OCT. 6, 2014

When workers across the country crack open their annual employee benefits packages this fall, many will likely feel immediate relief. Premiums for their employer-provided health insurance will be up, but not as much as in the past.

If they read a little bit closer, though, they might be agitated. Their deductible has probably risen again, increasing their out-of-pocket costs for treatment. That may lead some to decide whether to risk their health by skipping care, or their finances by getting services.

That unappealing choice comes as employers shift a bigger portion of health care costs to employees. In a nation bent on health care reform, where a key goal is to make sure there is quality care for those who need it, that can result in unintended consequences.

Roxanne Atrchin-Lopez, an Atlanta-area elementary school teacher, said she decided against getting tests she needed for a hernia because her $2,250 deductible made the likely out-of-pocket costs too high.

“You can only bleed a turnip so much,” the 57-year-old Smyrna resident said, adding that her monthly insurance premium is actually tolerable. “Now,” she said, “I’ll probably end up having an emergency situation and going to the hospital.”

Higher deductibles — what the worker has to pay before his costs begin to be reimbursed — “make it harder for people to get access to care when they need it,” observed Sara Collins, vice president for health care coverage and access at The Commonwealth Fund, a private foundation that promotes a high performing health care system.

The definition of high deductible can vary, although the federal government, for its purposes, pegs it as $1,300 for individuals next year and $2,600 for families. Others say anything over $1,000 for an individual is high.

High-deductible health insurance has been around for years, but it drew less attention than rising premiums. Now, with premiums rising modestly, deductibles are under the microscope. Premiums were up about 3 percent this year, and some projections call for a bump about 4 percent next year.

In its annual employer health benefits survey released this month, the Kaiser Family Foundation and the Health Research Educational Trust emphasized the growth of high-deductible plans.

The slow growth in premiums seen this year is welcome news, but “many workers now pay more when they get sick as deductibles continue to rise and skin-in-the-game insurance gradually becomes the norm,” said Drew Altman, Kaiser Foundation president and CEO.

According to Kaiser, 80 percent of workers with single coverage have a deductible, up from 55 percent in 2006.

The average deductible this year for workers with single coverage is $1,217, an increase from $584 in 2006.

Next year, four in five large employers will offer a high-deductible plan, up from just over half in 2010, the National Business Group on Health found in a survey. And one in three large firms will offer only a high deductible plan, up from about one in five this year, and just one in 10 in 2010.

Surveys by Towers Watson and the National Business Group on Health show that from 2011 to 2014, employees’ share of total expenses, including monthly premiums and out-of-pocket expenses, rose to 37 percent from 34.3 percent.

Advocates of higher deductibles say there are benefits to the plans beyond holding down premiums.

Because workers will pay a higher share of their medical expenses, the thinking goes, they will seek services only when they really need them, and they will shop around for the best price. This can hold down overall health care spending, a win for everyone.

But, critics point out, there are downsides. For one, some people who need care, like Atrchin-Lopez, might not seek it because they fear the cost. By not getting treatment at the time, they could wind up getting sicker and requiring higher-cost care later if the problem worsens.

Higher-deductible coverage also disproportionately affects those who suffer the most medical problems. Healthy people require far fewer services, so they pay lower premiums and don’t come near reaching their deductible, minimizing their out-of-pocket expenses.

Critics also say that telling workers to shop for a better deal on a medical procedure sounds good, but in many cases it’s not practical since health care pricing is complex and confusing.

Workers with high-deductible plans can somewhat protect themselves against a medical financial calamity by contributing to a Health Savings Account or a Health Reimbursement Account. These are rainy day funds for health care that workers, and their employers, if they choose, can contribute money to on a tax-advantaged basis. Employees can tap into what they’ve saved up to pay for medical costs including the deductible.


$1,300 — federal government’s definition of a high deductible for individual coverage

$1,217 — average deductible this year for workers with single coverage

$584 — average deductible for workers with single coverage in 2006

80 — percentage of workers with single coverage who have a deductible

55 — percentage of workers with single coverage who had a deductible in 2006

37 percent — typical employee’s share of health care coverage cost today

4 out of 5 — proportion of large employers that will offer a high-deductible plan next year

3 percent — typical increase in employee health insurance premiums this year

— Sources: Kaiser Family Foundation; Health Research Educational Trust; Towers Watson; National Business Group on Health