Health care not quite affordable

Open enrollment season is upon us and many people are reviewing their options for health insurance. The New York Times reported that many consumers feel that they still cannot afford health care. The twist in this article is that the people mentioned weren't complaining about insurance premiums, but rather their deductibles (the dollar amount that a patient is responsible for paying before the insurer starts contributing, excepting certain things such as preventative care). Understandably, there's a tradeoff between saving money upfront (lower insurance premium) and saving money later if something happens (lower deductible). The same tradeoff applies in automobile insurance.

The current administration has been touting how affordable health insurance is under the Affordable Care Act. Indeed, many who literally were previously unable to purchase health insurance on their own can now do so. However, as the article points out, this type of catastrophic health insurance isn't what many had in mind, leading some to drop their insurance policies. To some extent, this points to the marketplace perhaps inadequately informing consumers about the implications of their choice. To a greater extent, that health care is either too expensive in the premiums or in the deductible points to medical costs themselves being expensive. One person was quoted as saying, "I'm better off not purchasing that insurance and saving the money in case something bad happens." That statement suggests a lack of understanding that if something truly catastrophic happens (e.g. cancer requiring treatment), the savings in monthly premiums -- even when added up over a lifetime -- would not be sufficient to cover the current costs of standard treatment.

The premium versus deductible tradeoff gives people a chance to guess how they will come out ahead, but it doesn't actually address the underlying cost structure of health care (discussed, for example, in Steven Brill's "Bitter Pill"). I don't think there will be an easy answer to that problem (e.g. regulating physician fee schedules comes with its own undesired side effects), but I think that problem is one that will need to be addressed. The Affordable Care Act is only one step -- albeit a big one -- in America's journey to resolve its health care issues.