The American system of medical care works OK. But the system of financing it is a shamefully wasteful, convoluted, confusing, horribly expensive mess.
Many of us are running head on into that mess this fall. So, here’s a guide to choosing a health plan, designed for newbies and people who haven’t paid much attention up to now.
Most of us have decisions to make. The Obamacare exchanges, once debugged, will try to scoop up many of the 15 percent of Americans with no coverage at all. Lots of other people with individual health policies that don’t meet the Obamacare standards will be shopping for new ones.
Most of the rest of us will run into open enrollment for our company health plans and for Medicare .
The Obamacare exchanges, and most employers, offer plans with varying premiums. Generally speaking, the lower the premiums, the higher the deductibles, co-pays and co-insurance. (If those terms seem like Greek to you, look at the glossary accompanying this column.)
Choosing means betting on your family’s health. Consider how much care you’ve needed over the past couple of years, says Doug Simms. an independent health insurance consultant with the Meyer Group in Crestwood. Use that as a guide going forward.
If you’re a “young immortal” (male or female between 18 and 29), the chances are you can live with a high-deductible plan. If you catch the flu, you might pay $150 for a doctor visit. But you’ll save more than that on the lower monthly premiums for a high-deductible plan. (Preventive care is free under all plans.)
If you get a plan with a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage, you’re likely eligible for a health savings account. You put before-tax money into the account, and it’s tax-free forever if you use it for health care. If you save more than you spend, it becomes something like a retirement plan. Those over 65 use it to pay their Medicare premiums.
If you use it for something besides health care, you’ll pay taxes and, if you’re under age 65, a penalty to boot.
Simms thinks the accounts are a good deal for healthy people, especially those with nice bank accounts. His own coverage has a $3,000 deductible, and a health savings account.
Some young immortals get pregnant. If you are contemplating reproducing, the low-deductible plan is best. Ditto if you’re planning some other expensive procedure. Moms-to-be might also consider a short-term disability insurance plan, says Simms. If you get it before pregnancy, it will pay you during part of your recovery.
Next, consider that you might get hit by a bus. While you’re laid up in the hospital, the gnomes in accounting will be adding very big numbers to your bill. Karen Pollitz can tell you all about that. She’s a senior fellow and health care expert at the Kaiser Family Foundation .
She also is the mom of a skateboarder. At age 21, her son hit a pothole, went flying and broke his wrist. “The bill was $25,000. That was more than he was earning in a year,” she said.
Luckily, he was still under her health insurance. (Children under 26 can enroll under a parent’s employer’s health plan.)
Look at the deductible. That’s what you’ll pay each year before insurance kicks in. (The monthly premium is extra.)
Just as important, look at the “maximum out-of-pocket” expense in your health plan. That, plus your monthly premium, is the most you’ll pay in a year for medical care no matter how sick or banged up you get. Once you’ve met it, you’re covered 100 percent as long as you stay in your plan’s provider network. A caveat: Some insurers don’t count your deductible, or all of your co-insurance and co-payments, toward this limit.
High-deductible plans have out-of-pocket maximums as high as $6,000. Could you pay that if you had to? Consider that hospitals often offer payment plans before they sic the collectors on you and wreck your credit. You might not have to pay it all at once.
A basic principal of insurance is that you buy it for unlikely mishaps you can’t afford. So, pick a plan with a maximum out-of-pocket that you can handle, even if you have to pay over time.
The monthly premium is the big concern for most shoppers, says Carrie McLean, who runs customer service for eHealthinsurance.com. a private shopping site. So, lots of them will end up with deductibles and out-of-pocket maximums that they really can’t afford. “They really don’t have $6,000 in the bank to turn over to the hospital.”
Most people without insurance will qualify for a subsidy through the Obamacare exchanges. In fact, the high-deductible plan will be free for many of them. The online system is still broken, but you can apply by phone at 1-800-318-2596. The Kaiser Family Foundation (kff.org) has an online calculator to estimate your subsidy.
You can apply for the subsidy and choose a plan through ehealthinsurance.com, but the firm can’t close the deal until the federal system is fully functioning.
