Most Americans with health insurance can relate to this scenario: you get the bill from the doctor’s office or the imaging center, you open it and wham!  How did that one procedure end up costing so much? And how come you have to pay that much of it?  Despite having insurance, many of us have policies that require co-pays or co-insurance.  Yet most of us don’t know the difference.

A co-pay is a fixed amount that you pay each time you see a doctor while co-insurance is the percentage of the cost of doctor visits, hospitalizations (and prescription drugs) that you must pay under your insurance policy.  So, if you give birth via c-section and the bill comes out to $10,000, and your co-insurance is 80/20, you’re going to be paying $2,000 yourself, typically referred to as “out of pocket.”

Co-insurance

Co-insurance is common; according to the Kaiser Family Foundation, over half of all Americans with coverage through their employer have co-insurance.  Older Americans and women are more likely to have the highest “out of pocket” costs for care.   They frequently have more trips to the doctor and need more medical care, resulting in more co-payments and co-insurance payments.

This fall, heading into open enrollment, consumers can take steps to limit their financial risk.  Some plans offer a limit on the amount the patient can pay out of pocket.  Several online sites provide calculators to help you understand the real costs of choosing a particular policy, when you consider all the factors.

Come 2014, the new health care reform law will set some limits on the total amount consumers will pay out of pocket, but until then, it is important to continue to read the fine print.

photo credit: Anil Mohabir

An illustration of how Health Care Reform will manage high-risk individuals who were denied coverage. The federal government has stepped in to increase the amount of funding for high-risk pools, but the type of coverage will vary by state.

The great news is that, come 2014, no one will be denied health insurance because of a preexisting condition.   The less-than-good-news, for people shopping for their own insurance who have diabetes, asthma, or even a pregnancy, is that 2014 is still more than three years away.

Under existing law in many states, insurance companies can turn down individuals for a wide variety of preexisting medical conditions.   Some will offer coverage with a preexisting condition exclusion or a waiting period; they won’t cover a medical expense associated with that condition for an extended period of time.

Why Insurance Companies Deny Coverage for Preexisting Conditions

Insurance companies have a very smart reason to take a hard look at preexisting conditions.   In a totally free market, people would have an incentive to buy insurance when they get sick to cover their bills, but not purchase it when they are healthy.  This works fine for the individual, but not for others covered by the same insurance, because the very concept of insurance relies on the company being able to spread risk among healthy (ier) and unhealthy patients.

Health Reform Offers Insurance for All – Regardless of Condition

In 2014, when the new health reform law goes into effect, denial of coverage will no longer be an issue, because the law requires everyone to have insurance.  “Everyone into the pool!”, including the young and healthy helps spread the risk, so that insurers can cover the 67-year-old diabetic without him bankrupting the system.

So what can individuals do from now until 2014 if they have a pre-existing condition and cannot get individual coverage?   Under health reform, many states have already begun to create or expand their ”high risk” pools – an option for people denied coverage.   In other parts of the country, individuals can enroll directly into the government’s new Preexisting Condition Insurance Plan, or they can request a quote for coverage here.

In many cases, coverage for those who are usually denied coverage is not cheap — not even close.  But it is coverage and a bridge to get us to 2014 when there will no longer be “pre-existing” conditions and insurance rates won’t vary based upon one’s health status.

Health insurance reform has helped making an "apples-to-apples" comparison between health plans much easier.

Anyone who has ever tried to buy health insurance as an individual knows it is just not as simple as purchasing other goods and services.  It is easy to compare a Delta flight to New York to a United flight to New York based on price, when both start and end at the same destination.  Both come with a seat, and these days — if you are lucky — probably a soft drink and maybe even some peanuts.

The trick in purchasing health coverage is that it is very difficult to make apples-to-apples comparisons between plans, especially just based on price.  The plan with a cheap monthly premium may actually have a much higher deductible—and end up being much more expensive in the long term.  Two plans may look very similar and be comparably priced; but one may cover maternity care, while the other does not. That can be tough, especially for the consumer who only learns this after she becomes pregnant.

