My wife and I recently had to decide what we wanted to do with our health insurance for 2010, and it really made me think hard about the way we understand the finances of and how we pay for healthcare as individuals.
We have a fairly unique PPO-type plan that gives us a $2,000 budget to spend as a family – on doc visits, lab tests, drugs, etc. We don’t pay for a single co-pay or for a drug or a test until we utilize $2,000 worth of services. Everything from $2,000-$6,000 comes out of our pocket, and then after that $6,000 threshold, we would have to pay for everything else 100%. Not too bad, especially for healthy individuals, right?
But, what if ended up using more than that $2,000 budget? We’d be on the hook for 100% of our costs up to $6,000. The alternative insurance plan we were weighing against included co-pays as our only costs with the plan. Period – no other hidden costs (or so it was our impression). We wondered whether there was a chance that if we had chosen the alternative plan, even despite making the co-pay payments all year, that it would have actually been cheaper over the course of the year to just pay for the co-pays out of pocket? We wanted to understand at what financial point would our co-pays and all the out of pocket expenses under the alternative plan actually be better than getting our “free care” up to $2,000? A break-even point, if you will.
Well, as it turns out, it’s literally 100% impossible to answer that question.
It wasn’t possible for us to make a real informed decision as to which plan would have been right for us. I see the dermatologist 4-5 times a year and a general practitioner about once for a cold. My wife has regular check-ups and maybe visits the doc 2-3 times a year. But we each might have a few tests here and there or a minor ‘procedure’ at one of these visits. Given that, we wanted to know how quickly we’d burn through the $2,000 budget.
Given all that, we called the insurance company and asked to get an estimate of what our costs would be, which would then allow us to make an informed decision. I asked about specific acne treatments at the dermatologist and my wife asked about other doc visit costs. The insurance company literally refused to release those financial figures. We couldn’t do basic estimations on visits and yearly costs because the insurance company wouldn’t release the figures. They said something about costs varying on a per-provider (doctor or facility) basis and pharmacy. Each time one of us called there was a new or different excuse as to why they couldn’t make the costs transparent. Sounded like a lot of fudging to us.
We got the distinct sense (and from talking to others, we’re not the only ones) that the insurance company was deliberately throwing up smoke screens and trying to be opaque. Whenever a system actually strives to be opaque regarding costs or hides facts, that’s a red flag to me that something’s up. Certainly from the way the insurance companies are acting, it seems as if they are better off at keeping us all in the dark. The less the public knows, the better. Confusion seems to be a key component to the insurance industry’s business proposition and model.
My sense is that the system as a whole would be a lot more efficient and effective with greater transparency and improved business models. I’m going to follow up on this with upcoming posts on how healthcare IT and new healthcare polices would be able to not only improve our care, but make our system more efficient and actually save money. My upcoming posts are going to address that exact fact, look at how the system can be more transparent, why it’s failed in the past and how several different types of business models in the healthcare and insurance industries might actually make sense.
As I’m pulling those posts together I’d love to hear from you! What do you think? What have you noticed about your insurance company that might be a bit odd or difficult?
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