Monday, October 28, 2013

HCR -- High-Deductible Plans Sticker Shock

The rules have changed. Health care plans now must actually insure better health care. Insurance plans must pay at least 60 percent of allowed medical expenses and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. This means those so-called "catastrophic coverage" plans, growing in popularity as the costs of health care continue to go up, now have limits.

But why? 
This by Dr. James Knickman, a New York public health policy authority, formerly with the Robert Wood Johnson Foundation at Princeton, says this:

The Downside of High-Deductible Health Plans
[...] The logic is that these plans, with an average annual deductible of around $2,000 for individuals and $4,000 for family coverage (although there is considerable range in these options), force consumers to have "skin in the game" and make smarter choices about health care. But, on the flip side, might people also delay or forego care when they really need it if they know they're on the hook for a huge deductible? 
The answer, perhaps not surprisingly, is that it depends. Two recent studies have found important disparities in the use of care among patients enrolled in high-deductible plans. 
One study, in the journal Health Affairs, found that people of high socioeconomic status enrolled in high-deductible health plans did cut their use of emergency department visits for lower-severity conditions (those that don't actually require emergency services), by 15-20%. And this group's appropriate use of emergency care for serious conditions did not change. 
On the other hand, people of lower socioeconomic status who were enrolled in high-deductible plans reduced their emergency department use for serious health conditions--like flare-ups of asthma or congestive heart disease--by 25-30%. [* See note below.]
Hospitalizations among patients with lower socioeconomic status also declined in the first year of the study, by 23%, but jumped in the second year, suggesting that delayed care led to even more serious illness requiring hospitalization. 
Another study, in the journal Medical Care, found similar disparities according to gender, with men enrolled in high-deductible plans more likely than women with the same health care coverage to put off needed care for serious issues like kidney stones or chest pain, and ultimately to have higher hospitalization rates. 
These findings are timely, as high-deductible plans are growing in popularity. The rate of enrollment in high-deductible plans has more than doubled since 2009. More than one-third of workers today have an annual deductible of $1,000 or more, in part because Obamacare requires that many important preventive services--regular check-ups, some cancer screenings--be delivered free of charge. And, as Obamacare is fully implemented and the mandates for individuals to have health care coverage and most businesses to offer coverage to their employees, even more Americans--particularly those who work for small businesses--are expected to opt for high-deductible plans, given that they will be among the least expensive options on the new health insurance exchanges.
* In other words, people with higher incomes with high-deductible plans do save health care costs in two ways. First, a few (15%-20%) look for competitive prices when getting treatment for non-emergency issues and only go to the emergency for real emergencies. But about a fourth (23%) of  lower-income people with the same plans appear not to spend as much for medical issues and actually get hospitalized more the second year, having neglected taking care of themselves to save money. 

==►  Remember, this legislation is intended to correct two glaring problems. 
First, the costs of health care in America is the highest in the world and growing at an unsustainable rate. Second, too many people get zero routine care and use emergency care inappropriately, thus adding to soaring medical care costs for everyone.  

