In my last post, I talked about whether people who have health plans with greater cost-sharing make less expensive health care choices, on account of having “skin in the game.” But I want to make something clear: we all have skin in the game, whether we realize it or not.
Even those of us who have employer-based insurance with no deductibles and low cost-sharing—even those of us who don’t have to hand over a credit card every time we see a doctor—are feeling the pinch. A recent paper in Health Affairs argues that the growth in health care costs over the last ten years has almost completely wiped out gains in income for families. “Although a median-income U.S. family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009,” concludes the study, “this gain was largely offset by increased spending to pay for health care.” In 2009, the family had $450 less per month than it would have if the rate of health cost growth simply matched the rate of inflation.
Most of the increased health spending of this representative American family was on health insurance premiums, which went up from $490 to $1,115 per month. With a leap like that, you’d have to know that health care costs were affecting you. But what if you have a tough union that manages to keep your monthly premiums down? Workers with that kind of protection would seem to live at the other end of the spectrum from those with high-deductible plans. But whether they realize it or not, they are still affected by the cost of health care. Princeton economist Uwe Reinhardt writes in a recent column, “that over the longer haul the bulk and possibly all of the ostensibly employer-paid health insurance premiums gets indirectly shifted back into the employee’s paycheck through lower increases in take-home pay.” In other words, when employers have to spend more on health care, they can’t spend as much on salary. Escalating health care costs are creating a situation in which people actually earn less.
So it’s not a question of whether people have skin in the game—that’s a given. The difference with a high-deductible plan is that people who have them understand better where the leak is in their bank accounts—and feel that they have at least some power to control it.
As more and more employers are forced to offer just the one kind of plan and fewer and fewer employees have contracts that insulate them from high premiums, Americans are beginning to notice just how draining these health care costs are, for everyone. My hope is that once we take notice, we will finally take action.
Health Care Perspectives 
Both of your last 2 posts have made me think of something. A few summers ago, maybe 6, I visited the NYS Fair and had the pleasure of speaking with a physician that was manning one of the free blood pressure booths. I asked her point blank about the proportion of malpractice insurance to her overall operating costs. At first she didn’t want to answer me. Than I explained I worked for Preferred Care and was seeing all the increases and was curious for her take on it. At that point she was more than willing to tell me that it took a majority of her operating expenses. I don’t remember the exact number, but I was expecting 50% and was told something much higher. That was 6 years ago. Is there any research you can share with us on the % of malpractice to other costs for physicians and/or hospitals as that is an expense built into what is charged MVP for our members? Thanks!
So, Mr. OIiker, in light of what you’re saying what action do you see taking place? And by who? I’m curious what will drive the change; the consumers (employee-based or individual) fed up with costs or perhaps the insurance providers stepping in before dramatic change is forced. Do you see the High-Deductible model becoming more the norm?