CBO: Under the latest Senate health care bill, deductibles could be more than some people earn

The latest effort by Republicans in the Senate to overhaul the US health care system could have an unexpected effect on deductibles: they could get so high they're actually more than the poorest Americans earn.

That's a conclusion of the Congressional Budget Office's latest assessment of the new version of the Better Care Reconciliation Act.

Deductibles are what you pay before your insurance kicks in. The CBO estimates that by 2026 the second-lowest-priced plans (the silver plans, in the Obamacare marketplace) would have $13,000 deductibles. Under the Affordable Care Act currently, a deductible for the same plan would be $5,000 in 2026.

RELATED: Protests against the Republican health care bill

18 PHOTOS
Protests against the Republican health care bill
See Gallery
Protests against the Republican health care bill
THE PARK IMPERIAL AT 230 WEST 56TH ST , NEW YORK, UNITED STATES - 2017/07/10: New Yorkers and healthcare advocacy groups organized a protest on July 10, 2017; outside Rep. John Faso's fundraiser as donors arrive at the Park Imperial at 230 West 56th St. in Midtown Manhattan. Faso voted for the House Trumpcare bill in May, he also coauthored the notorious Collins-Faso amendment to both the House and Senate bills that would shift New York Medicaid funding from counties budgets to the state budget. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
A healthcare activist protests to stop the Republican health care bill at Russell Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
Healthcare activists protest to stop the Republican health care bill at Russell Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
Healthcare activists get a police warning during a protest to stop the Republican health care bill at Hart Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
Healthcare activists protest to stop the Republican health care bill at Hart Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
WASHINGTON, DC - JULY 10: A demonstrater from Arizona chants, 'Kill the bill or lose your job' while sitting on the floor outside the offices of Sen. Jeff Flake (R-AZ) during a protest against health care reform legislation in the Russell Senate Office Building on Capitol Hill July 10, 2017 in Washington, DC. More than 100 people from across the country were arrested during the protest that was organized by Housing Works and Center for Popular Democracy. (Photo by Chip Somodevilla/Getty Images)
NEW YORK COUNTY REPUBLICAN OFFICE, NEW YORK, UNITED STATES - 2017/07/05: The Socialist Feminists of Democratic Socialists of America (DSA) organized a protest outside of the New York County Republican Office in New York City on July 5, 2017; to tell Republicans that is it despicable and undemocratic that they are trying to ram Trumpcare through the Senate without debate or public hearings. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
UNITED STATES - JULY 10: Health care protesters from Arkansas chant outside of the office of Sen. John Boozman, R-Ark., in the Hart Senate Office Building on Monday, July 10, 2017. About a dozen people loudly voiced opposition to the GOP health care bill. (Photo By Bill Clark/CQ Roll Call)
THE PARK IMPERIAL AT 230 WEST 56TH ST , NEW YORK, UNITED STATES - 2017/07/10: New Yorkers and healthcare advocacy groups organized a protest on July 10, 2017; outside Rep. John Faso's fundraiser as donors arrive at the Park Imperial at 230 West 56th St. in Midtown Manhattan. Faso voted for the House Trumpcare bill in May, he also coauthored the notorious Collins-Faso amendment to both the House and Senate bills that would shift New York Medicaid funding from counties budgets to the state budget. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
NEW YORK, NY - JULY 5: A small group of activists rally against the GOP health care plan outside of the Metropolitan Republican Club, July 5, 2017 in New York City. Republicans in the Senate will resume work on the bill next week when Congress returns to Washington after a holiday recess. (Photo by Drew Angerer/Getty Images)
A small group of activists rally against the GOP health care plan outside of the Metropolitan Republican Club, July 5, 2017 in New York City. Republicans in the Senate will resume work on the bill next week when Congress returns to Washington after a holiday recess. (Photo by Zach D Roberts/NurPhoto via Getty Images)
Healthcare activists protest to stop the Republican health care bill at Russell Senate Office Building on Capitol Hill in Washington, U.S., July 10, 2017. REUTERS/Yuri Gripas
Healthcare activists are detained after a protest to stop the Republican health care bill at Hart Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
A staff members asks the media to leave the room as Healthcare activists protest in the office of Senator Jeff Flake (R-AZ) to stop the Republican health care bill at Russell Senate Office building on Capitol Hill in Washington, U.S., July 10, 2017. REUTERS/Yuri Gripas
U.S. Capitol police arrest demonstrators in wheelchairs protesting against the AHCA health care bill put forward by President Trump and Congressional Republicans as several dozen protestors are taken into custody after refusing to leave the rotunda of the U.S. Capitol in Washington, U.S., March 22, 2017. REUTERS/Jim Bourg
Demonstrators hold signs during a protest against the repeal of the Affordable Care Act outside the Capitol Building in Washington, U.S., March 22, 2017. REUTERS/Aaron P. Bernstein
Healthcare activists are detained after a protest to stop the Republican health care bill at Russell Senate Office Building on Capitol Hill in Washington, U.S., July 17, 2017. REUTERS/Yuri Gripas
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE


The deductible would be more than the annual income of someone who is at 75% of the federal poverty level. Even for people who make $56,800, the deductible would make up 25% of their annual income.

The ACA (Obamacare) guards against this by setting a limit on how much people can spend on health care on out-of-pocket expenses. In 2017, that's $7,150 for an individual. By 2026, the CBO said that will rise to $10,900, making the plans with the $13,000 deductible actually against the law unless those caps are changed.

Facing higher deductibles

But if the caps are changed, the increased deductibles would leave people on those plans on the hook for a lot more of their medical coverage.

In general, high deductibles have become increasingly common in the past few years. A survey in September 2016 found that 51% of workers had a plan that required them to pay up to $1,000 out of pocket for health care until insurance picks up most of the rest.

You can think of a deductible as the amount of money you're expected to spend out of pocket before insurance kicks in and starts to pick up a portion of the tab.

SEE ALSO: Senate Republicans complain of chaos in Obamacare overhaul effort

Say you have a plan with a $2,000 deductible. If you have a costly prescription or get in an accident and need to visit the emergency room, you're on the hook for the full cost up to that $2,000 mark. At that point, the insurer will pick up a percentage, meaning you'll still have to pay 15% of the bill if it's over $2,000. In the end, your medical bills would total $2,000 + 15% of the remaining cost. Premiums and doctor's visit co-pays usually don't count toward deductibles.

Here's a real-world example: In 2016, Business Insider spoke to Janine LePere, whose family had a $7,000 deductible. Her son has Type 1 diabetes, and the cost of managing the disease — especially insulin that regulates his blood sugar — can be about $1,100 a month. Because of the plan the family is on, that means that LePere has to pay that full $1,100 a month out of pocket until that $7,000 is hit. After that, the family still has to pay for some of the cost, but not the full amount.

Why some people choose to have high-deductible plans

Not all health plans have a deductible, though the majority of employees in the US are on a plan that has one. For some, a plan with a high deductible (that is, one that is more than $1,300 for an individual and $2,600 for a family) might be the right choice based on their health care needs. For others, the high-deductible plans are often the only affordable option.

