US News: Health Plans Heap Costs on Consumers (Patients)
How many ways can you be fooled by a health insurance plan? Let US News and World Report count the ways (http://health.usnews.com/health-news/health-insurance/articles/2012/10/0...). Excerpts:
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. Large numbers of plans severely limit coverage for such services as prescription drugs, maternity coverage, mental health treatment, and rehabilitation therapy. . .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 subcategories—hospitalization, outpatient surgery, name-brand prescription drugs, and emergency room visits are just a few examples—and how much of the cost consumers have to pay. A one-star plan may cover a limited set of services, a broader array of services but less of their cost, or both. A five-star plan provides a larger, thicker security blanket. . .Plans are regulated by states and sold within their borders, so U.S. News took the additional step of comparing the characteristics of plans available in different states.
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. Millions of people who now can't afford insurance or who can't qualify for coverage because they have preexisting conditions will be able to purchase coverage through state or federal exchanges that offer a wide selection of plans with standard categories of benefits and clearly stated costs.
If consumers choose plans that fail to meet their needs, it may be because they're confused. Compared with group and government plans, which often provide more structured benefits, individual plans have long been difficult to decipher, experts say, and have offered a patchwork of benefits, costs and coverage for medical services and products. "This makes it very hard to compare value," says Roland McDevitt, director of healthcare research for Towers Watson, a global benefits consultant.
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.
The Best Health Insurance Plans ratings also analyzed the monthly premium consumers are quoted when they apply. The quoted premium represents the lowest amount charged to an extremely healthy applicant; the final figure can be far higher. Our analysis showed that about one-third of the plans charged at least 25 percent of applicants a higher premium than they were originally quoted. About 1 plan in 10 charged a higher-than-quoted premium for more than half of applicants. Until health reform goes into full effect, the premiums reported by health insurers to CMS are no guarantee of what insurers will ultimately charge for coverage. After the law is fully enacted, insurers will be required to meet certain cost standards, including limits on rate increases.
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 sense—to 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. "You need to dig deeper to find out why a cheaper plan is cheaper," says Karen Pollitz, a senior fellow at the Kaiser Family Foundation in Washington, D.C.
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.
Pollitz advises starting with the deductible, the amount you must pay out of pocket before most coverage kicks in. The median deductible of the plans in the U.S. News analysis was $2,700 for individual plans and $6,000 for families. In general, plans with lower deductibles have higher premiums. Individual plans with premiums above the $284 median had a median deductible of $2,000. For those with premiums below $284, the median deductible was $5,000.
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.
The patient's share of the responsibility for medical bills often begins with the upfront copay. More than 30 percent of plans charge copays of $35to $750 for emergency room visits. Forty-five percent of plans charge copays ranging from $10 to $125 for prescription drugs listed by plans as "preferred" choices—and nearly 1,000 plans require copays for preferred prescription drugs even after plan members have paid the deductible, the analysis shows.
But copays represent a far smaller expense to consumers than coinsurance, generally imposed as a percentage of the cost of a drug or medical service. Even after reaching the deductible, more than one-third of individual health plans require patients to shoulder coinsurance of 20 or 30 percent of the bill for diagnostic tests, medical images, emergency room visits, outpatient surgery, and hospital care, based on our analysis.
Consider the financial jolt of heart bypass surgery, performed several hundred thousand times a year in the United States. Hospital charges alone—not including bills for diagnostic testing, imaging, or rehabilitation—can cost $35,000 or more, according to Medicare data in the Dartmouth Atlas of Healthcare. Coinsurance of 20 percent of $35,000 adds up to $7,000. Nor do those amounts include charges by the surgeon and other physicians. Physicians' fees are billed separately, even if care is provided in the hospital. More than half of the health plans in the database require hospital patients to pay 20 or 30 percent of doctors' charges, U.S News found.
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. "A lot of doctors who work in hospitals don't sign up for a plan's network," Pollitz says. "Anesthesiologists, hospitalists, pathologists, emergency docs—you may not even see them. But if they were involved in your care, they're going to send you a bill. And if they're out of network, it's going to be a big bill." The same is often true for hospital services, such as occupational therapy, that are not provided by physicians. Your wrist surgery might be covered by your plan, but the occupational therapy department at the same hospital could be out of the plan's network.
Consequences can be dire when a plan doesn't offer certain drugs or drug categories or medical services—or makes them unaffordable by requiring patients to pay a large part of the cost. "I just finished cancer treatment, and there's only so far you can go on generic drugs," says Pollitz, noting that cancer patients sometimes stop chemotherapy not because they can't afford chemo itself but because they can't afford drugs that control the side effects.
Insurance plans know that purchasers look mostly at the monthly premium, and so they do what ever they can to get that premium down. And they achieve that by many maneuvers, including changing deductibles, co-pays, and co-insurance. But they also do it by restricting what can actually be purchased with the insurance. They contract with a hospital, but not with the physicians who work at the hospital--radiologists, pathologists, anesthesiologist, cardiologists, etc. So if you are admitted to the hospital and need an X-ray, blood test, electrocardiogram, or anesthetic, you won't receive any health insurance support for those 'purchases'. Silly you, thinking that you were covered. And they heavily restrict other services, like physical therapy. And maybe you will only be allowed to get generic medication. And these contractual limitations are a shifting ground. After you have purchased a policy, you may not be made aware of changes to the contracted services available through your insurance, which can be made unilaterally by the insurance company.
The Affordable Care Act is not affordable for individuals, families, and the taxpayers who will be financially supporting these purchases, largely because this business model of health care financing is completely dysfunctional from the patient's perspective. It only works as a guarantee of health plan profitability.
Dr. Joe Jarvis