Debbie Silverstein: The Effect of High Medical Costs

From Debbie Silverstein, July 12, 2012

Hi Kathie,

I am Debbie Silverstein, State Director for the Single Payer Action Network Ohio and fellow retired teacher. The changes in the retirement system and especially health care, concern me deeply. I recognize the need for an immediate change, but also for a more comprehensive long range plan on the health care front. As we are reminded often by STRS, they are not required to provide us with health insurance. The attached article gives my perspective on the situation as it affects retired teachers who are not Medicare eligible yet.

Debbie Silverstein

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THE EFFECT OF HIGH MEDICAL COSTS

As most of us are well aware, the deductibles for health insurance through STRS for those ineligible for Medicare have gone way up for next year. In addition to those very increased deductibles, additional co-pays have been put in place in the recent past or for next year, mainly for prescriptions and emergency room visits. This is not an STRS only problem. STRS is only reacting to the dysfunctional health care system we have and taking the same steps most businesses that provide insurance are and have been doing.

I met recently with the director in charge of health care benefits. It was explained to me that 25% of current retirees were not yet on Medicare and 75% were. However, when examining expenditures, they were directly the opposite with 75% of the costs associated with those retirees not yet on Medicare and only 25% on those who were. In order to restrain costs among those of us not on Medicare a balance must be struck. If the lower deductibles are kept and the premiums go up too much, that prompts the healthier among us to drop the coverage and increases the costs of insuring only the sick. To encourage the healthier retirees to stay in the pool, the premiums must come down and the only way to do that is to pass the costs on to the individual through increased deductibles and co-pays.

The enormous costs of providing health care coverage for those not yet on Medicare is why we see STRS increasing the amount of the premium individuals must assume and increasing the deductibles for those plans. This is the scenario that will continue to play out over and over again as long as we cling to the current way we finance health care.

Many of us will enjoy lower premiums if we choose the largest deductible. At this point for me, that is probably the only course I have. Looking at the premiums, I would pay $21 more next year in order to only double my deductible. In order to realize a reduction in premium, I have to more than triple the deductible. And at this point I, and many like me, have to consider that seriously as the premiums get more and more costly. We cannot afford them either.

This will only pose a problem if I have to use my insurance, which will probably be the case. Let's face it, we are getting to the age where the likelihood of that necessity is becoming greater and greater. But the problems associated with doing this must be considered as well.

People with higher deductibles are more likely to have problems getting needed care than those with lower deductibles. Forty-four percent of adults with deductibles of $1,000 or more reported one of four access problems: did not fill a prescription; did not see a specialist when needed; skipped a recommended test, treatment, or follow-up; or had a medical problem but did not see a doctor. Only 25% of adults with deductible under $500 cited similar access problems. [1]

Medical bill problems or accumulated medical debt were reported more frequently by those with higher deductibles compared with those with lower deductibles. Two of five (41%) of those with deductibles of $1,000 or more reported a medical bill problem or outstanding debt compared with one of four (23%) of those with deductibles of less than $500. [2]

The erosion of comprehensive employer-based coverage disproportionately affects those who are most at risk: low- and middle-income families, and those with major illnesses or injuries. A substantial percentage of adults in families with incomes under $60,000 spend considerable shares of their annual income on medical expenses. [3]

Rising health costs affect household finances. Income and savings that would otherwise be used for purchasing consumer goods, or put toward savings or financing retirement, must be used to cover health care services. [4]

A 2003 survey found that 63 percent of families that reported problems with paying medical bills also had problems paying for other household necessities, such as food, clothing, and rent. [5]

The last time I went for the high deductible plan, I had an emergency. I suffered a stubborn kidney stone that didn't want to come out and required two trips to the emergency room. My portion of the bill, after insurance, was equal to an entire month's income.

That is how people go bankrupt, even with insurance. Studies show that medical debt plays a major role in 62% of personal bankruptcies, 49% of foreclosures and is one of the leading reasons families cannot get financing to purchase a home. Among those who declare bankruptcy due to medical debt, 78% have insurance.

There are two bills currently introduced into the Ohio legislature that would solve that problem. The Health Care for All Ohioans Act, SB 112, and The Ohio Health Security Act, HB 287, would both provide comprehensive medical, dental, vision and mental health care to all Ohioans, creating the largest risk pool possible and eliminating much administrative waste. Residents of the state would have free choice of doctors and hospitals and would not have to choose from a list of network providers. In addition, the savings to public employers in the state would be close to $2,000,000,000 annually with around $1,000,000,000 alone going to public school districts. Nationally, HR 676 would do the same with even greater savings.

It is past time for not only STRS, but all of us as well, to look for a long term solution. The Patient Protection and Affordable Care Act will provide some temporary relief for some people, but the cost controls they point to are unproven and those in the field say they won't work. The bill does contain some protections, but is very short on affordable care, especially for those of us living on a pension.

I urge everyone to contact STRS and your state and federal legislators and urge their support for these bills.

I do that regularly, but in addition to taking the highest deductible, this time I will open a club account at my local credit union and put the difference between that premium and the lower deductible premium in that account until I have my full out of pocket medical expenses covered. I wish I'd taken that advice the year I had the kidney stone.

[Footnotes]:

[1] Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Welfare of American Families, The Commonwealth Fund, September 2006.

[2] Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Welfare of American Families, The Commonwealth Fund, September 2006.

[3] Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Welfare of American Families, The Commonwealth Fund, September 2006.

[4] Effects of Health Care Spending on the US Economy, National Institute of Health, Feb 25, 2005

[5] Effects of Health Care Spending on the US Economy, National Institute of Health, Feb 25, 2005

For more information, visit the following websites:

SPAN Ohio: www.spanohio.org

Physicians for a National Health Program: www.pnhp.org

Healthcare-NOW! www.healthcare-now.org

Debbie Silverstein
State Director
SPAN Ohio