Reader Story: How I Purchased Private Health Insurance
Published on - September 26th, 2010 (Modified on - January 5th, 2011) (by J.D. Roth) This guest post from Jaime Tardy is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Jaime writes about her financial journey at Eventual Millionaire. This piece is a follow-up to her first reader story from June, in which she described how she paid off $70,000 and quit her job.
Finding affordable health insurance was one of the biggest obstacles we faced when I quit my job. My husband is a self-employed performing artist (juggler/musician). We had always relied on my job to pay for our insurance.
Find Affordable Insurance
Health Insurance is a complicated issue. We knew we needed to have health insurance, because without it we could face financial ruin; but I didn’t want health insurance to stop me from quitting a job I hated to pursue my dream of working for myself.
Before I quit, I spent hours researching different health care options. This post is about what I learned.
Finding the Right Health Insurance Plan
There were so many plans with so many options it was hard to keep everything straight. Our best option was to keep my newborn son on a separate plan. It would allow him to have much better coverage and let my husband and me purchase a cheaper plan for us, to save money.
At that point we lived in the state of New Hampshire. There was a program through the state that allowed you to buy in to their insurance program for kids. The coverage was excellent. At the time the payment was about $100 per month for just my son.
The plans for my husband and me were limited and expensive. I spoke to a few qualified agents. I researched and found reviews on the internet. I needed to make sure the plan fit our budget, had benefits that fit us, and had a good reputation.
It seemed like we had two options:
- A PPO/HMO plan which had a lot of benefits and a high monthly cost.
- A high-deductible plan that didn’t have a lot of benefits but was less expensive.
With the high deductible plan, we could also sign up for a Health Savings Account. An HSA is a savings account that allows individuals to save for medical expenses tax-deferred.
We seemed like perfect candidates for the high-deductible plan. We were 25 years old and very healthy. We rarely went to the doctors. We were frugal and could pay attention to the cost of our health care.
In 2007, a high-deductible plan for two adults was $192 per month with a $5,000 deductible. We had over $20,000 in our emergency fund, so we figured we could pay for most health emergencies. Our total cost per month for health insurance for our family would be $292.
After thinking about it more, I realized I had to take into account the possible loss of income too. If my husband injured his hand, he couldn’t juggle. If either of us had a serious injury and couldn’t work, we’d need our emergency fund to pay for bills. We decided to save an additional $5,000 to put in our HSA to help with that risk.
A Problem with the Plan
We had the plan for a year before I realized we were losing money. I had signed up for the preventative option, so we could have regular health check-ups covered for my son. It turned out that the option had a cap of $200 per year. I was paying an extra $22 per month. That meant I was losing at least $64 per year.
I thought I had inspected every inch of that plan. There were just too many options and rules. Needless to say, I canceled the preventive option.
New State, New Insurance
When we moved to Maine, we had to find new insurance. I had to spend hours researching again. There are only three health insurance companies here, and the premiums are a lot more expensive because Maine doesn’t discriminate. Everyone has the ability to get coverage.
The high-deductible plan and HSA seemed to work well before. Since the prices were so much higher here (our previous plan would have been almost $600 per month), we increased our deductible to $10,000. To avoid more risk, we increased the amount of money in our HSA to $10,000. Our current plan costs $483 for a family of four. (We welcomed a new little girl last year!)
Paying for Visits
Having a high deductible means we have to pay for doctors visits. Many people I talk with have no idea what a doctor’s visit costs. A normal doctor visit costs us $92. If we pay within 21 days, we receive a 10% discount.
I’ve realized how great it is to pay attention to costs. I feel so much more involved in the process of our health. My daughter’s doctor wanted to do a test, so I asked how much it would cost. She said that she never looks at the cost of the procedures. The test was $2,000 and it wasn’t medically necessary. If a procedure is important to your health, you need to spend money on it; but I was able to save $2,000 because I did my due diligence to research and ask for second opinions about my daughters care.
Last year we spent about $2,800 on medical expenses. That included all wellness visits for my one-year-old daughter, about seven appointments for illnesses, and two emergency room visits.
A Learning Process
Figuring out what fit for us has been a learning process. Since I can’t predict the future, I don’t know if this plan will fit us 100%. If I have a big disaster come up and my plan lacks adequate coverage, I’ll have to learn from it and adjust.
There’s a delicate balance of living the life you want and mitigating risk. I’m still finding the balance, but I do my best to keep my family debt-free, healthy and living the life we want.
Do you have any ideas or suggestions for my plan? What has worked for you, and what hasn’t?
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about Health & Fitness, Insurance, Reader Stories
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
You may already know this, but it cost me thousands of dollars to find out. If you have insurance, even with a $10,000 deductible, you save a ton of money. That’s because the insurance company negotiates the amount that their customers pay. For example, the $2,000 procedure the author mentions may well have been $3,000 if she did not have coverage and offered to pay cash.
loading....
