I’m going to pick on this tweet for a minute as I want to get some thoughts out for a class project that are relevant to this tweet:
@DavidBalatHC says 75% of insured individuals don’t hit their deductibles, which makes them effectively cash purchasers – if they’re able to comparison shop.
— Charles Miller (@Cmillernd2005) March 2, 2023
There are some big problems with this.
First, a lot of people effectively have no deductible. People on Medicaid effectively have no deductible, people on Medicare with a good supplemental plan barely have a deductible. Secondly, there are a ton of plan designs that have substantial services that are offered without either any cost-sharing (paper to come in April on one set of them!) or where the cost-sharing is only co-pays or co-insurance. Finally, the amount of spending in the bottom 75% of the commercial spending distribution is not particularly high. The bottom half of the entire spending distribution is about $500 in spend. Any mechanism of payment works well enough for this group. The real spend is in the last 10-15% of the population who are not price sensitive because their claims dwarf any allowable out of pocket limit and we don’t have plans with declining co-insurance curves (that is a pin for a future post).
So let’s assume this factoid is right, so what?