More small businesses try high-deductible health plans
This story originally aired on KQED's The California Report.
It’s no secret that health care costs are skyrocketing, and that some businesses are dropping their coverage for employees. At the same time many more – particularly small businesses – are trying to hang on by offering high-deductible health plans. To put it simply, these firms are shifting costs to their employees.
Bookshop Santa Cruz owner Casey Coonerty-Protti says she’s been struggling for years to find a way to keep offering her employees health insurance.
As a small business owner in the bookselling business, Protti says she’s lucky to make a 1-2 percent profit each year. This has made it difficult to keep up with ever-rising health care costs.
“The fact of the matter is, even to maintain the level of services we have now it’s increasing our costs 20 percent,” Protti says.
She says most of her more than 30 employees take the $5,000 high-deductible health plan offered. Employees pay for their care out-of-pocket until they reach the deductible.
Since she took over the family business six years ago, Protti says she’s seen health care costs steadily increase. When she started the deductible for employees was $2,000 and today it's $5,000.
As a result, she’s always trying to find a better, cheaper plan with the help of an insurance broker but has had little luck
“So we’re putting in high-deductible plans and we’re saving absolutely nothing from it,” Protti says. “We’re actually increasing our costs to provide a lesser service.”
Another small business owner has a different perspective on high-deductible health plans. Anne Lesemann is the co-owner of Home Buddies, a pet care service in the Sacramento area.
She says her company will spend less than $4,000 this year to cover insurance for herself, the other owner and one employee. For her business, she says, that’s not too bad. But when she thinks of it like a patient, she admits the $5,000 deductible doesn’t look so good.
“The high deductible plans were marketed as something that would make me a savvy consumer about health care. But that hasn’t occurred,” Lesemann says.
Even though she knows better, Lesemann has been delaying going to the doctor because she doesn’t trust what’s covered and what’s not. Lesemann learned this over the years by having a variety of high-deductible health plans. One time she says she got a bill for a $1,000 after having a colonoscopy screening that she thought was a free preventative service.
Confusion over coverage and delaying care is pretty standard with high-deductible health plans, says Dylan Roby of the UCLA Center for Health Policy Research. From a cost perspective, when peopledon’t go to the doctor he says no one has to pay for it. For cash-strapped companies in California saving money is an attractive option.
“Since 2005 about five times as many employers now offer a high deductible plan as an option,” Roby says.
Roby says small business employees are much more likely to have high-deductible health plans because that’s probably their only choice. If you’re young and healthy this could work out but Roby says it’s a different story if you go to the doctor regularly.
“So people when they’re making this decision shouldn’t necessarily say, ‘well, I can afford the deductible,’” he says.
In some cases Roby says plan on paying twice as much as the deductible, which could be anywhere from $1,000 to $10,000. Roby says then there’s the monthly premium of about a hundred dollars.
Plus, he says there’s a cost that a lot of people don’t understand: coinsurance. Even after the deductible is reached and the insurance starts covering benefits, Roby says people often pay for 20 percent of services. That could include expenses for imaging tests or lab work and Roby says only about a third of people have a health savings account set aside to cover these expenses.
This is where a high-deductible health plan could save money for an employer or insurance company but turn out to be financially risky for the employee.
“If you’re worried about unpredictable things, which is a major part of health care use, then I would be a little bit wary,” Roby says.
The federal health care law – if fully implemented – should bring some relief, according to Roby. Small business tax credits can already give some employers a break if they offer health insurance.
The law will limit how much people have to pay for their high-deductible health plans based on their income.
Roby also points to the online marketplace under construction now, known as the California Health Benefit Exchange. It should give people options for less costly and more comprehensive health care.