“The test was $2,000 and wasn’t medically necessary.” Interesting comment. Why not? Because the result of the test wouldn’t change the treatment? I mean, I myself have refused an MRI, because the outcome of the MRI wouldn’t have changed my treatment plan, so that made the test unnecessary (in my opinion). Just curious how a layman can figure out if a test is medically necessary or not. What did the author base that opinion on? I’m all for watching costs/making sure claims are paid, etc. And I work in the medical field, so can do my own research amongst the thousands of printed journals and textbooks (because I have access to them). And I do my own diligence when it comes to my health. I just don’t see how a layman can do that, especially with so much false medical information on the internet.
loading....
I’m in Missouri, and I pay $160/mo for a $3k deductible plan with no maternity. It has already paid for itself, as my doctor (whom I trust, and I’m picky!) strongly recommended a colonoscopy because of my family history. I called around for the cost, saved up, and then after the procedure discovered that my insurance paid 100% because it was preventive care. When the hospital pre-authorized, they weren’t even told this, and I wrote them a big fat check before I left after the procedure, so they had to refund me.
Yes, it is awful that docs have no idea what procedures cost. A month ago I had blood drawn for Vit D and thyroid levels. By mistake, it was processed in-house by the hospital and I was billed $1500! Happily, after I got up the nerve to call and ask for a discount so that I could still eat once in a while, they forgave the full amount, since they weren’t supposed to have done it in-house, anyway.
I have to think twice about any medical visit or procedure, because it’s not magically paid for. I’m grateful that I am healthy and rarely need care, or I would be in big trouble.
loading....
Thanks so much for this post! It’s a very nice example of getting non-group health care coverage for a healthy family.
It’s interesting that your plan was cheaper than covering just my son was last year on a group plan in a different state ($500+/mo– I was paying full cost for him and nothing for me).
loading....
Thanks for the post, this is such an incredibly important topic and vast numbers of people have no idea how complex and expensive our health care ‘system’ is. As a physician, I have tried to be cognizant of what it costs to order tests which I think are important for my patients, but the complexities of the insurance industry make it nearly impossible to answer questions about cost when patients ask me. I don’t know their co-pays, the % coverage for tests, whether of not tests will be covered, and then billing departments for the places I work for have their own rules about how they go about getting paid back for services rendered.
To answer your question, you have come up with a creative way to keep coverage for your family that it sounds like is suiting you well. My only suggestion would be to find someone familiar with insurance products to go over the coverages in your plan with you to try and make sure that you don’t have big holes BEFORE someone becomes very ill. Planning for every contingency is obviously impossible, but you want to at least make sure there are no obvious coverage flaws.
Relative to this topic, if I could ask the readers one thing, it would be to realize that a good doctor will be on your side with these issues and willing to work with you. While there are some doctors who have financial stakes in the services and tests they provide, the vast majority don’t get a dime for ordering a test on you or prescribing a drug.
Last advice, while screening for silent illnesses like high blood pressure and high cholesterol is very important, the best preventive medicine is not achieved by ordering tests, but eating well, not smoking, and getting regular exercise.
Keep up the great work JD and Jaime!
loading....
Great post.
We have private insurance as well.
Recently we took my daughter to the emergency room. When we first received the bill, it wasn’t itemized at all. Just a bill. I can’t believe they thought I was going to pay it like that. (I guess most people do)
So we requested an itemized bill, and on the bill was a generic item “Intermediate care” for 600 dollars. Since she didn’t need much care, I thought “What determines intermediate vs. a lower option?”
I called billing and noone could explain to me why it was called “intermediate care” vs. “basic care” or something else. Not even the emergency room knew! I finally got passed to the records department who ventured a guess, but I finally gave up and just paid it.
Frustrating.
Other things we’ve learned:
Some doctors give discounts for paying actual cash.
Find a doctor that is generous with their drug samples
Sometimes if labs are ordered and paid for through the doctor instead of directly to the lab, it’s cheaper.
ALWAYS ask if a test is necessary. Specifically, ask if the care would change based on the results of the test.
Always go to the doctor if you’ve been coughing for seven days straight (can you say whooping cough?)
Depending on your plan, emergency room visits aren’t covered AT ALL. Ouch.
Even the people at the hospital don’t understand the billing.
loading....
Until 3 years ago I always had private health insurance. It was a major medical plan and fit the needs of our healthy family that didn’t need more then a yearly visit to the doctor.
My husband got a job that offered a ‘great’ health plan and they employer paid 60%. We blindly went forward and after the first year I realized we were paying more in insurance + out of pocket expenses then we had ever before. I researched the plan, made a few changes and brought our costs down. In year 2 and 3 the cost were still high. We will be going back to our private major medical plan. It comes down to what our needs were and the plan was way more then what we needed or used. I’m not looking forward to the research part!
loading....
