The Policies Offered By Insurance Exchanges: The Fast Food of Health Care
The exchanges may not be cheap but at least they have low value.
by David Gimlett, M.D.
Now that October 1 has come and gone we are moving in to the era of medical insurance exchanges. These exchanges were created by the Affordable Care Act and are slated to take effect on January 1, 2014. They are designed to be state marketplaces where individuals and small businesses can go to shop for health insurance. Insurance companies are required to offer essential health benefits of various, but comparable, levels of coverage. These have been labeled the “metal” plans, i.e., Bronze, Silver, Gold, and Platinum which are supposed to cover 60%, 70%, 80%, and 90%, respectively, of the insured’s medical expenses.(1) For many reasons, those percentages are deceiving. The plans also are supposed to cap out-of-pocket expenses at the same level as that provided by Health Savings Accounts. That cap does not include premiums, most pharmacy benefits and uncovered services such as multiple physical therapy visits. Eligible applicants will be offered tax credits for premium support or expanded Medicaid coverage.
As a buyer- consumer- patient when looking at the plans it is important to know what physicians, hospital, laboratories, etc. are covered by any given plan. A large percentage of the plans being offered are so-called “narrow networks” which have a small list of providers compared with traditional networks. This has a number of bad effects, especially for people who have their own primary physicians and specialists. The out of pocket costs of going out of the network can be huge whether intended or unintended such as in emergencies, confusion over the complexity, or lack of appropriate specialty care within the network. (2)(3)
Deductibles are another important issue in choosing an insurance plan. This is the money the buyer has to spend before the insurance kicks in. Even before Obamacare the insurance companies were pushing policies with higher and higher deductibles. The exchange policies are building on this process. Some policies can have separate deductibles for provider services, emergency room visits, and prescriptions. This raises the cost to the patient even higher. Often, copayments and coinsurance charges are not included in the deductible. Furthermore, it has been shown that a high deductible encourages patients to forestall or completely avoid needed medical care. If you know that an emergency room visit can cost you $300-$2000 and you have a $3500 or $5000 deductible you may think twice, thrice(?) about going to the E. R. with that uncomfortable abdominal (or chest) pain that you have had for the last 6 hours.(4)(5) This not only defeats the purpose of medical insurance but it can have disastrous consequences. This is the high price of under-insurance. Any policy that has a deductible that the patient cannot afford to pay is not a good investment of the premium dollar. It is telling that, in the United States, studies have shown that 62% of personal bankruptcies are related to medical bills. Sixty percent of those had medical insurance at the time those medical bills were first generated. Obviously there was an issue of under-insurance . (6) The Massachusetts precursor of Obamacare has not improved those figures in that state. It has been rightfully stated that high deductible plans are for only the rich and healthy.
Unfortunately, purchasers, when selecting an insurance policy, look mainly at the premium price. This is the fast food business of the insurance industry. Best advice? Caveat Emptor. Buyer Beware.
2) Out-of-Network Physicians: How Prevalent are Involuntary Use and Cost Transparency,” HSR, June 2013
3) See my blog of 9/24/13 “Narrow Networks :Less Choice, More Cost Shifting”.
4) Half of Insured Adults with High-Deductible Health Plans Experience Medical Bill or Debt Problems
The Commonwealth Fund, January 27, 2005
5) The Impact of High-Deductible Health Plans on Men and Women: An Analysis of Emergency Department Care. Kozhimannil, Kat et al, Medical Care (APHA), August 2013
6) Himmelststein DU, Thorne D, Warren E, Woolhandler S. Medical bankruptcy in the United States,2007: results of a national study. Am J Med. 2009;122:741-746.