Tuesday, December 24, 2013

An all-too-hidden benefit in ACA insurance

Eugene R. Anderson, a pioneer in insurance coverage litigation for policyholders for whose firm I've long worked, was fond of saying that insurance is a unique product. You pay up front, and you get what you pay for much later, if ever.

That's less true of health insurance than of most other forms of insurance, since we all need some healthcare in most years. But it's true of high-deductible health insurance.  And that may prove a problem for public perception of the Affordable Care Act.
Many plans on the ACA exchanges have high deductibles and high coinsurance.  As the Wall Street Journal recently noted,  the average bronze plan deductible is over $5000 for an individual, according to a study by a firm called HealthPocket cited by the Wall Street Journal. (A spot check on ValuePenguin bears this out.) That's merely catastrophic insurance. Deductibles in silver plans -- e.g., the benchmark plans to which subsidies are keyed -- are more often in the range of $2000 per person, with coinsurance ranging from 20-50% after deductibles are reached.

For people at lower income levels (under 250% of the Federal Poverty Level), the ACA offers additional subsidies to reduce deductibles and maximum out-of-pocket costs.  But many buyers, particularly those ineligible for subsidies or for only modest subsidies and thus likelier to buy bronze plans, will not experience much benefit from their coverage until or unless they get seriously sick or injured and max out, first on their deductibles and then on their annual out-of-pocket limits of $6350 per individual and $12,700 per family (lower in some plans).

An exception is the ACA's free preventive care benefits, like birth control and yearly checkups and screenings for colorectal cancer, blood pressure, cholesterol, depression and other illnesses and risks. There is actually a rather massive list of mandatory free services, which too many fact sheets fail to distinguish from merely "covered" essential benefits (generally not covered until you hit your deductible). But I suspect that for most policyholders, these benefits will be less appreciated than would earlier-dollar help when seeking treatment for what ails them.

There is a hidden additional benefit to obtaining coverage under even high deductible plans -- unfortunately, all too well hidden.  It's this: even when you pay full freight -- say, for a visit to the cardiologist before you've hit your deductible limit -- you pay at a rate negotiated by your insurer. As many exposés of insanely predatory medical billing in the U.S. have pointed out, hospitals and other providers fleece the non-indigent uninsured the worst, sometimes charging them as much as triple the rates paid by Medicare and other insurers.

Alas, the insurer won't tell you how much you'll pay for each doctor visit or other service before you hit your deductible. It may vary from provider to provider. If what a Horizon Blue Cross rep told me today is accurate, the insurer caps the rate but doesn't fix it. And the insurers I called wouldn't/couldn't tell me the maximum rates for primary care or specialist visits (or anything else). 

The plan summaries on healthcare.gov list co-pays for various services, and they're usually moderate. I wonder, though:  how many new ACA signups won't realize that the co-pay doesn't end their responsibility -- that if they haven't hit their deductible, the doctor will bill them for the remaining balance?  I wasn't sure myself, until I called an insurer and asked.

And if that doctor's visit or x-ray or hospital visit costs less than it would have if the patient were uninsured but not indigent, how many policyholders will realize it?

Update: I did not realize that some high deductible plans do cover doctor's visits before you hit the deductible. Kaiser Health News took a sampling of seven cities and found that half of bronze plans cover at least some doctor's visits with only a co-pay (leaving aside the ACA's mandatory free checkups and screenings). Regarding the plan summaries posted on HealthCare.gov,  Kaiser's Julie Appleby explains: "Plans that list a price for a doctor visit followed by the phrase "after the deductible is met" mean the consumer must pay the full deductible before getting doctor visits for a small copayment."

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