My husband and I were turned down for insurance repeatedly (both in good health, no medical issues on records, regular physicals) because we’re overweight. We ended up using our state’s High Risk Health insurance, and opted for a high deductible plan for similar reasons to the guest blogger – we’re generally healthy, and can predict our medical care needs per year pretty easily. Group insurance isn’t an option where I work (my husband doesn’t work), so we were glad that there was an option available for us (or we’d still be insurance-free).
I’ve tried to explain to friends why the high deductible plan works well for us. From now on, I can just refer them here so they can see how someone might make that decision themselves.
loading....
When I read a post like this, I am SO HAPPY to be living in Canada where our health costs are covered…when I go to the doctor I don’t have to pay anything. I’m also very fortunate to have an excellent plan (for dental, orthodontic, paramedical, prescriptions) through my workplace (and it’s a job I still love most days, so I’ll stay put!). I’m a cancer survivor (over 10yrs now!) and cannot imagine how much my treatment would have cost me had I lived in the US and had to pay for it myself!
loading....
My pet peeve: Government won’t let health insurance companies compete over state lines… when you live in one state with 3 health insurance companies, basic economics tells you prices will be higher than if you were free to choose from the almost 1,500+ insurance companies in America. I don’t blame the health insurance companies for this. Sure, maybe they had lobbyists asked our politicians (who look out for our best interests -rolling eyes-) to make this law, but if our government really wants us to be healthy and save money, they will ditch this state lines law and let us choose a healthcare provider from wherever we want, not just in our state. Yet me thinks politicians are easily persuaded to do whatever benefits their job/pocketbook best. (I know a two lobbyists here in my town; trust me, politicians get their pockets lined heartily from them, whether we realize it or not and whether it is legal or not)
loading....
Wow – I don’t know a lot of the ins/outs of health insurance, but would this example be right then? That, lets say in December and you had paid for a full year, an emergency happened and ended up costing $17,000 – that this family would have to pay $16,000 first and only THEN would the insurance company contribute $1,000 to the cost? Because it sounds like even though there is a high deductible that you aren’t even getting like an 80/20 option on what you do pay. Ouchy. God forbid that your year roll over the next month and run into another (even inexpensive) accident!
loading....
I find it truly frustrating to try to find private insurance in Michigan. There are many plans but most are at least $200/month/person with $5k deductible. The problem for me is that none of them have exactly the same features or costs so it it impossible to compare them on a level field.
The note J.D. left about no one knowing the true cost of their services is so true! The insurance company wants you to “shop around” for the best price, but most places I call can’t even give me an estimate until it is submitted to the insurance because they give everyone a different price! Imagine grocery shopping like this. It wold be infuriating!
loading....
It is too bad that insurance is so difficult to figure out. I bet that is a new job in the making- a health insurance broker. Someone that you could pay some money to that could find the absolute best insurance plan that would work for your circumstances. Maybe that person already exists and I am just not aware of them.
My husband works for a large company, and we still have to pay 600/month for our family for insurance. (They pay half, we pay half.) It is not like the old days, that is for sure.
When my husband changed jobs, he couldn’t join the insurance plan for 2 months, so I got short term insurance for the family. The price was incredibly reasonable, but it was more of a catastrophic policy. I was so nervous those 2 months!
It is great that you have created a fund to cover the deductible if the need arises. It sounds like you have managed this situation very well.
loading....
My husband and I had to find private health insurance when I quit my job (for similar reasons to the article writer), and we found a high deductible plan with a $5,000 deductible for the entire family. Surprisingly, it paid off. The second year we were on it, my son had an emergency appendectomy on January 1. We hit the deductible in that first week, and for the rest of the year, all our medical services were covered. I was grateful to be on the plan that year, because it paid for itself. As long as you have enough in the bank to cover your deductible at all times (plus whatever more you need for lost wages, other emergencies), high deductible plans can be a decent, affordable option.
When my husband was given more hours at his day job, he was offered the employer-subsidized plan. But the employer did not cover much of the cost at all. When we did the math, we realized we would be paying far more, for not much better coverage. We stuck with the private plan.
loading....
We went through this research and headache, with this additional twist: we got denied when we applied. Several times. My husband had already quit his job to found a company, and it took nearly a year to sort through the red tape and get him covered. I shudder to think of the choice we’d have to have made had our denial been based on actual health problems: go without health insurance or not stick with the business (a successful one).
loading....
Wow. I always thought it was an either / or thing: either you pay a premium or you have a high deductible. It looks like private health insurance users really get screwed (big surprise).
I love it how this country’s politicians (both sides) play lip service to the self-employed, entrepreneurs, and small business owners, but when it comes down to doing anything to help them—silence.
loading....
I think they don’t know how much stuff cost because I honestly think they just change it whenever they feel like it.
