Silver lining of higher prices

This week, I received a letter from my health insurance company indicating that they will be cancelling my policy. Of course, not to fear, I can buy a new replacement policy that conforms with the Affordable Care Act regulations. What they didn't mention is that my new premium will be roughly double of my current premium (assuming no subsidies) and the deductible will be higher. Apparently, this is reasonably common. This comes at a time when some companies are transitioning their employees to the health insurance exchanges.

As I mulled over this news, I realized that while the transition may be rocky, there might be long-term systemic benefits specifically because more patients become more aware of the health costs. First, as consumers select insurance plans, many will question whether they need the levels of coverage that they might have enjoyed previously, paying only a modest co-payment when visiting the doctor. Subsequently, as increasing numbers of consumers adopt high-deductible plans, more and more of them will want to know the prices of procedures. Increased numbers of price-sensitive consumers might finally make it viable for providers to compete on price; in turn, this competitive pressure might actually affect the rate of health care costs. It's far too early to tell, and the short-term will certainly see some bumps, but these higher prices and higher deductibles just might be setting the foundation for a more competitive marketplace.