Many Insurance Plans Heap Healthcare Costs on Consumers
Plans with lower premiums burden members with potentially crushing costs
By Steve Sternberg and Chris I. Young
U.S. News & World Report, October 3, 2012
A first-ever U.S News analysis of nearly 6,000 health insurance plans marketed to individuals and families reveals that many of the consumers who enroll in these plans may confront budget-wrecking out-of-pocket costs that deplete their savings.
Each of the plans in the U.S. News database was scored and assigned a rating of one to five stars; plans available to both individuals and families were rated separately for each. A plan’s score depended on completeness of coverage in as many as two dozen benefit categories and subcategoriesāhospitalization, outpatient surgery, name-brand prescription drugs, and emergency room visits are just a few examplesāand how much of the cost consumers have to pay.
The plans U.S. News rated, which are those sold to individuals and families who have no access to employer or public coverage, currently cover some 14 million people. That number could very well double once the major provisions of health reform’s Affordable Care Act take effect in 2014, according to the bipartisan Congressional Budget Office, because the ACA mandates that everyone must have health insurance or pay a penalty.
U.S. News spent several months working with data obtained from the Centers for Medicare and Medicaid Services (CMS), a federal agency that summarizes plan coverage and pricing on a consumer page but does not rate or rank plans against each other. The analysis posed many challenges, including constant flux in the number of plans available in the federal database. That is because of incomplete reporting and because health insurers periodically create new plans and stop enrolling applicants in established ones.
Research into purchasing behavior shows that health insurance shoppers are strongly influenced by the size of the monthly premium. It is a regular outlay, like a mortgage or rent payment, so weighing its impact on one’s monthly budget makes senseāto a point. An individual or family that opts for an easily affordable premium can be blindsided in the event of traumatic injury or major illness. A plan that may seem like a good choice because it has a lower monthly premium may require consumers to pay much more out-of-pocket every time they need medical care.
Plans are often far from transparent about how much consumers must pay for medical services. The term “out-of-pocket maximum,” supposedly meaning the most a consumer will have to pay for medical services, is misleading; 90 percent of plans exclude some combination of deductible, copays (upfront fees paid for service), and coinsurance (the consumer’s share of the charges). Nearly 100 plans exclude all three. A plan member with average coverage who needs surgery could end up paying thousands more than their out-of-pocket cap.
If a hospital’s physicians aren’t members of a health plan’s network, the cost may climb even higher, an expense that often comes as a shock to plan members who assume their care is covered. The same is often true for hospital services, such as occupational therapy, that are not provided by physicians.
The higher you have to climb the deductible ladder before benefits are paid out, the more vulnerable your income and savings. Medical bills tend to come in waves. A routine doctor’s visit that starts with an annual physical and progresses to a tentative diagnosis can trigger a cascade of expenses, from lab tests to prescription drugs to inpatient or outpatient hospital procedures. Plans rarely cover more than a portion of those costs, which may add up to tens of thousands of dollars when severe illness strikes.
http://health.usnews.com/health-news/health-insurance/articles/2012/10/0…
No surprise. The title of this article says what we already knew: “Many Insurance Plans Heap Healthcare Costs on Consumers.” Further, individuals and families most often select plans based on how easily affordable the premium is, and those plans can easily exceed the supposed out-of-pocket maximum.
The Affordable Care Act includes some measures that will reduce some of the abuses of these plans, but it still leaves in place the fundamental infrastructure of private health plans. Shoppers in the state health insurance exchanges should understand that the plans they purchase will ensure neither financial security nor health security. We can do far better, beginning with establishing a single payer infrastructure.