I’m pregnant right now and I have diabetes so I have to go in for ultrasounds every two weeks. I received bills for last months apts (THAT WERE EXACTLY THE SAME – same time, same doc, same room, same equipment) and both I had to pay a $50 copay for.
BUT when I looked at the breakdown that they charged the insurance company for, the first apt cost was $325 and the second was for $675. There wasn’t a single thing that was done differently at each apt and yet somehow the second one was over twice as much. What are they doing? Just making it up as they go along?
loading....
Chickybeth, have you tried http://www.healthcare.gov? It lists how many plans are available in your area, links to http://www.michigan.gov/dleg/0,1607,7-154-10555_12902_35510—,00.html (which is michigan’s insurance department website), and coming in October will list price estimates for each policy. I don’t know how detailed the policy information is, but it seems like a good start.
loading....
My biggest problem with the way health insurance is handled in this country is the way it is tied to your job for so many people (I have a lot of other issues with it, believe me…this is just the biggest one). It is insane that people have to take jobs/stay with jobs simply because of health insurance. It so limits many peoples work options. Want to work part time for some reason…sorry, you lose your health benefits (not in every case but in a lot of them). As this post points out, going out on your own for insurance is full of landmines (high expenses, gaps in coverage, limited ability to even GET insurance).
I applaud you for making the jump anyway and wading through it all to figure out a way to get insurance for your family.
loading....
I’m a doctor, and it’s not that we don’t know what OUR services costs. I can just look on my computer at my fee schedule and tell you how much anything I do will cost. This is not the same thing as how much any individual insurance company will pay since that depends on the contracted payment.
What we don’t tend to know is how much a test we send you OUT for costs, like lab work and radiology tests. That’s because there is no one price. It depends on where you go and how much your insurance company will pay which in turn depends on what plan you have from the 100s of plans that each insurance company offers. There is no way we can know all of this. If there is a medication or a test that a patient may need and they will be paying out-of-pocket, I usually just get my staff to call the pharmacy or lab, or whatever and ask them how much it is, but even that can change from day to day.
That said, I do have an idea of the relative cost of things. Like I know an ultrasound is going to cost a lot less than an MRI, so if an ultrasound will provide the information needed, then I order an ultrasound and not an MRI. And, there are only about 10 or less radiology tests I may ever order in my specialty, so it’s easier to keep up with. But lab work is another story. There are 10s of 1000s of possible lab tests, and even within my specialty, there are probably 100 I order on a regular basis – no way to keep track of exactly how much each of these are at each different lab.
So, doctors DO know how much THEIR services are. We just don’t know how much all the labs, radiology centers, pharmacies charge for everything, and how could we? I’m spending my time keeping up with the medicine, and with falling reimbursements and rising overhead, I can’t pay someone just to keep up with everybody’s charges at every lab/radiology center/pharmacy. This is why each person SHOULD check the cost at the lab or pharmacy where they go just like you’d price compare for your car or house upkeep. And, getting the insurance companies out of the middle would help a lot too since they are what make the situation so complicated. But, that’s not likely to happen.
loading....
Health insurance is a real landmine because one policy does not fit all and circumstances can change what your needs are. I have a high deductible plan written on a group basis. I need to fund our HSA, but with the current economy it has been hard to have the funds. I have a son with chronic health issues and we pay the full $3,000 deductible plus the additional $1,000 out of pocket maximum every year. This is when it becomes very hard to handle the cost of health care. Finding affordable coverage and funding an HSA is much easier when you are not dealing with ongoing medical costs.
loading....
>>how ridiculous it is that doctors don’t know how much their services cost, but it’s not just doctors. It’s the entire system.
Ok, let’s get real here. The reason that no one in the health care system knows what the costs are is BECAUSE IT IS DESIGNED to be that way.
It is designed to be confusing, so you cannot compare costs.
It is designed to be confusing so people are dependent on the insurance companies.
… so what happens when there is any effort to fix the situation? Extreme hostility. Boggles the mind.
loading....
I have private health insurance, and I found it on http://www.ehealthinsurance.com — I pay $140 per month (but I pay every 3 months — I think it’d be a bit more if I paid monthly). I get $1k worth of office visits covered at 100% per year, then I have a $5k deductible, and then everything is covered at 100%. I also get free generic prescriptions. It’s a fabulous plan for me (but I am keeping my fingers crossed that costs don’t go up too much next year!). The one drawback is that there’s no maternity coverage. Even if my boyfriend and I get married, I’ll keep my plan until we want to have kids, because it’s much cheaper than the plan through his work.
I like my plan because I can go to the doctor if I have to, and I love the 100% coverage outside of the deductible. The other nifty thing my plan does is negotiate one ER visit per year. So, when I went to the ER last year, my visit cost $5k. I was freaking out about having to pay the whole thing. When I finally got the bills, I ended up having to pay just $900 — my insurance company negotiated down to $1,200, and they picked up a little bit in my $1k doctor’s visits cap. They said the only negotiate one ER visit per year on the plan I’m on, but that was good enough for me.
