Money Do's

Photos provided by Carolyn Forsyth

In Case you haven't heard, there's a lot of discussion around Health Care both in Washington, D.C. and At the family Dinner Table. This Topic examines what types of coverage people need at various times in their lives.

September, 2017

Health Insurance - What Do I need?

Let’s start with a simple fact, Health Care and Health Insurance are two different things.  Every individual has access to Health Care, while every individual does not have Health Insurance.

Simple case:

You fall while trimming your tree. You break your arm (or at least suspect that is the case).  You go to a medical facility. They will ask you some questions, including how you intend to pay for their services.  You say, “I will have to pay you in cash, I am currently without insurance coverage.”  The facility will note that, take you into a treatment room, order an x-ray, set the bone and place the arm in a cast.  They do this not only because the doctor has taken the Hippocratic Oath but because they have a duty to provide care to those in need.  They will also present you with a bill for their services that reflects the level of care required to treat your arm. You now owe the treatment facility and they expect to be paid. You received health care and you also received a bill. Health Insurance would have covered a portion of the bill depending upon your plan, but the care received would have been the same.

Not so simple case:

You awaken one morning and feel downright miserable. Something is physically wrong with your body and you go to a treatment facility.  Again, the facility will ask some questions and ask how you intend to pay them for their services. Your reply is the same as the previous case but you end up in a treatment room just the same as before.  The examination begins and through some probing the doctor notes that you appear to have some symptoms that are not so good.  A series of tests will be needed to verify his findings and they will be ordered.  Depending on the facility they might do the blood draw and ask you to wait while some of the tests are completed. Let’s assume that the results are presented and confirm that you are showing signs of a disease that requires a regimen of treatment that could take months/years and require a lifetime of diligence to keep under control.  For all of the above you will receive several bills and you will be expected to pay those bills. You received health care.  However, you also face an uncertain future that will severely impact your financial well-being and might impact your ability to meet the attendant costs. Health insurance was designed to lessen the impact of this situation you now face.

If you seek insurance at this moment, you have a pre-existing condition.  The law requires that you be allowed to get insurance, but the cost of that coverage could be prohibitive (if market forces are in play). You have a known risk and the costs for your care are going to be on the high end for both you and the insurer.

If your disease requires constant care and you do not have insurance, it will become increasingly difficult to get a doctor or a facility to accept you as a patient for maintenance care. That is one reason people without insurance end up in emergency rooms (it is their last resort for care). This is not a sustainable model and it is an issue which plagues patients, Health Care Providers and Health Insurers.

There was a time, not so long ago, when health insurance did not exist.  Doctors actually came to your house and carried a trunk full of medicines.  You got an exam in the kitchen and the doctor looked at your ear infection and prescribed penicillin which came out of the trunk of the car and your parents paid the bill. People knew the cost of health care because they were paying for it. Companies didn’t readily offer health insurance in the 1950’s but by the 1970’s health insurance was part of most jobs.

It was not long before those with insurance began to disassociate the actual cost of health care from the services being provided. That’s also when it became difficult to identify what you were paying for when you used health care. Everybody talks about the $3.00 aspirin when it appears on your bill in the hospital. Nobody argues with the $12,356.27 charge to remove your appendix. Somehow, a $3.00 charge for an aspirin tablet creates a stir.

Health Insurance was a buffer between the patient and the health care providers. The bills were long and complicated but the patient only looked at the line item that determined what is owed for the services:  Patient Responsibility: $37.50.  If that looked acceptable, everyone was happy. Nobody bothered to look at the other items on the page(s).

Suffice to say that in the 1990’s the system started to have issues. Health costs were going up, insurers weren’t making money, hospitals weren’t making money and patients were starting to see increasing Patient Responsibility costs.  This caused people to be unhappy with their insurance offerings and a whole host of options started to be presented.  The all-important Deductible (an amount you are required to pay for services before the insurance starts paying) began to rise. The Deductible was a way to hide an increase in the cost of health insurance.  When you are young, you rarely need to go to the doctor. When you become a parent, you should actually reserve a seat at the pediatric facility. When you are old, you tend to need regular visits and you get some very specialized services (hip replacements, knee replacements, Viagra, etc.).  Insurance, when priced correctly, should account for these realities.

