What ever happened to deductibles?
The word has almost disappeared from the debate as a special session of the Legislature devoted to supposed reform of California’s health insurance system proceeds.
Read any official or semi-official summary of AB8, the Democratic health plan nixed by Gov. Arnold Schwarzenegger, and you see things like requirements imposed on individuals and employers, treatment of the self-employed and small businesses, but no mention of deductibles, the sums people must pay before their insurance benefits kick in.
These can amount to thousands of dollars, even for the majority of Californians who are currently insured. But under some of the proposals the Legislature considered this year, they could go as high as $10,000 per year. No one is now talking about this in specific terms.
Yet, that’s where the rub for the entire reform effort could lie: Make the deductibles too low and health care might be overused by people who don’t really need it. Make deductibles too high and the working poor might as well be uninsured, since relatively few people have annual medical expenses that approach the $10,000 mark. For most families who immunize their children, get flu shots every autumn, and don’t head for the emergency room whenever Junior sprains an ankle, it takes a catastrophe for expenses to reach $10,000.
Which means that assessing the working poor up to five percent of their yearly wages for health insurance premiums, a figure often bandied about during the health insurance debate, would create a new burden for them while giving them little or no new benefit.
So why not talk about deductibles and ways to lower them? For one thing, Schwarzenegger’s proposed plan would allow insurance companies to keep 15 percent of all premiums for administrative expenses and profits.
Cutting that corporate benefit is about the only way to keep deductibles low for families buying the minimum coverage to be offered under any new plan.
But Schwarzenegger and many state legislators get large campaign donations from the health insurance and pharmaceutical companies that could be most impacted by low deductibles. As of late summer, the governor and his various committees had received just under $5 million from such firms, making them the fourth largest donor category among special interests financing his political career.
This makes the politicians at least in part the creatures of the existing health care and insurance industry.
It also may be why Schwarzenegger has repeatedly killed bills to start a single-payer government-run insurance plan. In a single-payer plan run by the government, there’s no need for profit. But administrative costs could mount.
All this explains at least in part the several polls that show heavy public distrust of the ongoing health care policy negotiations. More than two-thirds of voters in a poll taken for the California Nurses Association labor union said they are skeptical anything good will come from that bargaining.
The same poll said 70 percent of voters favor a plan that has no co-pays or deductibles, guarantees choice of hospital and doctors and is not attached to anyone’s job. That’s essentially a description of single-payer health insurance in its ideal form, and it enjoyed majority support in that survey all across the political spectrum.
Because all plans now under consideration would involve some kind of new tax on either employers or individuals, whatever plan emerges from Sacramento will have to go before the voters as a proposition sometime next year.
And for any health insurance reform to succeed there, it will have to assure the same quality of care and choice of doctors enjoyed by most people who are now insured, while holding down or eliminating deductibles and co-payments for those who now lack coverage.
Supporters will also have to prove to many skeptics that whatever makes the ballot is not merely a scheme to provide coverage for illegal immigrants, who make up a healthy portion of the uninsured population.
Cutting down deductibles is probably the best place for negotiators to start reshaping the plans that were considered earlier this year. If they don’t do that, they’ll have a hard time proving any new plan would really benefit most of the uninsured.
And whatever emerges, the harsh reality is that its eventual passage will be no easy matter, as almost all ballot propositions involving new taxes of any kind have failed for the last 20 years and more.