Wednesday, October 3, 2012

Fwd: qotd: New report on insurance plans heaping costs on patients

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Subject: qotd: New report on insurance plans heaping costs on patients
Date: Wed, 3 Oct 2012 07:55:23 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

U.S. News & World Report
October 3, 2012
Many Insurance Plans Heap Healthcare Costs on Consumers
Plans with lower premiums burden members with potentially crushing costs.
By Steve Sternberg and Chris I. Young

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.

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.

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.

U.S. News spent several months working with data obtained from the
Centers for Medicare and Medicaid Services (CMS), a federal agency that
summarizes plan coverage and pricing on a consumer page but does not
rate or rank plans against each other. 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.

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.

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.

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. The same is often true
for hospital services, such as occupational therapy, that are not
provided by physicians.

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.

Comment: No surprise. The title of this article says what we already
knew: "Many Insurance Plans Heap Healthcare Costs on Consumers."
Further, individuals and families most often select plans based on how
easily affordable the premium is, and those plans can easily exceed the
supposed out-of-pocket maximum.

The Affordable Care Act includes some measures that will reduce some of
the abuses of these plans, but it still leaves in place the fundamental
infrastructure of private health plans. Shoppers in the state health
insurance exchanges should understand that the plans they purchase will
ensure neither financial security nor health security. We can do far
better, beginning with establishing a single payer infrastructure.

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