Health Insurance? What Health Insurance?

The news has been very good lately for President Obama’s signature health care reform law. The administration has met its target of 7 million people signed up on the www.healthcare.gov website. Now the Congressional Budget Office projects that 12 million previously uninsured people will gain healthcare coverage this year. The CBO report also states that the law will cost the government $5 billion less than previously projected.

This is all wonderful news, if only the health insurance industry actually offered a product that is worth the paper on which it’s printed.

Before the Affordable Care Act became law, most policies offered a relatively low deductible. There would be co-payments for in-network providers and higher coinsurance rates if patients went to providers outside of their network. Also, most policies carried a lifetime maximum of $1 million.

 

Most important of all, these plans would actually pay out benefits to help offset the cost of healthcare before the benefit period (usually calendar year) ended. Offsetting costs was the main reason why people paid premiums for healthcare coverage. Payments validated the concept of health insurance. Those policies - unless you happen to be lucky enough to have a health plan through a union - are disappearing fast.

In recent years, the health insurance industry started offering so-called consumer driven high deductible health plans. These plans predate the ACA by several years, so it is not fair to blame the proliferation of these policies on the law. These plans are popular with consumers, so say the insurance industry. The main attraction is the low premiums.

Businesses and individuals are paying next to nothing in premiums for these plans because it is all that most people can afford. For these low premiums, the consumer gets no benefits until the catastrophic level deductible - ranging from $2,000 to $6,000/year and higher - is satisfied. In other words, if you pay next to nothing in premiums, you should expect to get (all together now) next to nothing in benefits. Many people expect better than this, and are absolutely stunned when they learn that they are responsible for the first two or three thousands of dollars of medical costs.

I know this is true: I’ve worked in customer service in various capacities within the health insurance industry for over 25 years. The complaining, whining, moaning, groaning, and screaming never stops. The hapless customer service rep can only confirm that the policy paid their claim correctly, sympathize with the caller, and advise them of their appeal rights. The only problem is that the customers themselves get little more than the rep's sympathy when all is said and done.

The consumer driven part is also a joke. The theory goes that if consumers shop around for prices on their healthcare costs, then the costs will be driven down all around. One small problem: providers are loath to release this sort of information ahead of time. I found this out when I tried to get a price for a CPAP mask through a local supplier. I wanted to compare it to prices I found on the Internet. When I asked for the price from my brick and mortar supplier, I was told that they did not have access to that information!

Really? The vendor who will sell me the item does not know how much it costs? Really?

I would not have cared about the price if I had a policy that would help cover it, but since the entire charge was applied to my deductible, I cared. Naturally, that’s the whole point of the high deductible health plans from the insurance carrier’s point of view. Or, as they are wont to say, it lets everyone “get a little more skin in the game.”  

Godfrey Daniels! I don’t mind paying my fair share, but I do want some skin left on my body at the end of the day! Is that so wrong?

It is also difficult to pin down the price of a procedure to an exact dollar amount owing for unforeseen circumstances. Sure, we could get a price of $2,000 for a surgery, but what if the patient suffers complications? How do you work that scenario into the equation?

The health insurance industry can hide behind the “consumers want this product argument all they want”, but it does not bode well for the concept of health insurance. It only perpetuates the widely held viewed (widely held by the consumers purchasing the policies at next to nothing prices) that insurance companies will do anything to keep from paying out claims. It is as if the health insurance industry is throwing its hands in the air, and admitting that health care costs are even too high for them to pay, even with negotiated fees. In this scenario, they can no longer validate their concept.

FULL DISCLOSURE: I do not have health insurance. I have Independence Blue Cross. These two lines are not a contradiction.

(Thank you for reading! Health insurance? I don’t have to show you any stinkin’ health insurance! HA!)