Tuesday, December 11, 2018

Psyching Out Health Insurance

After staring at Affordable Care Act plan choices for hours, and taking lots of time to parse wording and seek foothold on the actual decision points, I believe I've found the gist and uncovered the game.

This is deliberately confusing. It buries the actual decision point. Consider:

Deductible is 5500, and max out-of-pocket is 6550. This means "50% coinsurance after deductible" (e.g. emergency and hospital services) only applies between 5500 and 6550 in expenses. Up until 5500, you're paying in full. Past 6550, you don't pay a cent. So virtually all terms of the plan apply to the very narrow terrain between those points. So it's all misdirection.

Upshot: you'll pay some, one way or another, for all your standard health care stuff like doctor visits and prescription costs. You can't get around this. You might find a hugely expensive plan taking care of most of that stuff (there are no such plans in NY state under Obamacare), but premiums would be so high that you'll still lose in the end. It's like Vegas: you will absolutely lose in the end, so strategy, insofar as it exists, is entirely about setting hard limits.

Fortunately, Obamacare makes this aspect super clear, via "maximum out-of-pocket". That's the point where your insurer shuts up and pays. Forget coinsurance, copays, deductibles, etc.; the health care system opens up and saves your ass from potentially infinite expense. [UPDATE: Hmmm...maybe not. Definitely read this.)

And god bless Obama for making it so they can't cut you off for previous conditions or if your totals do get scary high. That's not a scenario most of us will experience, but it's extraordinarily relieving not to have to worry about it. Also: the exchanges are highly regulated, so the cheapest plan will keep you just as alive as the most expensive one. That's not clear at first glance, either. A lot of the goodness is baked in and not explicitly touted.

Typical doctor visits and prescription charges are more or less set costs (a tad higher or lower from plan to plan, though you will never ever find one mis-priced to give you a break). Above/beyond that overhead you'll be highly vulnerable (in case of health surprises) up to the max out-of-pocket. All variability between ACA plans occurs in the subtle shadings within that vulnerability window. Which is to say, they don't really matter! What matters is your maximum out-of-pocket. So keep your eye squarely on that number. I did, and chose a cheap bronze plan from Oscar.

I'm shaving complexity here, but by no means implying that you shouldn't still study and compare coverage. For example, one important variable for me is the "gatekeeper" requirement. Oscar doesn't make you go to your primary care physician for specialist referrals (a huge pain).


Unknown said...

Jim, I may be out of touch as I've not yet had to use the exchanges, but looking at the terms of this plan just makes me angry. This is not a real health insurance plan; it's the healthcare equivalent of "break glass in case of emergency". I was under the impression that Obamacare had all but eliminated these kinds of plans.

Real health insurance means walking into the doctor's office, paying a nominal fee, and never seeing another bill. Every single American should have access to this type of healthcare coverage.

Jim Leff said...

As I wrote, either way - via premiums or via out of pocket - one pays. Insurance is not about someone else picking up the tab for normal day to day expenses. That’s Medicaid. Insurance (not just health; any insurance) is specifically and exclusively for that break-glass scenario. For when your needs aberrantly deviate from statistical norm. For crisis.

That’s what insurance is. What you describe as “real” insurance is not insurance, but welfare. You may favor a welfare approach vs an insurance approach to health care (though, even then, someone somewhere pays), but I’m not sure why you’d feel angry about it. That may (or may not) be where we wind up as a country, but it’s not where we’ve ever been, and it has nothing to do with the principle of insurance.

Unknown said...

"Insurance is not about someone else picking up the tab for normal day to day expenses. That's Medicaid."

First of all, I wouldn't say that routine healthcare is a "day to day expense" like grocery shopping. It's an occasional but necessary and vital one that is more important than any other type of expense one would incur. As such, health insurance is a special carve-out, and is unlike any other insurance product.

Additionally, whether or not a product qualifies as insurance isn't determined by whether or not the consumer pays 100% of the cost. By your definition, millions of employer and union subsidized health plans would be disqualified from being called insurance. I've had plans that function as I describe above and as a Type I diabetic on an insulin pump, I can tell you that they were essential to my well-being.

Medicare and Medicaid are both types of social insurance, as is unemployment insurance. That they are government subsidized doesn't make them any less an insurance product than an employer subsidized plan.

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