Friday, April 15, 2005

Health Insurance: catastrophic versus insular? (Part 2)

While I don’t disagree, I think that this ignores other factors which contribute to the overall cost of coverage. For example, in any given policy (group or individual), up to 17% of the price is due to government mandated benefits. Such benefits are an integral part of the plan, and cannot be reduced or eliminated. This means that, even if you don’t want or need that benefit, you can’t request its removal in order to reduce premiums.
As to Econblog’s dismay that folks choose plans which are contrary to their best interest: folks still eat Big Macs, smoke, watch way too much TV, and don’t exercise enough, either. All of these are antithetical to one’s good health, yet many (most?) of us are guilty of at least one or two of these “sins.” So it should come as no surprise that health insurance consumers would choose a plan which ill serves them. Then, too, many agents choose the “easy route;” that is, pushing the generic plans because that’s what everyone wants (or so they believe). This is true, BTW, regardless of whether we’re talking group or individual.
By way of example: I’m currently working on a small group case which has experienced major rate increases (I know, shocking; kinda like seeing the sun rise in the east). The plan has a $250 deductible, and then pays 90%, with a maximum OOP (out-of-pocket) of $1,500 (including the deductible). Also, office visits require a measly $15 co-pay. And, of course, there’s the ubiquitous rx card.
As Dr John observes, this type of plan just begs for over-utilization.
My ideal solution would be to move them to an HSA plan with a MUCH higher deductible, and without the office visit co-pays and rx card benefit. This would save the group (and the employees) a lot of premium dollars, which could fund the savings account itself, with plenty of cash left over.
But that’s not my call, it’s the employer’s. No matter what I say, the decision ultimately comes from the man (or woman) writing the check. And if that person doesn’t perceive it in his best interest, or if he fears a negative reaction from his employees, then that plan is never going to be installed.
Remember, too, that the employees have a financial stake in this, and the cost savings would ultimately redound to their benefit. And yes, it’s my job to enlighten said employees that this is the case. But if I can’t convince the employer to make such a change -- and in this case, the employer “gets it;” he understands how HSA works – then the best to be hoped for is that we can increase the deductible a bit, and maybe the office co-pays.
Such is the real world.
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