Why your deductible is getting bigger

When it comes to worrying about health costs, most of the attention is directed at government programs. Medicare and Medicaid costs are going up and will start causing major problems in a few years. The Affordable Care Act is complicated, and the requirements are growing.

There is, however, an indication that the bigger story may be found in the private sector.

Most Americans get their health insurance through their employers. Some experts say that is changing. It is common to hear predictions that by 2020 or 2025 the percentage of Americans covered by their employers will drop to around 20 percent from the current level of 60 percent.

Employers want to shed that expense. We see the move toward that goal in higher premiums charged employees and especially in high deductibles. Those deductibles are so high for many employees that a new Commonwealth Fund survey indicates four in 10 working-age adults “skipped some of kind of care because of cost,” USA Today reports.

Here is a hint why: The number of workers with deductibles rose from 55 percent eight years ago to 80 percent today. In addition, the amount of that deductible is getting higher each year.

It has long been argued that one reason U.S. health care is so expensive is that the consumer does not foot the bill. That’s changing. In addition, the way it is changing is worrisome. Workers are more and more putting off spending the money. That means costs will come down. But will the average worker’s health fall as well? Last year, the research firm S&P Capital IQ predicted the big drop in the number of workers covered by employers. The reason: Those exchanges started by the Affordable Care Act. The thinking is that the exchanges will cover those with pre-existing illnesses along with everyone else. So why should employers pay? As The New York Times reported, “employers might decide to give their workers a stipend to pay for health insurance on the exchanges rather than sponsor a plan.”

The savings for the employers will be enormous. For a long time, many observers hoped those savings would be passed along to the workers in the form of higher pay. However, that hope is not as bright as it once was.

Another problem is taxes. Right now if the employer pays the bulk of a worker’s health insurance, it is tax-free. If the employers pay a stipend, that could be construed as compensation and taxed as income. When that detail is worked out, the switch over will gain speed. So-called “Cadillac” insurance plans are already targeted for taxing come 2018. That is another reason why employers want to reduce the costs quickly.

The switch from employer plan to government exchange will change the nature of U.S health insurance for nongovernment employees. It will be similar to the end of private pensions. The costs and the risks are shifting to the employee.

Isn’t it time we start talking about this?

— LIVINGSTON DAILY PRESS & ARGUS