@Rachel211 (#7), have you called to ask about the difference? Especially if you’re required to pay part, I’d call the hospital and ask about it. It is extremely easy to accidentally put in an incorrect code and get the billing off by a bit. I’d definitely check into that. Mistakes happen frequently in medical billing. I always check my bills to make sure that I’m only being charged for what was done.
loading....
I think this is a great post to show the confusing and frustrating process of health insurance. This is intentional on the part of the insurance companies to increase confusion which in turn increases profit.
In response to JD’s comment, I am an emergency medicine physician and would like to provide atleast my insight on the “cost” game. Most practicing physicians don’t know about the cost because it is an artifical system setup by hospitals and insurance companies. Most insurance companies reimburse a fraction of the amount billed, so is the true cost the amount billed or the amount reimbursed? Also hospitals set the price billed to compensate for uninsured patients. So depending on the hospital the price for the same test might be different. Most people want the healthcare system to be similar to other business transactions but I don’t that is possible with the insurance companies and uninsured patients. Just my 2 cents on a topic which will go on for years.
loading....
Another resource for finding private healthcare plans is NASE, the National Association for the Self Employed
NASE
loading....
I have an HSA and I guess this article confused me a little bit. I thought BY LAW that an insurer with dependents can only contribute up to $6,050 to their HSA a year and that an individual only does $3,050. That also include employer contributions. With that said, I pay only $2,300 tax deferred and my employer pays the rest. I had done the math and I am really only paying $3-4 a month for health insurance and the rest goes into my HSA where I can actually set up various investments similar to a 401K. The only difficulty is that it is through Chase and I don’t trust that bank.
To answer a previuos question, My max deductible a year is $5K, but if I had an emergency, the cost would go by the plan, the hospital would not just charge me that amount. I am hoping to stick with this plan as long as I am a federal employee and as long as my health needs are minimal. At age 55 I think I can use this money for whatever I want, including retirement.
I have to admit the only drawbacks is that it could work too well in keeping people out of the hospital when they probably should go.
loading....
Government regulations have destroyed what used to be a good, private health care system. It’s such a shame.
loading....
Be thankful that you were in progressive states. In Texas, 2 adults married 1 working would have run $1400/mo for 5k deductible due to smoking and 1 with epilepsy (well managed with $35/mo prescription and no event for 20+ years). $2300/mo for HMO low deductible and preventative care coverage.
loading....
I just had to comment on the Doctors not knowing what services (prescriptions) cost as spot on. I work in a pharmacy and I will get quite a few people who have been ‘told’ by their Dr. that the med will only cost $XX, not $XXX.
A big one is the antibiotic Levaquin, the patient gets #10 pills and the cash price is $190. “But my Dr said it would only be $40″
Well ask him/her where they are getting it b/c I would like to get some too.
loading....
The lack of cost transparency for medical services also makes it difficult to optimize one’s Flexible Spending Account. Not only do I have to guess what my medical needs will be next year, but I have to guess the prices. This has always struck me as bizarre, since I don’t have to guess on any of my other tax-deductible expenses, which would be far easier to do (e.g. property taxes, wages).
loading....
We have ins thru my husband’s employer. He’s 56, a heart/diabetes patient. I’m 48 with BP & thyroid issues. Our 14 y.o son is healthy. We are carrying our 23 y.o son as a disabled dependent due to a childhd degenerative hip disease. Our monthly ins premium is more than our house payment. We consider this a necessity, with incurred med expenses of <$1million over the past 17 years.
I am not surprised to hear that drs are unaware of procedural costs. We just went thru a hip replacement for our son – 2 weeks ago. Cost was not mentioned by anyone. When we discussed this fact at home, we chose not to ask. The surgery was a medical necessity, cost did not change that. I don’t regret approaching this with blinders, preferring to deal with the aftermath….after my son is walking, hopefully pain-free for the 1st time in 17+ years.
& since we are so warped with humor, we’ve been having a lottery trying to guess the Grand Total!
loading....
@14 You are completely wrong on every point. The private health care system has never been functioning and cannot actually exist without government regulation. It is a classic, canonical example of a market failure from adverse selection. Our blog post today expresses my frustration at comments such as yours, and I believe tomorrow’s will touch on some of the theory as to why you’re wrong, though in the context of the used car market.
loading....
I have been in business for myself for many years and have watched my premiums rise with my age as well as the times. I know the experience of calling around to compare prices for a mammagram and an annual check up and NOBODY being able to give me information.
I also have a high deductible plan and HSA, and make it a point to let doctors know my situation and interestingly enough, they often give me options or recommend alternative ways to address a health situation.
The uninsured in this country really need to organize and go to Washington. We can do so much better. At the minimum, we need annual preventative check ups and basic services. As it is, we put off because it takes too much energy to figure out the system.
