A Kitchen Table Tutorial in Healthcare Economics

Open enrollment for health insurance policies occurs every year. During this time period and only during this time period a treasure trove of information is available to many Americans simply for looking. In the privacy of their homes individuals and families can compare costs of premiums, deductibles, and co-pays of different types of health insurance. In the absence of a health savings account (HSA), these expenses are paid with after-tax dollars.

The four articles titled Life’s Spectrum: From Commercial Insurance to Medicare point out some of the details of the cost comparisons that need to be understood before enrolling in Medicare part B, C, D or part B supplement.

In the employer sponsored group commercial insurance sphere, the employer will know premium and out-of-pocket costs for its plan. Understanding these costs is important to the half of Americans whose insurance is employer-based because the employer dollars expended for healthcare are dollars not seen in the employee’s paycheck. Given a choice the employee might choose to purchase something other than healthcare. In other words, even though the cost is not transparent, the healthcare purchased for the employee is not free.

If an employee transitions to individual health insurance these costs become very visible. Their magnitude can be very different. I read recently a press report discussing trends in annual out-of-pocket limits of deductible and copay costs of employer-based health insurance. Twelve hundred dollars was considered a high deductible plan. A deductible this small is a rarity in the individual insurance market if it can be had at all. The magnitude of healthcare costs should be a consideration when deciding to change employment.

The www.healthcare.gov website is one market for individual and small group insurance plans. It has a plan preview window. Relevant individual or family demographic information can be entered; available plans and list price premium costs can be viewed. Demographics include county of residence, age and sex of each family member, cigarette use, pregnancy, and annual household income. An approximate premium subsidy will be calculated, this subsidy can be used only toward the purchase of plans bought on the healthcare.gov website (39 states) or the state equivalent. These subsidies are available to individuals or families earning 138% – 400% of poverty level.

The website will also calculate the approximate reduction of the out-of-pocket responsibility of families with incomes ranging from 138% to 250% of poverty level. This reduction is available only for silver plans; it is not available for the less expensive bronze plans or, it turns out, for the more generous gold or platinum ones. Press reports are that seventy per cent of health exchange participants receive a co-pay reduction plan, that is through a silver plan.

While not a demographic in the usual sense of the word, the healthcare.gov website has a provision to let individuals ask if a specific physician, hospital or medication is in-network or on formulary before selecting a plan.

Tomorrow: Startling Discoveries About Individual Health Insurance in Hall County, GA

 

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