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Congress is in recess, and – as was expected – the bill that would have extended COBRA was allowed to lapse.  As of June 1st, the federal government will no longer subsidize COBRA premiums.  What does this mean to you, as a health insurance consumer? Read on to learn more.

What is COBRA Coverage?

COBRA is a form of protection for individuals who become unemployed and have their health insurance benefits taken away as a result. It was first introduced in 1986, under the Consolidated Omnibus Reconciliation Act passed during the Reagan administration. Since then, millions of unemployed workers have had the opportunity to retain the coverage that was provided to them by their former employer.

In 2008, when the economy took a nosedive, millions of people became unemployed (the best estimates show that a record 10 million are collecting unemployment insurance and half of the 15.3 milion jobless Americans have been unemployed six months or longer). The newly elected Obama administration stepped up to the plate and added government subsidies to help cover the cost of COBRA through the American Recovery and Reinvestment Act of 2009.

Under the ARRA, COBRA was provided at a 65% discount to the unemployed. What this meant was that a typical COBRA plan (which would have cost a family in California $1,107 a month and 82% of their unemployment check) would have cost only 35% of the actual cost of the plan – or about $390 for a family. The subsidy finally made COBRA affordable for most American families.

What’s Changed about COBRA Subsidy?

As of June 1, 2010, anyone who becomes unemployed will no longer receive subsidized COBRA coverage. This means that you will need to pay the full premium for coverage, which could total more than 3/4th of your unemployment check! Unfortunately, Congress is in a fiscally conservative mood, so you won’t be able to take advantage of any more federal subsidies.

However, the good news is that there are essentially dozens of alternative health insurance options within your reach. The thing most consumers may not realize is that COBRA is priced as group coverage – and it often includes coverage that you may not need as a family. You can take advantage of drastically lower rates simply by opting for a private health insurance alternative. All you have to do is click here to request a free quote!

Is there a difference between choosing a primary care provider (family physician) and a specialist to treat you?

Primary care is struggling. Doctors in this field aren’t getting paid from organizations like Medicare and other government-funded entities. And even though many people who have HMO coverage are required to have a primary care physicians, the same HMOs skimp on payouts to the same physicians in their network. No doubt, as a result, patient care is suffering. We can complain and moan all day about underfunding for primary care, but that won’t address the real issue here: Where is that money supposed to come from?

With our economy in the state it is currently in, we can rest assured that additional funds are going to appear out of thin air (or out of other countries’ pockets) to help us solve our health care issues, but wouldn’t it be nice if everything else could stay well funded (though thinking so is laughable), while enough money went to primary care?

One can dream. The Wall Street Journal Health Blog took an informal survey from readers, asking where they thought that extra money for primary care should come from. The most popular answer was this: Lowering reimbursements for care and procedures provided by specialists. Is this a feasible solution? What would Congress do? Are we all just going to have to keep hoping the health care system in this country is going to magically remedy itself? (more…)

A look at the per capita health costs - U.S. compared to other OECD nations in 2000. Of course, since the year 2000 these costs have ballooned even further.

A poignant article in the respected journal, Health Affairs, put it best when it said that “a cycle of unsustainable spending growth followed by fervent cost containment initiatives has been a regular feature of the health care landscape for the past half-century.” As a result, the journal looked at health care spending per capita for thirty countries in the so-called “industrialized” Organization for Economic Cooperation and Development (OECD) list of countries, all while record numbers of Americans choose to opt out of individual health insurance plans.

In 2002, U.S. citizens spent more than $5,260 per capita for their health care. This represented a 53% premium over any other country in the OECD list. That trend continues to this day, and it is a major catalytic factor in the health care reform movement championed by the Obama administration.

Health Affairs concludes that the two main factors in the high U.S. health care costs are:

• Defensive medicine (which leads to higher diagnostic rates and a hyper-sensitive population of doctors due to the fear of medical malpractice claims), and
• The high rates of emergency care resources vs other industrialized nations. Of course, the article in the journal tends not to oversimplify and cites numerous other potential reasons.

Whatever the case, health care spending has ballooned far beyond that of any other country (as the graph above illustrates). Where the proposed reform will take us from here is anybody’s best guess.