Damn the deductible

Deductibles on insurance coverage are a device to shift the initial cost of a claim to the policyholder. They are a tool best associated with property and casualty insurance, where proper maintenance of a home or car contributes to reducing claims, and were an auto accident, or damage to one’s home is a rare event.

Applied to health insurance, deductibles are simply a device to shift the cost, from the insurance company to the patient. But wait, before you condemn the insurance company it is important to understand that deductibles, like any other device or cost control technique of health insurance, serve to reduce premiums. Deductibles then are a pay me now or pay me later proposition.

Say what you will about HMO’s hover they are responsible for that era when deductibles fell out of favor, replaced by copayments. The reasoning is simple, deductibles are, what they are a cost shift, and they result in the avoidance of necessary and appropriate routine and early interventional care, as well as interrupting continued care. Patients with deductibles are delaying care, and avoiding following recommendations for father care due to cost. Those deductibles, once in the few hundreds are not sizable, with over 50% of insurance having high deductibles, over $1,000. Those copayments, $5 — $20 paid per visit are dwarfed by the deductibles. A copayment says the cost of a visit is not free, think about it before running in, a $1,000 deductible says — how long can you avoid?

Of course, avoidance of necessary and appropriate care carries a cost often far more than the deductible. When delayed care results in hospitalization, or an emergency visit, or perhaps the increased severity of a cancer diagnosis, or its treatment, it can cost big time. In one sense, it is still $1000 out of the patient’s pocket, but the cost to deliver care, to treat, to restore health, has gone up dramatically. And with a reduced chance of success. That higher cost now gets baked into increasing health insurance premiums, and an increasing number of employers are just passing those increases on to the patient in the form of payroll deductions. Pay me now, and pay me later.

The damnable deductibles also hit physicians hard, which physicians, those that are least able to take the hit, the primary care physicians. The great thing, if you will, about copayments, is that they were small dollars, affordable. Primary care physicians were able to keep the financial exchange between the patient and the physician to a minimum, making the visit more about care than about paying for it. Now since the primary care physician is generally the first physician encounter of a patient, those deductibles, those big deductibles, dramatically change the relationship between the primary care physician and the patient. $1000 and up is a big number to be collected at the time of service, not the whole thing, but the full cost of the visit, approaching, if not surpassing $200. A number bigger than many patients are able to, or happy to, pass over the counter at the time of visit.

The result is higher billing costs, as your office now has to not only bill the patient but also bill the insurance carrier. The carrier needs to credit the cost to the deductible so that the specialists or the hospital, down the road, get their bill paid in full. No chasing the patient for them. You get to do the chase. Now it is strongly recommended that physicians obtain a contingent credit card for the visit, to guarantee the payment of whatever the deductible is (those online checks to the payer website for the deductible status are notoriously inaccurate), your office is taking the rate cut because of the credit card fees. While cheaper than billing, or the potential of bad checks, it does mean your income is shaved off a few percentage points.

Now, remember that deductibles suppress necessary and appropriate care, and while they usually do not apply to preventative services, too many patients are restraining themselves from seeking even that care, afraid of the deductible. This is not good for their health, or your practice’s wellbeing, so is sure to remind your patients of the appropriateness of preventative care, and that it is often not subject to their deductible.

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