This is from an article in Washington Post underscores many of the same points. 
Low-premium, high-deductible health plans are endangered by Affordable Care Act
Rod Coons and Florence Peace pay $403 a month for a family health plan that covers barely any medical care for either of them until he or she reaches up to $10,000 in claims in a given year. And that’s just the way they like it. 
“I’m only really interested in catastrophic coverage,” says Coons, 58, who retired last year after selling an electronics manufacturing business in Indianapolis. Beyond their premium, the couple typically spends no more than $500 annually on medical care, Coons says. “I’d prefer to stay with our current plan.” 
That won’t be an option next year. In 2014, plans sold on the individual and small-group markets will have to meet new standards for coverage and cost-sharing, among other things. In addition to providing 10 so-called essential health benefits and covering many preventive-care services at no cost, plans must pay at least 60 percent of allowed medical expenses and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. (The only exception is for plans that have grandfathered status under the law.
Plans with $10,000 deductibles won’t make the cut, experts say, nor will many other plans that require high cost-sharing or provide limited benefits — by excluding prescription drugs or doctor visits from coverage, for example. Plans next year can continue to be linked to a health savings account, however. 
According to the Department of Health and Human Services, based on the 10 states (and the District) that have so far proposed individual market premiums for next year, the average monthly rate will be $321 per person for a mid-level plan. 
Many policyholders don’t realize their current plans won’t meet the standards set by the Affordable Care Act next year. 
When the online health insurance agency eHealthinsurance began notifying people in non-grandfathered plans that they’d have to change policies in January, the company got so many calls that it shut down the planned week-long e-mail campaign after one day. 
Carrie McLean, the company’s director of customer care, says people who got the e-mail “said, ‘What are you talking about? I thought I was already on an ACA plan.’ ”
Coons is none too pleased, either. “I’m happy with where I’m at right now, but it doesn’t look like that’s where I’m going to be at in the future,” he says. Coons plans to look for coverage through the online state marketplace. The couple may qualify for subsidies available to people with incomes up to 400 percent of the federal poverty level ($62,040 for a couple in 2013).
Obamacare deductibles may cause sticker shock
Insurance companies are requiring higher out-of-pocket expenses to pay for complying with new rules
By Peter Frost
[...]  To promote the Oct. 1 debut of the exchanges, the online marketplaces where consumers can shop and buy insurance, Obama administration and Illinois officials touted the lower-than-expected monthly premiums that would make insurance more affordable for millions of Americans. But a Tribune analysis shows that 21 of the 22 lowest-priced plans offered on the Illinois health insurance exchange for Cook County have annual deductibles of more than $4,000 for an individual and $8,000 for family coverage. 
Those deductibles, which represent the out-of-pocket money consumers must spend on health care before most insurance benefits kick in, are higher than what many consumers expected or may be able to stomach, benefit experts said. 
By comparison, people who buy health insurance through their employer have an average individual deductible of just more than $1,100, according to the Kaiser Family Foundation.
Although millions of Americans will be eligible for federal assistance to help offset some of those costs, millions will not, underscoring one of the trade-offs wrought under the law's goal to ensure most people have access to health insurance. 
"It's been major sticker shock for most of my clients and prospects," said Rich Fahn, president of the Northbrook-based insurance broker Excell Benefit Group. "I'm telling (clients) that everything they know historically about health plans has changed. They either have to pay more out-of-pocket or more premiums or both. It's an overwhelming concern." 
Plans with the least expensive monthly premiums -- highlighted by state and federal officials as proof the new law will keep costs low for consumers -- have deductibles as high as $6,350 for individuals and $12,700 for families, the highest levels allowed under the law. 

Insurance brokers and health care experts also urge caution for consumers who choose plans with higher deductibles. 
"Yes, rates are really low, but that's like saying, 'Here's a free car,' but if it costs you $500 a month to run, it's not really a free car," said Dave Stumm, executive vice president at Stumm Insurance, a Chicago-based brokerage. 
Fahn calls the bronze plans "smoke-and-mirrors catastrophic plans," which don't provide benefits until and unless something bad happens -- a car wreck, a major surgery or a chronic illness. 
For many low-income Americans, the law offers some help, though how much will vary by the individual. 
The vast majority of the uninsured -- an estimated 80 to 90 percent, according to the Congressional Budget Office -- who buy coverage on the exchanges will qualify for federal subsidies in the form of tax credits. Those who make up to 400 percent of the federal poverty level (about $46,000 for an individual and $94,200 for a family of four) will be eligible for the subsidies to help offset the cost of premiums. 
Further, people with incomes up to 250 percent of the federal poverty level (about $28,700 for an individual and $58,900 for a family of four) will qualify for cost-sharing subsidies that will reduce deductibles, in some cases substantially. 
Brokers say they worry most about people who qualify for lower subsidies or none at all. Those with more modest incomes might not have enough in savings to pay for medical expenses. 
They "could get slammed if they get sick," said Pollitz, of the Kaiser Family Foundation. "They just won't have the money. They just won't." 
A potential consequence could be that some individuals may not seek medical care beyond routine office visits when they should, dissuaded by the specter of having to pay for it out of pocket. 
"They'll just live without," Pollitz said, "kind of like they do now."

Obamacare opponents are having a great time pointing out higher rates for those high-deductible plans that have been growing in popularity as health care costs have skyrocketed. Those complaints fall on mostly sympathetic ears since most insured people, thankfully, don't face catastrophic bills. But the numbers that do are increasing -- those facing financial ruin in the aftermath of a horribly expensive medical events.

Sorry, folks. That's why it's called insurance, to insure you against those losses. It's a game of chance. You're betting you're gonna get sick or hurt and the insurance company is betting you won't.

Think of high deductible policies like life insurance. The only way to win is to lose.

