Day 55: Stuck between a rock and hard(ly Health “Insurance”) plans

Stuck (stŭk) v.

  1. Caught or fixed
  2. Baffled

* This article was submitted to us by one of our summer interns. Their name is being protected because they currently are in a health care start up protective witness program *

Have you ever felt trapped when deciding your health insurance options?  I have.  Each year I study my health insurance options closely to determine which insurance plan type will provide me with the most value, the best quality and the easiest access to my health providers for the lowest cost. You could say that I am a value (outcomes/price) shopper.

Lets review the options:

The PPO. Most people gravitate toward the “promise” of the doctor-rich PPO plan with the low deductibles and minimal co-insurance. Unfortunately, this attractive insurance coverage is completely unaffordable because the premium typically cost more than  $1,250/month for my family of six!  It is hard to imagine paying >$15,000/year in health insurance premiums alone just to have access to a larger network of physicians and to keep my healthcare copay or coinsurance low should I need to visit a doctor.  Remember, on top of the ~$15,000 for premiums, I am still shelling out several more thousand dollars in out-of-pocket co-pays, co-insurance, and related costs for medical services.

The HMO. Alternatively, I can select an HMO plan for my family for about $600/month, a savings of >$650/month when compared to the PPO.  The HMO includes affordable copays when visiting the doctor or hospital and manageable total out-of-pocket costs in the case of a major healthcare expense.  But, the HMO has its own limitations.  First, the HMO doctor network is small and restricted, with no out-of-network benefits.  Second, HMO docs are paid to “manage costs” and this management all-too-often results in long patient wait times, antiquated facilities, pre-authorizations to visit specialists and typically shorter than 10 minute face-to-face visits with the doctor.  Third, although I’ve never experienced it first-hand, we’ve all heard the HMO horror stories that a disease or condition not being managed well because of the excessive focus on controlling costs (which could also be applied to the PPO option).

The HSA. Another affordable plan is the High Deductible PPO tied to an HSA. HSA’s continue to make steady, albeit small but gaining, increases each year. In this model, I pay about $300 / month for my premium and come out of pocket for the first $7,000 of medical expenses. This could include small stuff (simple visits for cough/colds are all out of pocket to me) as well as big stuff (we actualy like having the babies because it served as the medical “jackpot” in the rest of the year was “free”). But for all its cost savings (resulting from financial incentive of using your own money), it still does not provide steerage, care coordination, enhanced communication, or any of the other proactive health and prevention features required to truly keep costs down and you health up.

Considering my options. I have recently been using an HMO product for my family. Recently, I had the need to go out of network to visit a specialist doctor.  Since I currently have an HMO plan that doesn’t include out-of-network benefits, I had to test the waters of paying cash for services.  To be honest, I was a little nervous.  I was worried that I could be on the hook for thousands of dollars in fees that wouldn’t be covered by my HMO plan since I was visiting a non contracted doctor.  I called ahead to get a sense of the cash price for a visit and I was told the fee for a cash paying customer is $200 for your first visit and typically $100 for each follow up visit.  This wasn’t so scary.  To me, $200 isn’t insignificant but it isn’t $2,000 or $10,000.  This experience made me think:  why would I pay $1,000/month in premiums for access to a wide network of doctors or settle for an HMO that heavily manages cost by limiting access when I can pay cash for the basic or primary care services?

The answered seemed simple: select an inexpensive insurance plan (i.e., affordable premium) that provides catastrophic insurance coverage at a level (deductible) with which I’m comfortable and for everything else, pay cash.  I naturally thought about selecting a Health Savings Account plan with a very high deductible.  This would make a lot of sense if I lived in any other state except California, but California has a unique phenomenon whereby HMO plans are still very affordable.  In fact, of the health insurance plans available to me, including a high deductible PPO plan with an HSA, the best/cheapest catastrophic plan is the HMO.  In other words, although my HMO plan covers primary care and preventive visits, I only plan on using my HMO plan in the case of a major medical emergency.  With the savings from not choosing the PPO plan, I’m going to spend that money to pay cash to the doctors I choose to visit.  If it happens that I need to visit the doctor 5 or 6 times this year then I might expect to pay $1,500 in out of pocket costs for seeing the doctor on my terms.  If my health is worse than this, then I have my insurance that will step in and help me–after all, isn’t this what insurance is meant to do…pay for unexpected events?  If my health is better, then I can save those dollars for the next rainy day.

Isn’t that funny – essentially using an available HMO product as the lowest cost catastrophic plan but paying cash for all primary care services. This certainly highlights the opportunity for some enterprising and innovative health insurance plans to develop a new catastrophic plan that can carve out risk to some tolerable level that I choose. Sounds like a real winner . . . particularly when wed with the new products that Crossover Health is bringing to market.

Next article will discuss that product and how we “add it on” to the current mix while we wait for someone to develop a specific major medical plan for us (hint hint all you insurance companies out there!).

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Filed under Crossover, Innovation, Insurance

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