By Dan Weissmann December 9,
2019
Health care — and how much it costs —
is scary. But you’re not alone with this stuff, and knowledge is power. “An Arm
and a Leg” is a podcast about these issues, and its second season is
co-produced by KHN.
It’s open enrollment — time to pick
next year’s insurance — for folks who buy it on their own and for many of us in
our jobs. Lots of us aren’t sure we know how to pick, and research shows: We’re
not wrong.
A group of economists found that most people will not make the best choice among the plans in
front of them.
And it’s not just average people who
have trouble. One of the economists who did that research — George Loewenstein of Carnegie-Mellon University — told me he
was personally dreading the process of helping his adult son pick a plan.
“I have no confidence that I’m going
to make the right decision,” he said.
So, it’s not just you.
Most of us, Loewenstein and his
colleagues found, have two main problems: We don’t understand all the terms,
and we have a hard time doing the math.
The good news is, you can avoid some
of the worst mistakes. That can mean saving thousands, or even tens of
thousands of dollars.
Here’s what you’re aiming for.
Set Realistic Goals
You’ve seen the stats, like how most bankruptcies involve medical debt, and you’ve seen the
horror stories, like the guy whose first month of dialysis threatened to stick him with a half-million-dollar bill.
The goal in my family is simple:
Avoid disaster.
That may mean paying a little more
every month. A health insurance payment — the monthly premium — is very
annoying for most of us, especially since we often still have to shell out to
see a doctor, even with insurance.
But getting that monthly payment as
close to zero as possible? Probably not your best move. Not if it puts you at
risk of a horror story you could avoid.
So: Be very careful with plans that
don’t comply with Obamacare rules. They’re sometimes marketed as “Trumpcare” — which is not actually a thing — and although they do tend to
have lower premiums, they could leave you vulnerable in unexpected ways.
Just ask the woman in Philadelphia
who had her foot amputated. Her insurance plan’s response: “Nope! Not covered.”
Understand The Terms
Quick: What’s a deductible? What’s a
copay? What is coinsurance? What does out-of-network mean? What does OPX stand
for?
And those are just the basics. If
you’ve got them down cold, you can skip to the next section, but otherwise
here’s a quick rundown:
·
The deductible is how much you shell out before your
insurance covers much of anything. The amount can be absurdly high. If your
plan has a $7,000 deductible, ask yourself, “Where would I get hold of seven
grand?”
·
Copay is how much you pay for an office visit with a doctor. Usually
a flat amount: $20 or $30 … or more.
·
Coinsurance is your share of other medical expenses — stuff that can get
pricey, like a hospital stay. Usually expressed as a percentage: 10%, 20%, etc.
(Of course, serious medical stuff gets so expensive super quickly, so 10% of a
LOT is … a lot.)
·
The network is the set of providers — doctors, hospitals,
clinics — that accept your insurance. Anybody who doesn’t take your insurance
may be able to charge you … whatever they want.
·
OPX stands for out-of-pocket maximum, and it’s a key number: It
puts a cap on how much you could pay (beyond your premium) in a given year.
If you could use more detail, here
are some resources:
·
Smart and well-organized: The great reporter Sarah Kliff, formerly of Vox now with
the New York Times, offers the most confusing words in your health insurance forms, explained.
·
Longer, more fun, also great: “An Arm and a Leg” podcast listener
Anna Jo Beck sent in a self-published booklet that
does a great job explaining the basics and more. Friendly, thoughtful,
and sprinkled with lovingly captioned pictures of stuff like toddlers, kittens
and newlyweds — which Beck describes as “moments of cute, heartwarming
distraction to keep you from totally wanting to give up hope.”
·
Less warm and fuzzy, but very straightforward: This Health Insurance 101 post from Reddit’s personal-finance
community.
Do The Math And The Research
For the math, you’re going to want to
make a spreadsheet. Maybe open yourself a beer first.
To evaluate an insurance plan, you’re
solving for two things:
1. What does this plan cost me in a
normal year?
