The paper was an honest response to a question by Governor Schwarzenegger and others, which is “Isn’t a high deductible policy better than nothing?”
For some people, yes, especially if they have significant assets to protect. But usually, those folks also can afford-and choose-comprehensive coverage.
We have talked to many people where an unexpected $5,000 or $10,000 medical expense is the straw that breaks the camel’s back in terms of the family finances, with the kind of debt people already carry.
But is that indicative? Our paper suggests it’s not just the lowest-incomes, but well into the middle third of the population.
For this middle third, a one-time incidence wipes out the family savings, including the family car (if it is possible to live in CA outside the Bay Area without a car). A chronic condition over even a few years could still lead to bankruptcy. Imagine the heart attack followed by heart disease.
The other problem is the health impacts. A middle-class patient with a high deductible is going to do every possible thing not to go to the emergency room, since even a quick visit, much less being admitted in the hospital, means their savings is gone. One of our uninsured stories we highlighted didn’t go to the emergency room, even with a severe stomach ache, fearing the bill. Similar to somebody with a high deductible, he thought the visit would have been in the thousands, but his reluctance to go to the ER led to a ruptured appendix. That cost him his health, his ability to work for a few months, and was far more expensive for not just him, but the health system as a whole.
But given the financial state of his family (and most families), he made an economically rationale decision. The point of health insurance is to change that equation. If it doesn’t change, is such a high-deductible plan worth it, regardless of how cheap the premium is?