Thanks for letting me rant a bit. Great post today. Love this blog.
loading....
I suspect that the lack of transparency of health care costs is one of the biggest factors in our high healthcare prices. With costs hidden, there’s no way to shop around for a good prices, no healthy competition to keep costs down, no restraint mechanism or accountability for performing useless procedures just to get paid for them.
This adds to the power imbalances caused by the nature of much of health care being so urgent and so life-and-death important and so expertese-based—you are vastly limited in your ability to put off a treatment while you shop around, do it yourself, or seek out an alternative solution.
Under the current system a big chunk of the country (or their employing companies) pays a substantial amount to insurance companies, and then the doctors and the insurance companies fight over most of that money (both sides devoting vast amounts of time and resources to increasing their share), which gives the medical side an incentive to tack on whatever they can because it means more reimbursements (if the insurance pays, and if not, hey, just get it out of the patient), and the insurance companies meanwhile find it in their best interests, profit-wise, to deny as many claims as they can without tarnishing their perceived reliability for the consumer. Nobody has any interests in any frugality that would benefit the people whose pocketbooks the whole mess is coming out of.
A full-scale transparency, with procedure costs readily available and facilities and doctors rated on how efficiently they treated their patients (i.e. unnecessary testing lowers the rating because it’s busywork with no practical result), would do a lot to rein in costs.
loading....
As a medical professional, I wish I could offer something helpful, but I can’t because it really is a mess out there. The government bears much of the blame due to regulations, for example the fact that you can’t purchase insurance from outside of your state. That’s not to take the industry off the hook, they are also to blame. Their plans are complex to use and compare. And then there are the users, who abused third party payers as money trees and have milked the system dry. Don’t let anyone place all the blame on any of the three parties in the system, they all share equal blame for where we are today.
HSA is what I have, and I encourage everyone to look into that option. It doesn’t make sense for everyone because they had to handicap it in order to get it passed into law, but it is still the best idea out there for actually fixing the system. It gets people looking at actual costs, gets the third party payer from being completely in charge, and decreases the amount of government involvement in our health care. If implemented for enough people it would cause providers to meet that market segment, benefitting the entire system.
Of course with Obamacare all this will change, we are already seeing rates rise dramatically because of it, and will see many options go away because of it. I’m hoping the benefits are worth it, because it’s going to cost a fortune…
loading....
One of the things that frustrates me the most about health insurance is the lack of rewards (i.e. lower cost) for those of us in very low-risk categories. I’m single, male, 24, never smoked, no family health issues, and extremely fit. $5000 deductible HSA through my employer is $1550 annually.
Compare health insurance to car insurance: if I buy a Lamborghini and live in downtown Chicago, I pay MUCH higher premiums than someone with a Corolla in Idaho. Why doesn’t health insurance work the same way?
loading....
Hi There,
I have nothing but compliments for your plan. I’m VERY curious if you are using one of the non traditional plans such as Mega? We have Anthem (I’m self employed and buy my own plan) – My coverage costs $425 give or take with a $15,000 per person / $30,000 per family out of pocket / deductible. We, like you, discovered that the riders costs more than the typical coverage they provide. I’m surprised to hear you were eligible for the HSA – we are NOT because, not many people know this – the has’s actually have an UPPER limit as well as minimum dedutible/OOP. Currently, if your family plans’ total OOP is $11,900. We actually opened HAS’s a while ago, then discovered they were “ineligible” and had to reverse them and take all the money out. If you have 10k deductibles per person, my guess is that you have “illegal” has’s. (sorry for misspelling, my computer won’t let me type h-s-a – keeps correcting to has).
I know what we do is that we make payments on our medical bills (family of 3, ages 45, 44 and 9 year old daughter, living in Winslow, Maine, Anthem Health Insurance, 15k per person deductible). Our health insurance costs $425 per month, and we pay around $400 a month in medical bills. (payments on various services)—and we’re pretty “light duty”. A GYN exam here, once a month Chiro there, etc.
The Mega health and life plans do seem much better, but I’ve been unable to find a real flesh and blood person who has used one. The internet has NOT ONE GOOD THING to say about them, so so far, I’ve stayed away.
Thanks for sharing. Your post is the first thing I’ve read that comes close to my family’s reality. Sounds like you’re right on track.
See this link: http://healthsavingsaccountrules.com/
loading....
To rachael211, yes, at least MY plan is like that. Mine is actually higher than the contributors — 15k per person (30k max per year for family), so we would pay 100% percent of the first 30k of medical expenses for my family, with NO COPAYS whatsoever. And we pay $425 per month for this privelage of paying all our medical costs out of pocket. The ONE benefit we do get is that by “running the bills” through the insurance, we end up getting a bit of a discount.
loading....
I think I’m glad my doctors aren’t thinking about what a treatment costs. I am happy to discuss with them what is medically necessary and what is not, but I don’t want them making decisions based on what they think I can afford OR what they will earn from doing a particular procedure.