If you’re superhealthy, maybe that
means you don’t go to the doctor at all. If you’ve got some conditions that
mean you know you’ll need a provider, or you’re going to need access to meds,
figure out what those copays and coinsurance fees might add up to.
2. How much might this plan protect
me — and how much would I still have to pay — if, God forbid, I got hit by a
bus or something?
That’s really what insurance is for,
and you want to know the answer to this one. It’s usually the same as the
answer to “What’s my out-of-pocket maximum?” — assuming you’ve done the
research.
The research? This is where you study
the network.
This step is especially important if
there are things you know you will — or could — need next year: Might you or
your partner get pregnant? Have you reached the age where docs say you should
get a colonoscopy? Is there a funny rash you’re starting to worry about?
You get the idea.
If so, definitely make sure
you’re OK with whichever providers are in the network for a given plan.
Because remember that key term,
“out-of-pocket maximum”? Well, in a lot of plans — including everything on the
Obamacare exchanges — this threshold applies only for in-network providers.
With out-of-network providers, not
only are they free to charge whatever they want, your insurance is not there to
put any limits on what you might have to pay.
For details about making your
spreadsheet: Check out this first-person account by Zachary Tracer, the health care editor at
Business Insider — which is illustrated with a photo of him working
his spreadsheet, beer close at hand.
About the research: It’s not easy,
especially if you’re going to the hospital for something like surgery or
childbirth. A reporter from Bloomberg who writes about health care recently posted to Twitter asking for advice.
Get Help, The Best You Can Find
Here’s why my economist source was
dreading this process. Getting to the bottom line taxes the average person’s
spreadsheet mojo.
I thought I could figure it out on my
own. When I said that to Lynn Quincy, who runs the nonprofit Health Care Value
Hub, she laughed.
“Your plan could have different
deductibles,” she said. “It could have a general deductible, it could have a
pharmaceutical deductible, it could have a hospital deductible.”
She was basically saying, How’s
your spreadsheet looking now, smart guy?
Of course, the answer was: Looking
pretty sad.
For instance, here’s part of an
actual quote my insurance agent sent this fall: $200 IP $150 OP
I was, like: What do IP and OP
even stand for? Just getting the answer to that required a couple of
tries-and-misses with Google on my part — and I report on this stuff full time.
(Answer: “inpatient” and “outpatient.” But even now that I’ve got that answer …
how could those numbers affect my bottom line?)
There are automated services that can
help — basically, databases that do the math for you — but we don’t all have
access to them. Some employers offer this kind of thing as a benefit.
Check with your HR department, and if
it’s an option, jump on it. And if it isn’t, well: Ask your HR folks all the
best questions you can. And ask if they’ll consider adding a service like that
next year.
In some states, the Obamacare
exchanges offer a similar service, developed by a nonprofit called Consumers
Checkbook. Here’s the list of states where that’s available.
For the rest of us, here’s a place to find
actual human beings near you whose job it is to explain this stuff.
Note that you’ll find two types of folks listed:
·
“Assisters,” who can help you navigate the Obamacare marketplace
or see if you qualify for programs like Medicaid. They’re obligated to be on
your side, paid by government grants.
·
“Agents/brokers” can also help you navigate … but they’re generally
paid by insurance companies. And not all states require them to act in your
best interest.
OK, there it is — and, of course,
it’s not entirely pretty.
Just remember: It’s not just you.
And this: This is not an SAT
question. There’s no one right answer.
Especially: It’s not realistic ― and
probably not a good idea ― to shoot for a game plan where you end next year
having spent the absolute least amount of money possible on health care and
insurance. Life is kind of a crapshoot that way.
But with a little patience ― and
maybe a stiff drink ― you can reduce the risk that you’ll go broke. And that’s
worth doing.
Dan Weissmann is the host of “An Arm and a Leg,” a
podcast about the cost of health care, now in its third season. It is
co-produced by Kaiser Health News.
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