Wednesday, December 21, 2011

Welcome to Today's Health!

Welcome to Today's Health, a weekly blog dedicated to all things related to the current state of health care in the United States.  Check back often and please feel free to leave comments or long as they are civil and related to the post.  Inappropriate comments will be removed by the Administrator (me).

The first blog post asks the question:  So You Say You Want to Buy Insurance on the Individual Market?

I recently had occasion to consider what life would be like for me if I had to provide my own health care coverage.  While researching the individual insurance market, I visited the Obama Administration's website  This site has an interactive feature that allows visitors to fill out a short personal health assessment (age, health, preexisting conditions, etc.).  Once the “application” is completed, the visitor is one "click" away from viewing examples of individual health care plans available in the individual insurance market that fit his or her particular parameters and at what price.  

I completed my personal assessment in minutes and then clicked the search button.  Many health plans appeared but my initial excitement over this phenomenon quickly faded.  It became apparent that the lower the premium I was willing to pay, the higher were the deductibles and out-of-pocket maximums.  In fact, in my case, the lowest premium was almost $400 a month (just for me, no family coverage) with an annual deductible of $3,000 and out-of-pocket maximum of $6,000/year.   If you are like me, used to employer-sponsored coverage under an HMO or PPO where there are low or no deductibles, this represents a huge change.

Now what does this premium structure mean in practical terms?  It means that I would have to pay $3,000 in medical costs each year before the insurance company started paying anything.    It means that every year, I would have to pay not only the $4,800 in annual premiums but also pay the first $3,000 in medical expenses.  In other words, barring unforeseen circumstances, in most years I would lay out $7,800 and my insurance plan would pay nothing.  In my view, choosing one of these plans is tantamount to gambling that I would be unlucky enough to pay the first $400 monthly premium, become extremely ill or have an extremely expensive (catastrophic) accident which lands me in the hospital for an extended stay.  I would then be required to pay the $3,400 premium/deductible combination, plus the applicable co-payment (20% in a typical 80/20 plan up to the $6,000 maximum) and then the insurance would pay 80% of the remaining reasonable and customary charges.  I imagine that insurance companies are betting they never have to pay off on medical care for most people. 

I pose two caveats to the results gleaned by the widget:  A notation occurred on the “quotes” of some companies, warning that the actual price quoted could be much higher than what is shown.  And, worst of all, for one particular carrier, 67% of people who apply for the coverage (presumably with my health care assessment particulars) are turned down for coverage – even though the individuals may have been willing to pay a premium that was over a thousand dollars a month.  Companies are gambling that they will win but are hedging those bets by refusing to take people who might actually need the coverage.  

I highly recommend that the next time you hear talk of the repeal of health care reform  - or of subsidies intended to "help" us purchase individual coverage - that you visualize yourself as unemployed, no longer secured by the safety net of your employer’s health insurance coverage.  Better yet, assume that your COBRA benefits also have run out or, like many of us, that you may be unable to afford COBRA premiums and so you opt not to take the coverage.  You are now reduced to obtaining health insurance coverage from the individual market or maybe from an assigned risk pool if you qualify for that coverage.  It is with that mindset that I urge you to try the widget one time at  It's an eye-popper.

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