That’s one reason I’m happy to be working with doctors at a University hospital/major medical school who are on salary and whose salaries don’t depend on number of patients or procedures etc.
Medical insurance strikes me as unlike other insurance, because health care isn’t really “optional” [I can choose not to drive a car, and I can choose to "self insure" my possessions, and know exactly how much I could lose if I do so, and I can decide I don't need live insurance, for example, but those kinds of decisions don't seem as possible wlhen it comes to health care] and at the same time, unlike, say, house insurance or car insurance, the “down side” for the insurer is so much more open ended.
I’d like to see more real “catastrophic” health insurance available (at prices that aren’t a catastrophy!) and more low-cost clinics for “routine” care. At one time, it looked like physician’s assistants and nurse-practicaners might be able to lower overall medical costs, but for various reasons that hasn’t happened…
loading....
#14- obviously you have not been outside of the insurance fold for a while. I am guessing you are with a large corporation or over 65 and covered by the government.
Ten years ago a hospital could not find my daughter’s insurance when she was checked in by a friend. She had surgery IN the emergency room and was discharged as soon as she was conscience and could walk on her own- six hours after surgery.
We called about insurance.
They charged our insurance company $17,000 for the emergency room, $10,000 for the doctor and about $4000 for the rest of the stuff—a 20 hour visit! The insurance company finally settled for less than $7000- after a few discussions about proper treatment.
That was the incredible workings of private medicine.
The same daughter just got out of the military (which she had joined BECAUSE of insurance). COBRA for the healthy family of three is…$1995 for three months.
The new company does not pick up their half of insurance for two more months.
Insurance is CRAZY. Our medical system is out of control.
I thought there was going to be relief…but I don’t see it.
Personally, I am praying I have nothing major happen until I hit 65!
At least I know where to help them look for private insurance IF they should be unemployed again. Thanks for the article- it is bookmarked.
loading....
Managing risk is what the Jaimie is asking about and it’s not an easy theme. You might want to google the idea and see what pundits in different fields say to understand different approaches to it. It’s as much about knowing facts as about understanding what they mean to your ever changing situation.
I take different risks now than when I was 30 (I’m 50). However the landscape changes as well. For example, I had a part-time job that offered affordable insurance in 1990 so that I could comfortably be a musician too.
One thing we can expect is that the cost of health care will rise while services overall continue to deteriorate. This will likely include having more products and services on the market, which also implies we’ll have to spend more time evaluating them.
Illness is a part of life. Accidents happen.
To not plan for these is risky.
10 years ago when I had just returned to the U.S.for school, I used my student health services for checkups and had a high deductible catastrophic plan that covered 100% of major hospitalization. I live in CA. I don’t remember how much it cost, but it wasn’t a lot and I felt like I was managing my risks appropriately, seeing as I ride a bike and could get run over in a heart beat.
Today, I won’t live in the U.S. and be self-employed, that is, I have no desire to deal directly with the business of making money on illness.
loading....
I think HSAs are good IF you are young and healthy but for anyone with a chronic condition???
One med alone in our household is $1500 a month (that is $18,000 annually) and, with insurance, we pay $25. Our annual premium for family HI is about $22,000 a year with 90% paid for by the employer.
loading....
@AC We put in about $5,000 per year. Right now it has $10,000 in it, not $10,000 per year.
@Ahzz Wow! I thought Maine was pretty bad, but I had no idea how bad it can be. That is crazy. I remember asking my agent what the top plan was. She said it was $2700 per month. I couldn’t believe it.
@Ken LaVoie Ah a fellow Mainer! And you might be right about the illegal HSA. We are still trying to figure that out without any luck. Our health insurance agent wasn’t sure but neither was the bank when I called.
My agent said that she has a plan for small businesses that isn’t an HSA (I can’t remember the name of it at this moment!) that we are investigating but so far we haven’t figured out if we are eligible.
I do use Mega, and I have read bad reviews. Most of them concerned the quality of customer service not the quality of payouts, I spoke to two people that have had Mega for awhile and called customer service beforehand to see what they were like. So far they have been way better than my previous plan that covered NOTHING. So far they have actually covered things I didn’t think they would, and customer service has been ok so far.
I wish you luck with everything you are going through too!
@elisabeth I also wish routine care was less expensive. I wish I didn’t have to take the kids to an expensive first care emergency room on a Sunday. I think it’s a huge hassle to go through insurance for everything when I am basically paying everything out of pocket anyway. But I really don’t want to have something horrible happen and pay $100,000 so we live with what we have for now.
loading....
Wow.
