There are too many obstacles to using health insurance

The Affordable Care Act. Obamacare.

No matter what you call it, the law has two main goals: Insure more (all?) Americans, and in doing so, lower the aggregate costs of health care in the U.S.

After year one of the Act’s main rollout, there is no doubt about the first goal: Millions more Americans now have health insurance. Many have purchased it on the exchanges, whether they are state-run (best example might be Kentucky) or run by the federal government (think HealthCare.gov). Millions more are now covered by Medicaid, the 1960s-era federal program (which also uses state matching funds) to insure the poor.

The jury is still out on whether the law will lower costs. In principle, insuring more people lessens costs by bringing more healthy people under the insurers’ umbrella, thereby spreading risk more effectively and using more (but smaller individual) premium payments to provide care to more individuals in a group market setting. More buying power, and more market efficiencies (see automation and digitalization of health care, as well as streamlining of processes) in theory lower the aggregate costs.

Another way in which insuring more people while costing less occurs is by providing insurance that people don’t use. When we don’t use our health plans, the overall spending in the system goes down. Obstacles to using health insurance include co-pays (the out-of-pocket portion of health costs that insurance doesn’t cover) and deductibles (an annual out-of-pocket amount that you must spend before your insurance kicks in).

In a solid analysis of this situation, the New York Times ran a front-page article demonstrating how the new plans use tiered deductibles — which have the net effect of dissuading people from using their insurance.

Remember that everyone has the right (in fact the responsibility, i.e. the ‘mandate’) under the law to purchase an affordable plan, tiered as platinum, gold, silver, or bronze. (This does not apply if you a) have insurance through your employer, or b) you qualify for Medicaid.)

The platinum plans cost the most up front, but have the least in terms of deductibles and co-pays. Just the opposite for the bronze plans, the most affordable (i.e., the ones with the lowest annual premiums). The problem with these is that it turns out the deductibles can be so high as to impede people’s use of the insurance. It’s in effect an insurmountable hurdle to using newly-gained health insurance.

Here’s an excerpt from the article to give you the idea:

Mark Yuschak, 57, of Jackson, N.J., said he had a silver plan with an annual deductible of $3,000. He discovered its limits in March.

“My wife had an incident, a digestive disorder, and we had to go to the emergency room of a hospital in Freehold, N.J.,” Mr. Yuschak said. “We presented our insurance card and filled out all the forms. They told us, ‘You don’t have a co-payment, you’re free to go.’ ”

Later, though, they received a bill “that could choke a horse,” Mr. Yuschak said — for more than $1,000. “Our insurance wouldn’t cover any of it because we had not met our deductible.”

How can we make this system work better?