health care

The Health-Care Crisis Has Spread to Employer-Sponsored Health Insurance

So you’ve got health insurance but can’t afford the deductibles? You’re not alone. Photo: Mario Villafuerte/Getty Images

For most of this century, the big U.S. health-care policy issue has been providing insurance to the uninsured, including the uninsurable people with expensive health conditions. Yes, the majority of non-elderly Americans covered by employer-based insurance were affected by this debate insofar as sharing the costs of more universal coverage would increase their premiums and/or taxes. But for the most part, Americans were relatively happy with the insurance they got at work.

That’s changing, as is graphically illustrated by a major new survey conducted by the Los Angeles Times and the Kaiser Family Foundation that shows insurance deductibles, co-pays, and other “cost sharing” requirements by insurers are putting the squeeze on affected policyholders in a big way.

As the Times’ Noam Levy explains, the rise of deductibles has been dramatic:

In the last 12 years, annual deductibles in job-based health plans have nearly quadrupled and now average more than $1,300.

Yet Americans’ savings are not keeping pace, data show. And more than four in 10 workers enrolled in a high-deductible plan report they don’t have enough savings to cover the deductible.

One in six Americans who get insurance through their jobs say they’ve had to make “difficult sacrifices” to pay for healthcare in the last year, including cutting back on food, moving in with friends or family, or taking extra jobs. And one in five say healthcare costs have eaten up all or most of their savings.

And that’s not even counting those who skip care they need because they cannot afford to pay their “share” of steadily rising medical bills.

Half [of survey respondents] said costs had forced them or a close family member to delay a doctor’s appointment, not fill a prescription or postpone some other medical care in the previous year.

When people don’t get essential care, of course, insurance has failed everyone other than the insurer itself. And while everyone was aware cost-sharing requirements were steadily increasing, it did sneak up on policy-makers whose attention was elsewhere:

“There has been a quiet revolution in what health insurance means in this country,” said Drew Altman, the longtime head of the Kaiser Family Foundation. “This happened under the radar while everyone was focused on the Affordable Care Act.”

The 2010 healthcare law — often called Obamacare — provided landmark protections to Americans once shut out of health coverage. But as Democrats and Republicans fought over the law, Altman said, neither focused on the rapid run-up in costs for people covered through work.

But this was by no means accidental. High-deductible insurance plans were promoted both by the industry and by conservative politicians:

Twenty years ago, amid a backlash against HMO restrictions on people’s ability to choose their doctors, high-deductible plans were billed as a way to empower patients and free them from the unpopular constraints of managed care …

Backers of the high-deductible strategy nevertheless argued that patients, given “skin in the game,” would become active consumers who would force drugmakers, hospitals and other medical providers to rein in prices.

“The thing that caught people’s imagination was this idea of unleashing American patients as consumers,” said Dr. Arnie Milstein, medical director of the California-based Pacific Business Group on Health, an organization of large companies, including Boeing, Safeway, Walmart and Wells Fargo.

If that sounds familiar to consumers of political rhetoric, it’s because Republicans have long promoted patient-driven competition as a health-care cost panacea, usually through a combination of high-deductible insurance plans and tax-preferred health savings accounts designed to help consumers save for out-of-pocket costs:

Many of the first companies to offer high-deductible plans gave employees seed money for medical savings accounts, with the idea that the cash would help workers pay their deductibles. Within a few years, the George W. Bush administration — backed later by Congress — carved out tax benefits for the accounts.

As high-deductible plans caught fire, however, many employers saw they could save even more by not contributing to their employees’ accounts.

Guess who got left holding the bag? That’s right, the employees, who were essentially victims of a bait and switch.

Now, suddenly, people with employer-sponsored health insurance have more to worry about than fighting managed care and/or maintaining the right to choose doctors:

In a major reversal from 15 years ago, six in 10 Americans with job-based coverage now call affordability the most important feature of a health plan, outranking previous top concerns such as a broad choice of doctors and hospitals and a wide range of benefits.

This shift in sentiment also helps explain why Medicare for All is so popular an idea. Yes, seamless universal coverage is attractive, but getting rid of deductible, co-pays, and even (in the more generous proposals) premiums could be an even bigger deal. It’s enough to make proponents of “skin in the game” nervous:

Even former Utah Gov. Mike Leavitt, a Republican who supported the move to higher deductibles as Health and Human Services secretary in the George W. Bush administration, acknowledged that adjustments may be needed, even if returning to the days of no-deductible coverage is not the solution.

“There needs to be a way to relieve the pressure,” Leavitt said. “Otherwise, people will feel like they have no insurance at all.”


The New Health-Care Crisis