It’s that time of year — when we enroll in health insurance. Whether you are shopping for individual coverage or have coverage through your employer, there is a good chance you are comparing health plans and getting ready to make one of the biggest financial decisions of the year.
Not all insurance is created equal. If you have looked for coverage at HealthCare.gov, or your state’s insurance marketplace, or even just compared the two or three plans offered by your employer, you quickly see that some have higher cost-sharing, which means you pay more when you use health care. Some have smaller networks.
But if you are shopping for coverage on your own, there is a lot more you might find out on the Web. A study by me and my colleagues, published by the Urban Institute, found that, during last year’s open enrollment, over 80 percent of Internet searches for health insurance returned plans that don’t comply with the Affordable Care Act. That means when you search for coverage, you are likely to find yourself directed to websites selling substandard plans or selling your phone number to brokers and telemarketers that will start calling you nonstop. If you are asked any question about your health, that means it is not a compliant plan and may have lots of exclusions. And if somebody wants your credit card before they give you benefits in writing, there’s probably a reason why.
So, now you’ve steered clear of these substandard plans and purchased a health plan. It’s January and you need medical care. How do you use your plan?
First, let’s go over some basic insurance terms. The premium is the amount you pay each month for insurance. While we think of premiums rising each year, they are actually falling in the individual market for 2020. But that doesn’t mean the cost of the plan you buy is falling. Health insurance costs a lot. According to the Kaiser Family Foundation, the average cost of a family plan offered by an employer is $20,000, an increase of 22 percent over five years — but employees don’t see this cost because employers pay an average of 70 percent of family coverage.
You might know the word deductible from your car insurance or homeowner’s insurance. In health insurance, a deductible is the amount you have to pay as the patient before the insurance pays anything — and they have been rising. The average deductible of an employer plan is now $1,655, up from 10 years ago by $533. They can be thousands of dollars in the individual market. But most plans cover preventive services before the deductible. And some plans will cover a number of out-patient services, like office visits, before the deductible
Other important terms are copay and coinsurance. Copay is the fixed dollar amount you pay for a service — say, $30 to go to a doctor. Coinsurance is the percentage split between what you and the insurance pay, perhaps you pay 20 percent for brand name drug and the insurer pays 80 percent. Finally, there is the ever-important, but little known, MOOP (Maximum Out-of-Pocket), which is the most you will ever pay in the plan year for covered services if you go in-network. The MOOP is basically the worst-case scenario — if you have an expensive illness or accident, you know the MOOP protects you.
Now let’s move to prescription drugs. Formulary is the term for the list of prescription medications your plan covers. The higher the tier, the more you pay for the medication. A few things to keep in mind on formularies is that if your drug is not covered or has high cost-sharing, you can ask your pharmacist or prescriber if there is a cheaper alternative. Your doctor may be able to help you appeal to get it covered, but there are never guarantees with appeals.
It is important to look at the provider directory to find providers in-network. Even if your plan covers services out of network, I promise it’s not as generous as you think. If the plan says it covers 70 percent of services out-of-network, it means it covers 70 percent of what the insurer believes is a reasonable rate, which is often well below the actual bill. So you could be left with hundreds or even thousands of dollars of what’s called balance billing — basically, the provider charges you the balance of what the insurer doesn’t pay. So start by going in-network whenever you can. That means before surgery or other procedures, ask if all of the providers are in-network, including the anesthesiologists.
Finding providers is hard in rural areas. This is because there are fewer people, and that also means fewer providers and fewer health insurance plan choices. Providers are leaving rural areas and hospitals are closing, making it harder to access health services. Add to this that some insurers try to reduce their costs, and their premiums, by restricting the number of providers in their network and it can be hard to get to an in-network provider. People living in rural areas are much more likely to have to drive hours to see a specialist in-network, or sometimes even a primary care provider. Some insurers are starting to use telehealth services, where you can talk to a doctor or other provider over a computer or telephone. This may be helpful in improving access, but some people need to see a provider in person.
In the end, health insurance is complicated and expensive. That doesn’t mean it isn’t important to have. The Affordable Care Act expanded access to insurance and added important new protections for patients. But it was never expected to be a final step. Unfortunately, political gridlock prevented the passage of improvements and fixes to some of the problems with the law — problems that are not unexpected when you make such a large-scale change to a complicated system. Based on historical experience, Congress used to come together to make those changes to large health coverage changes. But we seem stuck in a gridlock where the parties don’t want to come together to compromise, and instead we have to look to the next election as a possible way to improve coverage.
Dania Palanker is an assistant research professor at the Center on Health Insurance Reforms at Georgetown’s Health Policy Institute.