Make sure to take a look at the maximums both for in-and-out of network providers.
Pollitz has a horror story for that, too. Her husband came down with pneumonia and spent a week in the hospital. The hospital was in her
insurer’s network, but the shocker came with the doctors’ bills. “Not one of them was in our plan network,” she said. The doctors alone ran up $12,000 in charges.
So, you may think you’re in-network when you’re really out. A provider who’s in this year may be out next year.
What’s a network? Insurers work out discount deals with medical providers. Choose a provider in your plan’s network, and you’ll get the low price. Go outside and you’ll pay a lot more out of pocket. And that extra you pay usually won’t count toward the out-of-pocket maximum.
This gets us to a side benefit of having insurance. If you’re covered, you get the benefit of those in-network discounts on the bills you pay yourself. If you’re not insured, you’ll get no discount.
That’s right. It’s a symptom of our system’s insanity that medical providers demand much higher payments from the uninsured — who are often near poverty — than they charge to insurers and their clients.
Take a look at the doctors and hospitals in the insurer’s network. Is your doctor in it? Is there a hospital nearby? If not, perhaps you should pick another plan.
Some insurers have been cutting the more expensive providers out of their networks. Anthem Blue Cross cut BJC, the St. Louis region’s biggest hospital operator, out of its network for health plans for individuals.
How important is that big network? “It depends on where you live,” Simms says. “If you live in Ste. Genevieve, the likelihood that you’ll need the Barnes network is small.”
Insurers in the Obamacare exchanges have to offer networks capable of meeting patients’ medical needs as defined by Uncle Sam.
Some forms of insurance, mainly HMOs, put some restrictions on your ability to see specialists, even those in the network. More on that in our glossary.
Finally, all plans will cover prescription drugs, but some charge more than others. If you regularly take a drug, ask how much the plan charges for it before signing up, McLean says. And check to see if there is an out-of-pocket maximum for drugs that is separate from medical care.
GLOSSARY OF HEALTH INSURANCE TERMS
Here's a glossary of health insurance terms, drawn mainly from the federal Centers for Medicare and Medicaid Services and from the government's HealthCare.gov website.
Allowed Amount. Maximum amount the insurance company will pay for a service. This may be called eligible expense, payment allowance or negotiated rate. In-network providers usually can't charge more than the allowed amount. If your out-of-network provider charges more than the allowed amount, you may have to pay the difference.
Balance Billing. When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. An in-network provider may not balance bill you for covered services.
COBRA. A federal law that may allow you and your dependents to temporarily keep your company health coverage after your employment ends. You pay 100 percent of the premiums, including the share the employer used to pay, plus a small administrative fee.
Co-insurance. Your share of the costs of a covered health care service, calculated as a percent (for example, 20 percent) of the allowed amount. For example, if the health plan’s allowed amount for an office visit is $100, your co-insurance payment of 20 percent would be $20.
Co-payment. A fixed amount you pay for a service, usually when you receive the service. For example, a doctor's visit may have a $15 co-payment.
Deductible. The amount you must pay for health care before your insurance kicks in. For example, if your deductible is $1,000, your plan won’t pay anything until you have paid $1,000 yourself, not counting your regular premiums. Preventive services are provided free without a deductible.
Exclusive Provider Organization (EPO) Plan. A health insurance plan where services are covered only if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).
Health Maintenance Organization (HMO). A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. The HMO sometimes requires permission from your primary care doctor before you visit a specialist. HMOs often provide integrated care and focus on prevention and wellness.
Network. Doctors, hospitals and other medical providers that have signed a contract with your insurance plan agreeing to certain discounted charges for certain services.
Non-Preferred Provider. A doctor, hospital or other medical provider who doesn’t have a contract with your health plan and isn't in its network. You'll pay more to see a non-preferred provider.
Preferred Provider. A provider who has a contract with your health insurer to provide services to you at a discount.
Preferred Provider Organization. A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Premium. The amount you pay regularly for your health insurance. It's usually deducted from your paycheck, or billed to you monthly.