I am inclined to think that anyone these days who doesn’t think that insurance at the very, very least needs some regulations (if not a full overhaul) have just lucked out and not had to deal with a major insurance bill that was ‘questionable’ to be covered. Of the three friends I know who have had cancer (all of them young) they have all had horrible, horrible times trying to get the insurance to pay for treatment. One friend even had a HUGE amount in savings from being single and having a very lucrative job, and now is bankrupt and has to live with his parents. And he is still racking up new bills with rechecks and upkeep.
Sad.
And he was one of those people who did everything “right”! He had ‘good’ insurance through his job and a very hefty (over $100k) savings account. If he still ended up bankrupt and living at home, what chance does anyone else have?
loading....
#18 Nicole – you may wish to do some research on fraternal organization, mutual aid societies and lodge doctors. It was a way for the the immigrants and minorities to take care of each other in the age before government services.
I’d provide links, but a simple google search with the terms above will bring up enough resources.
loading....
@26 Yes, dear. I know all about the history of health care in the US in enormous detail (and quite a bit about 19th century England, France and Germany’s systems while we’re at it). If you would like to engage me in a long discussion on this topic, I suggest you enroll at the university where I teach as I keep having to remind myself that I’m not getting paid to remove ignorance from the internet.
It is quite lovely to think that fraternal organizations, mutual aid societies and charity would solve all our world problems if only the dratted government wouldn’t get involved. That would force everyone to become religious too, which would save their souls, an additional benefit. Sadly that just isn’t the way the world works in reality.
See, I also know poverty statistics through at least the 20th century, and I know how much difference government public health programs have made… and I’ve taken classes on earlier even more nasty, brutish, and short time periods.
Empirically history does not bear you out.
Theoretically, the free rider problem argues that these kinds of societies will never be able to provide the optimal level of provision. The race to the bottom lemons problem described on our blog tomorrow will further explain the health care market problem in terms of adverse selection, though it will focus on used cars.
Normally I’m all nice and teacherish about these kinds of issues. I like to educate and one does catch more flies with honey than vinegar. But, I think the election season is bringing out the boneheadedness in people who know nothing except the misinformation available during an election season. It’s getting to me.
loading....
Just having insurance for the discount and paying out of pocket would totally be worth it if you ever ended up in the hospital. I had a very routine vaginal birth with absolutely NO medication and less than two days in the hospital. I was pretty much ignored most of the time while I was there unless and until I asked for assistance and got checked on about twice a day. For this, I was billed over $10,000 initially. By the time the insurance company adjusted for their rates, the insurance company paid about $3,000 and I was responsible for about $1,100 ($250 deductible and 80/20).
Just having insurance is over a 50% discount. If I didn’t have insurance and had any kind of birth, I would have to declare bankruptcy! That’s insane. I basically would have paid $5,000 a night for a terrible hotel with infrequent visits from a nurse. Oh, the $10,000 did NOT include my doctor’s fees which I had already pre-paid. No wonder so many people have to declare bankruptcy for medical reasons. I can’t believe what hospitals get away with.
loading....
The issue about how much procedures cost brought back an interesting thing I noticed when I moved from Canada to the US:
In Canada, where I grew up, procedures were never about cost. The choices were always more about side effects, time it will take to recover, long term expectations, etc etc. You worked with your doctor to determine the right treatment for you, and that was what you got.
When I moved to the US, all of a sudden it was a menu: Procedure A cost X, Procedure B costs Y. You decide what you want. I remember thinking “I decide?! I have no idea, I have no medical training!” It was a strange feeling to choose your medical care based on prices.
Anyway, it’s a bit off topic, but this post reminded me of that
loading....
@#14- how exactly has government regulation “destroyed” good public health care system? I would like to agree with you, but just making that single statement hardly constitutes a position on the matter and it’s a tad anachronistic in my opinion. On a macro econ perspective with the government’s already heavy involvement in health care through Medicare, medicaid, and CHIP it is in the public’s interest that health care costs are exposed and properly regulated and managed. Obama is considering prolonging the Bush tax cuts until 2020. That seems reasonable given we are on our way out of the recession, unfortunately if he were really to do that, the CBO estimates our accumulated deficit will run over 100% of GDP by 2023! not only that, the ENTIRE reason why that will happen is because of the mandatory health programs; not social security. Now if the government were to pull out of the health care system completely, that could fix the problem and we could all pay less taxes, but it would leave many older folks who are not lucky enough to have pensions or plans that will take care of them and their burden will again quickly fall onto their loved ones. How is that even possible with a national savings rate below zero and a decline in wealth over the last decade for the average household?
loading....
Reading all the comment and the reader story make me VERY HAPPY that I live in Canada and enjoy excellent medical care that I don’t have to pay crazy money for! I’m equally happy that I’ve got excellent additional coverage through my employer (for prescriptions, dentist/orthodontal, paramedical services etc). I am a 10yr cancer survivor and I never experienced any kind of delays with my treatment at all, and the only thing I had to pay for was parking at the hospital. Had I lived in the US, I would have very high medical bills to try to pay.
loading....