Younger people rarely saw major issues with their deductibles, families blew through the deductible when flu season arrived and old people transitioned to Medicare which got them out of the Health Insurance pool and into their own system for which they had already paid the fees.

The insurance industry was faced with several issues, increasingly complex medical procedures were becoming widely used (knee replacements, open-heart surgeries, organ transplants) and new drug treatments began to appear that were expensive but had proven successful in extending life or curing cancers and other diseases.  These approaches required lots of treatment and some costly drugs. Patients wanted these treatments but their disassociation of treatment costs from health care had created a gap between patients, health care providers and the insurance industry.

The Affordable Care Act added government regulations to an increasingly complex mix. Now deductibles have risen (that’s a way to increase costs to the insured) and monthly costs have risen as well. The uninsured now have access to insurance but the pool of insured people has become riskier as a result of the process.  That means costs have risen for individuals (not declined). Companies are paying additional taxes and insurance companies are leaving markets where they are not profitable. The government is wrestling with this issue and will do so for the foreseeable future. But that doesn't change the key question:

What health insurance does a person need?

It depends on several factors:

Age:

Individuals in their 20’s are less likely to need insurance. That’s not to say they can go without health insurance but young individuals actually need a type that covers a doctor visit to get a cut finger stitched, an annual checkup to review any drugs you might be using regularly (birth control, anti-inflammatory, anti-depressant, etc.).  They actually need catastrophic insurance which kicks in when you get something really bad (appendicitis, separated shoulder, torn ligament, broken arm, etc.).  The cost of this insurance is affordable and while the deductible might be high, they are young, they are working and they will have time to pay off any uncovered costs.

One aspect of the Affordable Care Act was that children (under age 26) could be part of their parent's plan. Insurers actually need these individuals to balance their risk pool (prior to the ACA children who were in school could be part of their parent's plan - and parents were diligently asked to verify that their child was still in school each year).

As of this writing, for those from 26 to their mid-30’s a high deductible, catastrophic coverage plan works.

Family Life:

The need for a different plan usually comes with marriage and the decision to have children.  This requires a Family Plan which provides a relatively modest deductible given that it covers a lot of people.  The cost is going to be higher but if children are in the mix, well worth it.  Children need vaccinations (do not mess with polio, measles, chicken pox, mumps), they get the flu, they get colds, they get ear infections and sometimes they get awful fevers that keep parents up at night. That being said, everyone loves their kids and insurance helps defray the health costs of their early years. Get a good Family Plan with a moderate deductible.  Also, plan on less sleep for the next 15 years.

The Mature Years:

Once you reach 45 and the kids are in high school or college, the needs for insurance change.  Individuals encounter issues that might require joint repair, lifestyle changes and more regular doctor visits. We aren’t all healthy specimens in our late 40’s but assuming you had a reasonable life and reasonable activity you should opt for a slightly higher deductible but balanced with the likelihood that you will be seeing your doctor for something nasty every two to three years.

The Really Mature Years:

Ultimately, most people transition to Medicare once they reach the required age.  You’ve already paid the premiums here and the benefits are relatively good. The government will tweak it now and then, but politicians don’t want to anger older people (they tend to vote). You can get additional supplemental insurance, which is a decision based on your general health.

Chronic Illness:

If an individual has a chronic condition (diabetes, for example) they will need insurance coverage that provides coverage for more doctor visits and sometimes a prescription coverage for a life-long medicine (in the case of diabetes – insulin). This could increase the cost of the insurance package over that of a healthier individual but it’s important to get a benefit package that meets the needs for appropriate treatment. This won't be cheap and it may require more cost to you than the average healthy person. Some states provide assistance through high-risk pools but that will only offset a portion of the costs. If you are able to work, employment with a firm that has a solid benefits package will generally get you insurance at a better price. Government employees have access to good insurance plans as well. Suffice to say that this requires working, which for some chronic illnesses is not always possible. Again, this is an area that needs to be addressed by all involved (Federal and State Governments, Insurers, Companies, Health Care Providers and Individuals).  It will take time and effort to resolve.