Wednesday, December 17, 2008

You Can't Always Get What You Want

The Big Chill is one of my favorite movies for a lot of reasons.

JoBeth Williams, Glenn Close, Mary Kay Place . . . just to name a few.

But the story line was entertaining (at least to me) and the music was the best. The Rolling Stones have provided us (some of us at least) with some incredible songs over the years. One of those, "You can't always get what you want" plays a role in the Big Chill.

There are those who want lower insurance premiums but don't want lesser coverage, or at least what they perceive as lesser coverage. Doc copay's are not insurance but prepaid medical coverage. No one needs a doc copay but everyone wants a copay.

So to accommodate those who think insurance isn't insurance if it lacks a copay, carriers have been introducing lower premium plans that give more prepaid medical on the front end but strip away needed (catastrophic) benefits on the back end.

This is a move in the wrong direction.

Apparently the folks at the Philadelphia Enquirer feel the same.

They published a story about Karlin Brockington who used up all the money in her plan. Only one problem.

She has acute myeloid leukemia and she needs further treatment.

Brockington had been paying $19 a week from her paycheck for health insurance.

For 16 months, insurance covered chemotherapy, a bone marrow transplant, five months in hospitals.

But on Aug. 28, 2008, a letter came from her plan administrator. Brockington had reached her "lifetime maximum coverage of $2 million."

In five days, she would be uninsured.

In most cases $2M is adequate, but eventually that well can run dry in some situations.

This is one of them.

"The primary reason for . . . caps is to lower the cost of insurance so employers can cover as many people as possible," said Mary McElrath-Jones, spokeswoman for UnitedHealthcare, parent company of UMR, administrator of Brockington's health plan.

That is true, but, in this case at least, it is a weak argument.

The difference in a plan max of $5M vs. $2M is almost nill. For literally a few dollars extra per week the plan max could have been higher.

Had the plan "skimped" a bit on the front end, with say a higher copay for docs they most likely could have shifted the premium savings to the back end and provided a much better plan.

"What insurance is supposed to do best is handle the extraordinary thing that is rare," said Gary Claxton, health policy expert at the Kaiser Family Foundation. "So to some extent, these policies are not protecting the people who most need insurance. These people did everything they were supposed to do. They were paying their premiums. Insurance companies are finding ways to limit exposure of these policies to really sick people."

I concur.

I coach all my clients in ways to keep their premiums affordable while protecting them on the back end. My traditional line goes something like this.

"You don't have copay's for tires, brakes and oil changes on your auto insurance. Why do you need them for health insurance?"

For most folks, it makes sense.

I also caution them about internal limits on potentially catastrophic claims, especially Rx which can run $5k or more per month for one drug.

The problem of benefit caps and trying to deliver a viable product while containing costs isn't just limited to the private sector. Medicare has their issues as well.

In November 2007, Brockington was approved for Social Security disability, and began receiving $944 a month.

But that disability income is eaten by co-pays, living expenses, car insurance.

She will be eligible for Medicare - but not until next November. When Congress extended Medicare to include the disabled in 1972, it imposed a two-year wait, which still exists today.

Why isn't anyone calling for Medicare reform?

If not Medicare, then what about Medicaid?

Brockington then tried to get Medicaid, medical coverage for the poor. She applied in New Jersey, but because she owns a mobile home in Delaware, and is licensed to drive there, New Jersey told her to apply there, she said.

Delaware officials, she said, told her that with a $944 disability income, she earns too much to qualify for Medicaid. She plans to apply again soon in New Jersey under a program called Ticket to Work. She has been living in Lawnside for years with her mother and sister - commuting to work in Deptford long before she got sick.

Seems the government safety net plan doesn't want her either.

Seems a lot of people want to cover everyone for everything. It just isn't fiscally possible.

But it is possible to cover almost everyone when they truly need it most. And that can be done for a lot less than most people think.
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