Cruel Hobson’s Choice
Published in The Journal Record
November 18, 2015
Recently I had a minor fender bender with another car. Since no fault was assigned by the investigating officer, my insurance company agreed to pay for my repairs. When I picked up the car the body shop had a promise to pay from my insurance company but would only release my car after I had paid my $200 deductible. They, therefore, had no risk for the work done on my automobile.
Compare this to the whole subject of deductibles in health insurance. What is very clear is that as deductibles increase utilization of health care services decreases. We are on the verge of seeing huge explosions in deductibles. The most popular plan on the Affordable Care Act-generated health exchange web site is the Bronze Plan which often has deductibles higher than $1,000. In addition, employers are moving to significantly higher deductibles to offset the cost of required benefit increases such as no pre-existing conditions clauses.
In today’s world the average family of four with a $1,000 deductible per person is essentially uninsured. This exponential increase in deductibles is beginning to leave providers with a cruel Hobson’s choice. The first alternative is for the hospital or the doctor’s office to accept the patient who has not satisfied their deductible and then trust they can collect that deductible after the care is delivered. The alternative is for the provider to attempt to collect the deductible at the point of service which leads to a whole host of public relations problems.
If the medical event is truly an emergency the hospital must take care of the patient first and trust they can collect the deductible after. In non-emergent events attempting to collect a high up-front deductible is a tremendous patient dissatisfier.
It can also be argued these cheaper plans have entirely shifted the risk of payment from the insurance industry to the providers. High deductibles which patients cannot possibly meet simply alleviate many of the payments insurance companies would otherwise be required to make. This leaves the medical provider with soaring bad debts. For insurance companies it’s pure cash flow.
If hospitals were like auto body shops they could just hang on to the patient until somebody paid the bill. Kidnapping, however, is not a very practical solution.