I have spent way to much time trying to stay informed and understand the implications of ObamaCare (The Affordable Care Act). This started with actually reading the legislation, listening to hours of Congressional hearings, and most recently working through the challenges of Healthcare.gov. I figured, if nothing else, it would help me make a better decision for my spouse and myself when it came time to purchase healthcare insurance. I’m not an Affordable Care Act certified “Navigator” or counselor but here are some simplistic and hopefully useful observations from the perspective of a person without employer provided insurance.
Aside from the state and county you live in, the amount you ultimately pay in premiums depends on your income, choice of insurance company, and level of coverage you decide to carry. Seems straight forward until you start to work through the details.
First, where you live (state, county, and city) matters in terms of which insurance plans you have to choose from, how much you will pay to which providers (physicians and hospitals) are included in your plan, and more importantly, which physicians and hospitals you’ll be able to use. More on this later.
Second, the subsidy calculator (provided through the Kaiser Family Foundation website) is useful but only gives you an estimate about what your subsidy might be. You won’t find out for sure until you actually enroll and get a premium confirmed from the insurance company. The subsidy calculator is very income sensitive. For example, an annual income of $62,000 could mean a potential subsidy of over $7000 per year while there is no subsidy at an income of $63,000. This is important when you start looking at what might be affordable for you. If you assume or use a calculator-derived higher subsidy than you ultimately might qualify for, you may have chosen the wrong plan for you and your family. As in the example, a few thousand dollars difference in your estimated and actual income for 2014 could mean a devastatingly unexpected tax bill at year-end.
Next, because the plan options are categorized into levels of coverage (Bronze, Silver, Gold or Platinum) you might at first think insurers have standardized their plan offerings making a selection straightforward. Choose a level that fits your needs and then just choose the insurer you want. The reality is that within each level of coverage there are multiple levels of coverage with variability in premiums, deductibles, maximum out-of-pockets, co-insurance, and co-pays.
Your first impression might be pleasant surprise at all the options for healthcare insurance available to you now. You might also be thinking premiums must be really competitive. At the same time, you might be thinking there are just too many choices to systematically and intelligently evaluate. There might be as many as five or six insurance providers vying for your business, each with a seemingly endless variety of plan options. Sorting through the variables can be confusing and a bit overwhelming. There are the obvious differences in premium prices and levels of deductibles, maximum out of pockets, co-insurance, and co-pays. Then there are choices for PPO plans (Preferred Provider Organizations) versus HMO plans (Health Maintenance Organization). But, unless you have some idea about what you have paid in the past (your actual out-of- pocket expenses) for healthcare, there is no way to rationally determine which plan is best for you. Your general health may give you a clue as to how much healthcare you might use next year but it is incredibly difficult, if not impossible, to quantitatively assess plan choices.
The complexity of comparison gets even more interesting when you go to the specific plan details available at the insurer’s website. When you want to compare plans from three different insurers, for example, you go to each of their individual websites only to find the plan details formatted in a way that makes direct comparisons difficult. You now have the choice of printing off plans or bouncing back and forth between websites. Worse yet, you still don’t know the cost of individual components or if they differ between plans (e.g., a physician office visit for illness or emergency room visit). You just know generally, what the plan will cover as a co-insurance percentage or co-pay.
At this point, you will have spent a considerable amount of time trying to understand your options and might be about to give up but there are two very important considerations to assess before choosing a plan. These are not readily apparent on Healthcare.gov or in the plan summary documents at the insurer sites.
Just because an insurance plan is offered in your area, does not mean you have easy access to the physicians and hospitals near you. This is especially true in rural communities where local physicians or the nearby hospital may not be “in network” (covered by) of the plan you are considering. That means you may have to go to another town or city to find “in-network” providers, insurer-approved physicians and hospitals.
Physician and hospital information are not available on Healthcare.gov. You have to go to the individual insurer sites and see which physicians and hospitals are in the plans you might be interested in purchasing. Not always an easy task. You might even have to do a preliminary application on the insurer site to access this information. This is a critical evaluation step, especially if you have a physician and hospital near you that you want to use. Even if the physicians are covered by the plan, they may not be taking new patients and you may not know this until you call to try to make an appointment. If you choose the wrong insurance plan, based on low cost for example, the physicians and hospital of your choice may not be covered or accessible.
Ok. Let’s assume you have found a plan that fits your needs in terms of what you can afford, the level of coverage you feel you need, and the physicians and hospital are within reasonable proximity of your home. What about the drugs you take? Most plans have formularies (lists of drugs they cover) and tiered pricing with different levels of co-pay for generic drugs (usually no or small co-pay) up to more expensive brand name drugs (usually much higher co-pay). The tiers are important, especially if you take single source brand name drugs with no or few alternatives. So, not only do you need to know what you will be paying in co-pay for your drugs, you also need to know if your drugs are even available on their formulary. This is especially true for very expensive specialty drugs that are often not covered the same as other drugs. Fortunately, many plans publish their drug lists (formularies) on their website. Just note that covered drugs and tiers may be different for Affordable Care Act participants, employer provided coverage, and individually purchased plans.
Given this process, the research required, and the need for interpretation, analysis and evaluation, I find it hard to believe many people have the time, the patience, the resources, or the necessary information to make rational educated choices about which plan and insurer are best for them. The variables are complex and difficult to match against individual affordability and healthcare needs. Unfortunately, the plan with the lowest premium may drive selection, which may or may not be a good choice.