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

The rising cost of family health insurance has dramatically outpaced that of family incomes, as you can see in this historical graph.

The President really has his work cut out for him lately selling health care reform; it is hard for the average American to get excited about the new law when those who buy their own coverage are facing a 20 percent increase in their health insurance premiums.  Those covered by their employers (in the “group market”) have seen their rates rise as well.  If we have finally started to fix this mess why is health care getting more expensive not less?

So Why are Health Insurance Costs Going Up?

The answer is simple and complex at the same time.  At the most basic level, health insurance premiums are going up because the cost of health care is rising.  And during this recession people who don’t need a lot of care (the “young and healthies”) are opting to forego coverage, making the current pool of insured in the individual market older and sicker on average.  A slightly more sinister explanation is that insurance companies may be playing off consumer fears of health care reform, and trying to make strong profits before several provisions in the new law actually take effect.

But sticking with the most basic explanation for a moment, why do health care costs continue to rise?  The answer to this question is less simple.  Many experts believe our health care system continues to provide care that is excessive, ineffective or even unneeded.

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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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Health and Agriculture have different goals in sight - one wants us to eat unhealthily, while the other - because of recent reforms - will want us to eat more healthy.

The next time you’re trying to decide which grocery store has the lowest prices, you might want to look at the waistline of its shoppers.  If the person in line behind you is very overweight, the store might just be a bargain, or so says a new study from the University of Washington. However, health care reform could mean a big change in the makeup of your grocery store. Why? Find out below.

The Relationship Between Health and Grocery Budget

The relationship between one’s grocery budget and waistline is complicated. Research shows that higher income people may have more free time to visit multiple stores, buy specialty foods, shop based on quality (not quantity), and prepare nutritious meals.  But research also shows that poor quality, high-calorie foods are cheaper.

This comes as no surprise to anyone who has ever eaten lunch at McDonalds from the value menu.  But we often don’t understand the reasons why high calorie, low nutrition food is so cheap. The reason is that our public policies are designed to support industries that produce high calorie foods in mass quantities.  Under the Farm Bill, the largest dollar amount of U.S. Department of Agriculture subsidies go to supporting corn. (For anyone who has ever followed the Iowa Caucus, it is immediately clear how powerful the corn lobby is in this Country).

Corn Syrup and Health

Lots of corn creates lots of high fructose corn syrup—which makes foods sweet and calorie rich for pennies on the dollar.  The USDA also subsidizes cotton, soybeans, rice and wheat.  Absent from that list is vegetables.

A map depicting levels of obesity across the United States. Notice that states with the most obese population are generally closer to the Corn Belt.

To help even out prices between our grocery stores and the difference between our waistlines, the U.S. may need to figure out a way to make healthy food cheaper, or unhealthy food become more expensive.  Some pundits have started to argue that the only industry powerful enough to take on the agriculture industry might be the health insurance industry.  Because the new health care reform law mandates health plans cover everyone, plans will have to cover the thin and healthy along with the obese and unhealthy. When that starts to mean even higher health care costs and a bite out of health insurance industry profits, we might see health insurance and “big ag” go head to head.

The Canjet C-FTCZ Boeing 737-800

Planning a vacation to another country this year? Great, do you think you can fit me inside your suitcase and smuggle me along with you? No? Going away on a vacation abroad is a fantastic way to escape the real world for a little while and to learn about other cultures and parts of the world.

Unfortunately, most health insurance carriers won’t cover you while you’re outside of United States soil, so anything that might happen to you while you’re traveling will not only be out of your own pocket, but you might find it harder to get seen for any kind of treatment. Things like travel insurance are essential, and there are other great tips you might find handy for your travels abroad. Consider this post your to-do list when getting ready for a vacation-print it out and hang it next to your suitcase as you pack. Bon voyage!

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