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Tuesday, October 13, 2009

What, exactly, is a "high-cost insurance plan"?

Posted by Jill | 5:30 AM

In my last job, I was fortunate to have health insurance that was the same as what state workers had, and I think we all know that state government benefits are among the most generous in the country.

When I had my last colonoscopy, the worst thing I had to worry about was that the insurance company made out the check to me instead of the medical group, so I had to endorse it over. No questions about the anesthesia, no nitpicking about covered expenses.

I know I'm anticipating trouble where it hasn't occurred yet, but I also know that a recent visit to a non-network doctor resulted in not only the claim being turned down, but also not applied to my deductible because only "covered" expenses (i.e. expenses that the insurance company in theory would "cover") are applied to deductible, which means non-network doctor visits aren't even applied to the deductible you have to meet before they're covered.

Again: This plan costs my employer and me over $12,000/year.

Now it seems that Congress is dickering about taxing "costly health plans":

A proposed tax on high-cost, or “Cadillac,” health insurance plans has touched off a fierce clash between the Senate and the House as they wrestle over how to pay for legislation that would provide health benefits to millions of uninsured Americans.

[snip]

Under the Finance Committee bill, the tax would be imposed beginning in 2013 on employer- sponsored health plans with total premiums exceeding $8,000 for individuals and $21,000 for families, regardless of whether the coverage was paid for by the employer, the individual or both. The tax would be paid by insurers, who would be expected to pass along the cost to customers.

Critics say that would mean an increase in premiums or in out-of-pocket expenses for employees, raising medical costs for individuals and families.

Supporters say the more likely prospect is that employers would bargain-hunt or take other steps to avoid the tax, putting pressure on insurers to offer cheaper coverage and slowing the rise in medical costs for everyone.

Again, there's that word "coverage." But as we all know, "coverage" on paper and actually paying claims two different things, and often mutually exclusive.

This article in Business Week from 2004 explains what "cheaper coverage" usually means:

In early 2001, seven years after Doug had successfully battled bone cancer, the couple needed new health insurance. So they were all ears when a representative from a group called the National Association for the Self-Employed knocked on the door of Doug's boat repair business in Marina del Rey, Calif. The rep offered what sounded like a great deal: For just $434 a month, MEGA Life & Health Insurance Co. would cover them both. The policy even carried a chemotherapy rider in case Doug's cancer came back.

[snip]

But when the cancer did return later that year, they received a shock: A few months after Doug started chemotherapy, Cedars-Sinai Medical Center refused to treat him anymore, saying he had already used up the MEGA coverage. The problem: It capped chemo coverage at $1,000 a day, even though Doug's cost up to $18,000 -- fine print Dana says they were never told about. The doctor got Doug transferred to another hospital. But after he died in October, 2002, at the age of 48, Dana was stuck with almost $500,000 in medical bills that MEGA refused to cover, and now lives on her boat to save money on rent.

[snip]

Across the country, insurers are pitching a kaleidoscope of plans that collect millions in premiums and fees but don't pay all claims or serve up shabby service. This summer alone, Montana has issued 15 cease-and-desist orders against medical discount plans hawking coverage for $89.95 a month, no questions asked. In Florida, officials have shut down 200 fake insurance operators in the past two years. In February, the General Accounting Office found that 144 unlicensed health insurers covering 200,000 people have left $252 million in unpaid medical claims in recent years. Overall, health-care fraud cost $54 billion in 2003 and is growing by at least 3% a year, according to the National Healthcare Anti-Fraud Assn., a nonprofit group in Washington, D.C.

That, my friends, is what "cheaper insurance" means, both for employers and for the rest of us.

There is just no getting around the fact that unlike automobile insurance and homeowners' or renters' insurance, which all of us require and will probably never need, health insurance means claims for everyone who has it, sooner or later. This simply cannot be accomplished under the for-profit model.

Labels: health care

2 comments

2 Comments:

Interrobang said...

And that's why I never married that American ex of mine and moved to the US. Sure, the employment situation was far better there than it is here (that has since reversed itself too), but I had a preexisting condition by the time I emerged from the womb, two and change months premature, vastly underweight, and not breathing.

Thanks to the provincial healthcare plans of Alberta and Ontario, not only were my parents and I not bankrupted by those and subsequent problems and their necessary remediations, but I'm now a working, taxpaying citizen.

I'm not actually sure what would have happened to me if I had been born in the US, being as I was born (premature and not breathing) to a 16 year old girl who had absolutely no intention of keeping me (probably under duress) and was adopted subsequently, but that was after I spent a bunch of time in an incubator on oxygen and stuff. Frankly, I can well imagine doctors at a for-profit hospital deciding that I wasn't worth saving and just letting me flicker out, but I hope I'm just being paranoid there.

10/14/09, 12:35 PM

Anonymous said...

Let's begin here:

1) The OP says because a system has scam artists that there's no way to provide less expensive coverage without each of us getting scammed by the less expensive plan.

2) @Interrobang - You didn't get married because of your worries of what a doctor might have done, in a different country, decades before today.

3) If you seriously think doctors might let a baby "flicker out" simply because it, nor the degenerate mother, can pay the bill is ludicrous. You've obviously never worked in a hospital.

4) I'm surprised a premature, drug addicted baby has managed to learn to write so well in English, especially one from Canada.

3/24/10, 7:37 AM