By David Lazarus
March 10, 2011, 8:06 p.m.
If you bought a Quarter Pounder at McDonald's you'd expect it to contain at least four ounces of meat. If you bought a 32-ounce Big Gulp at 7-Eleven, you'd expect it to be, well, a big gulp of beverage.
So if you bought a health insurance policy with a deductible so attractive it's part of the plan's name — such as Anthem Blue Cross' Individual PPO 500 plan — you'd expect that $500 deductible to be basically set in stone.
But Anthem is notifying many individual policyholders that their plan's deductible is going up May 1. The deductible for the Individual PPO Share 500 plan will now be $550. The Individual PPO Share 1000 plan will have a $1,150 deductible. The Individual PPO Share 1500 plan will have a $1,750 deductible.
If that's not a breach of contract, it certainly smacks of a bait and switch.
Peggy Hinz, an Anthem spokeswoman, said the changes were reviewed by state regulators. "It is important to note that adjusting benefits is not a breach of contract and can help keep premiums down," she said.
That's news to Culver City resident Mindy Berman. Not only is the deductible for her Individual PPO Share 1500 plan going up but so is her monthly premium — jumping 24% to $643 from $519.
"It seems like they're hitting me from both sides," she said. "It's beyond unacceptable."
Janice Rocco, the deputy state insurance commissioner for health policy, said her office is investigating. She said department lawyers aren't convinced that the changes are kosher, especially for plans that were marketed to consumers as having a specific deductible.
"That's one of the issues we're looking at," she said. "If the deductible was a particular selling point, that's a concern."
When it comes to the cost of health insurance, most attention is typically focused on premiums. Workers' contributions to premiums have climbed 47% since 2005, according to the Kaiser Family Foundation.
Overall premiums have risen 27% in that time, while wages have gained 18% and inflation has increased 12%, the foundation said.
Individual insurance premiums have experienced even more dramatic growth. Blue Shield of California, for example, has sought several large rate hikes in recent months.
Yet for all the hand-wringing about soaring premiums, higher deductibles represent a similarly onerous burden on consumers.
A higher deductible means a patient has to spend more of his or her own money before insurance coverage kicks in. That can leave consumers holding the bag for most routine doctor visits and treatment.
"Basically, higher deductibles mean you're paying more for less healthcare," said Jerry Flanagan, a staff attorney at Consumer Watchdog, a Santa Monica advocacy group. "It's a change to the essential definition of a plan."
He acknowledged that the fine print of most policies allows insurers to raise deductibles as long as they can provide a reasonable explanation, such as preventing a larger increase in premiums.
But Flanagan said it often appears that insurers are interested solely in boosting profit, not protecting patients. "They're unilaterally rewriting people's contracts to make more money," he said.
Rising medical costs are a legitimate problem, and it's understandable that private insurers need to safeguard their bottom line and keep shareholders happy. (A Medicare-for-all approach to coverage would remedy this, but that's another column.)
What's especially troubling in the case of Anthem's deductible increase is the idea that a plan can be marketed with a relatively low deductible as its chief selling point, and then that deductible can still be jacked up after a consumer has signed on.
Maybe that's splitting hairs. Maybe insurers are free to do whatever they want.
One of the few consumer products I can think of that allows the provider to change terms after a deal has been cut is credit cards — and look at how lawmakers have cracked down on abuses of such practices.
Insurance policies should be no different, especially when they're prominently sold as having unique features. Stronger laws are needed to protect consumers from potentially abusive business practices, just as laws were beefed up to bolster fairness among credit card issuers.
A good place to start would be empowering California's insurance commissioner to approve (or reject) all policy changes, rather than merely reviewing changes to ensure they comply with existing regulations.
Berman, 44, said she'll probably switch to a higher-deductible plan offered by Anthem to try to keep her premiums at a reasonable level. She's considering the Individual PPO Share 3500 plan.
"Of course, who's to say I won't get a letter a year from now saying that plan's deductible is also going up," Berman said. "It's very scary."