One thing’s for sure — deductibles are on the rise. Just like when you get into a car accident, you’ve got to spend your deductible and then your car insurance starts covering the repairs. Except, when you’re getting your car fixed, you can get multiple estimates and shop around based on price and quality. In healthcare, it’s nearly impossible to get a cost estimate up-front for something as simple as, say, putting tubes in your kid’s ears.
This didn’t matter so much just a few years ago because deductibles used to be a few hundred dollars. But now look at what’s happened:
The above numbers are employer-sponsored plans. But let’s look at Obamacare plans:
Deductibles are skyrocketing. But here’s the issue — you can only spend your deductible on things your health insurance approves at rates they’ve set. Now, a health insurance company’s only job is to predict next year’s expenses and adjust your premiums accordingly. That is the core of an insurance company. And as long as you and/or your employer keep paying your premiums, they’re happy to continue the status quo. Their method of controlling costs is to negotiate rates for expensive services, typically with hospitals and large physician groups in expensive specialties. One long stay in an ICU can be $2M, which is ~7,000 urgent care visits. They don’t care so much about negotiating costs for relatively inexpensive things like urgent care centers and MRIs.
But they want to force you to spend your hard-earned out of pocket money on things they don’t prioritize as part of their business model.
This practice stifles innovation and competition because you can only spend on approved, in-network services. And doctors and hospitals are still billing as if you have no deductible and insurance companies are paying everything for you. For example, a radiology center is not competing with others based on price and billing you a smaller amount because you haven’t yet spent your deductible. They’re billing you the same ridiculously high amount they’d bill your insurance company. And insurance companies have made this concept “illegal” in the contracts they have with the radiology center. According to the contract, the radiology center must bill you and the insurance company the same price.
Your deductible is your own hard-earned money and insurance companies are not allowing you to spend that on services that compete based on value, convenience, and quality. There should be an entire healthcare market out there competing for your dollars based on convenience, quality, and cost. Insurance companies neglect to admit that if you spend $1,000 instead of $5,000 of your deductible, that’s a huge value-add to you. It’s the difference between going on a lovely vacation, or not. And as long as it doesn’t hit their expenses by you spending all of your deductible, it’s not a problem they want to help you solve.
Insurance companies meddling and mandating involvement in your entire deductible spend is massively stifling innovation as companies like Sherpaa are arising trying to fundamentally change your healthcare experience. The IRS defines what you can spend your FSA/HSA dollars on. Insurance companies should allow this same set of healthcare services and products to apply toward your deductible, whether they’re in-network or out-of-network in order to foster a competitive landscape for your deductible spend.