Unfortunately those policies have for many the same appeal that those Mega-Millions interstate lottery drawings have. The difference, of course, is that "winning" in this case means facing possible financial ruin. And the sad part is that for many who have never before even had health insurance the bronze plans will be their choice because even with a federal subsidy that's still more than they can really afford. And those among them who do hit crippling medical bills will still get burned -- even with insurance.

Like the man said above, rates are really low, but that's like saying, 'Here's a free car,' but if it costs you $500 a month to run, it's not really a free car,"... the bronze plans [are] "smoke-and-mirrors catastrophic plans," which don't provide benefits until and unless something bad happens -- a car wreck, a major surgery or a chronic illness.


Junk Insurance is at the bottom of the barrel...

Changing subject somewhat (but not much) another group of so-called insurance plans will also vanish from the marketplace, a form of what many call "junk insurance" which attracts many (usually low-income) people by an unbelievably low premium. It's even worse than the "free car" illustration mentioned above.

Technical glitches of the Website have spawned a cottage industry of journalistic cheap shots and hit pieces which are red meat for Obamacare critics. Coupled with a rash of reports of premiums skyrocketing and endless loops of the president's widely-publicized promise that "if you like your present insurance plan, you can keep it" the story becomes low-hanging fruit for unprincipled reporters appealing to an ignorant and often equally unprincipled audience.

This article illustrates the point:

CBS News’ Misleading Obamacare Report: Woman’s Plan Paid $50 Per Service, Doesn’t Cover Hospitalization
On CBS This Morning, [Jan] Crawford reported that 56-year-old Dianne Barrette received a letter last month “from Blue Cross Blue Shield, informing her that as of January 2014, she would lose her current plan. She pays $54 a month. The new plan she’s being offered would run $591 a month, ten times more than what she currently pays.” 
“What I have right now is what I’m happy with,” Barrette says in the report, “and I just want to know why I can’t keep what I have. Why do I have to be forced into something else.” 
There are very good answers to her questions, answers which Crawford, either deliberately or through ignorance, failed to report, answers which are available to anyone with a passing familiarity with health insurance. 
First of all, the plan that Barrette paid $54 a month for is barely health insurance at all. It’s part of a subset of insurance that Consumer Reports calls “junk health insurance” (and which even the company that sells it recommends that customers not rely solely upon) and it pays only $50 towards most of the services it covers. That’s it. If Dianne went to the doctor every week for a year, her plan would pay, at most, $2600. Meanwhile, based on average office visit charges, Diane would pay about $5,600.00. She probably doesn’t go to the doctor every week, of course, which means her plan pays a lot less, while her premium buys her a lot less. If she goes to the doctor, say, six times in a year, she’s paid a $648 premium for the privilege of spending another $600 on office visits. The plan also pays up to $15 per prescription, which will get you a few milligrams of most prescription drugs. The one decent deal on her plan is that it covers 100% of in-network lab services. 
But many people just want the peace of mind to know that if something really bad happens, they won’t have to worry about being billed into the poorhouse. What if the worst happens, and Dianne needs to be hospitalized due to sudden illness or injury? Well, unless Dianne is suffering complications due to pregnancy, her plan covers nothing. If she’s having complications from pregnancy, it covers fifty bucks. It’s entirely possible that now-healthy Dianne is “happy” with this plan, but the whole idea behind the Affordable Care Act is that the rest of us are not happy having to pick up the tab if Dianne gets a disease, has an accident, or otherwise needs to go to the hospital. Frankly, though, Dianne would be better off saving that $648 and negotiating her office visits on her own. 
The plan that Crawford compares Dianne’s junk insurance with (even BCBSFL recommends that customers not rely solely on GoBlue plans), on the other hand, is probably not the best deal available for the money if you’re planning fairly regular doctor visits, but it’s just one of many plans the company offers in that price range. It has a $6,250 deductible that applies to most services (the law requires routine care to be covered at 100%) before the plan pays. However, there’s a cheaper plan ($547/mo.) that covers the first 3 office visits per year at 100%, with a $40 copay after that. BCBSFL offers nine other plans cheaper than the one suggested in Dianne’s letter. 
Like all Obamacare plans, of course, any plan Dianne chooses will have an out-of-pocket maximum of $6,350, versus the current $infinity that her plan offers. 
Additionally, Crawford reports that Dianne “is eligible for some subsidies,” but “she has no idea what the subsidies would be because, of course, guess what, she can’t log on the website.”

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