RELATED: A look at the Senate's all-male health care working group

13 PHOTOS
A look at the Senate's all-male health care working group
See Gallery
A look at the Senate's all-male health care working group
U.S. Senator Tom Cotton (R-AR) (L) and Senator David Perdue (R-GA) (R) unveil legislation aimed at curbing legal immigration by halving the number of legal immigrants admitted into the United States, at the U.S. Capitol in Washington, U.S. February 7, 2017. REUTERS/Jonathan Ernst
U.S. Senator Cory Gardner (R-CO) smiles after he was ceremonially sworn-in by Vice President Joseph Biden in the Old Senate Chamber on Capitol Hill in Washington January 6, 2015. REUTERS/Larry Downing (UNITED STATES - Tags: POLITICS HEADSHOT)
U.S. Senate Majority Leader Mitch McConnell (R-KY) speaks during a media briefing on Capitol Hill in Washington, U.S. April 25, 2017. REUTERS/Joshua Roberts
U.S. Senator Rob Portman (R-OH) speaks during a session called "The New Congress" at the Wall Street Journal's CEO Council meeting in Washington December 2, 2014. REUTERS/Kevin Lamarque/File Photo
U.S. Senator Pat Toomey (R-PA) speaks to the 38th annual Conservative Political Action Conference meeting in Washington DC, U.S. February 10, 2011. REUTERS/Larry Downing/File Photo
U.S. Senator John Thune addresses the media during the 2017 "Congress of Tomorrow" Joint Republican Issues Conference in Philadelphia, Pennsylvania, U.S. January 25, 2017. REUTERS/Mark Makela
U.S. Senator John Cornyn (R-TX)questions Supreme Court nominee judge Neil Gorsuch during a Senate Judiciary Committee confirmation hearing on Capitol Hill in Washington March 21, 2017. REUTERS/Joshua Roberts
Senator Ted Cruz (R-TX) questions Supreme Court nominee judge Neil Gorsuch during his Senate Judiciary Committee confirmation hearing on Capitol Hill in Washington March 21, 2017. REUTERS/Joshua Roberts
Chairman of the Senate Health, Education, Labor and Pensions Committee Lamar Alexander speaks during Rep. Tom Price's (R-GA) nomination hearing to be Health and Human Services secretary in Washington, U.S., January 18, 2017. REUTERS/Joshua Roberts
Senator Orrin Hatch (R-UT) during the second day of confirmation hearings on Senator Jeff Sessions (R-AL) nomination to be U.S. attorney general in Washington, U.S. January 11, 2017. REUTERS/Joshua Roberts
Sen. Mike Lee (R-UT) speaks at a rally for nominee Neil Gorsuch outside the Supreme Court in Washington, D.C., U.S. March 29, 2017. REUTERS/Aaron P. Bernstein
UNITED STATES - APRIL 4: Sen. John Barrasso, R-Wyo., speaks as Senate Republican leaders hold their media availability focusing on the confirmation of Neil Gorsuch as associate justice of the Supreme Court following their policy lunch on Tuesday, April 4, 2017. (Photo By Bill Clark/CQ Roll Call)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

The high-deductible plans have become increasingly common over the past decade. In 2006, only 4% of people who worked were enrolled in a high-deductible health plan. In 2016, it was up to 25%. And the amount people are paying for deductibles is rising, as well. A Kaiser Family Foundation survey found that deductibles had gone up 63% in the past five years — 10 times the rate of inflation.

Because the Senate Republican bill wants to cut premiums, it's why the plans are expected to have $10,000+ deductibles. The higher the deductible amount, the lower the monthly premium. That's because you're shouldering more of the health care costs.

But, say you're a relatively healthy individual with not too many health care expenses who still wants to be covered in case anything goes wrong: In that scenario, a plan with a high deductible might make the most sense.

How do you pay for healthcare with a high-deductible plan?

Because so many expenses are paid for out of pocket, people with high deductibles have the option to set up health savings accounts. The accounts allow you to set aside money pre-tax for medical expenses. That way, with each paycheck you can accumulate funds that can one day be used to cover prescriptions, procedures, co-pays or other medical expenses.

HSAs can also roll over year-to-year, so if you have a relatively healthy 2017, the funds in your account go toward 2018 and beyond.

The health savings accounts are a favorite of Republicans, who view them as a way to incentivize consumers to make more frugal healthcare choices. However, that only works if there are funds in the account to start, which is often not an easy task. And right now, HSAs can't be used to pay for monthly premiums, though a newer version of the Senate health bill might include some changes to that effect.

What high-deductible plans could do to the healthcare system

As high deductible plans become more common and those deductibles continue to rise, the pressure will be on Americans to pay for medical costs out of pocket. The number of people who might become underinsured through these plans could place even more financial burden on the health care system.

In the short-term, for people who are relatively healthy, the high deductible plans could cut costs for insurers. But for people who need more extensive coverage but can't afford it, the plans could have huge negative financial effects for them — and in turn, on the health care system as a whole.

Related: Test your headline knowledge with our weekly news quiz!

More from Business Insider:

Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.