Insurance Creep

I have a high deductible health plan, which makes a ton of sense to me.  For reasons I don't understand, by increasing my deductible from $100 to $2500 I save over $3,000 a year in premiums.  So even if I max my deductible every year, which I don't, I still don't pay as much in a year as my old BC/BS gold-plated policy.  And as an extra, added benefit, we have actually started price-shopping health care services, and that has been a real eye-opener as well.  Bottom line - one can get things like tests and X-rays a lot cheaper if one has the incentive to shop around.

So I worry about exactly this with the new federal health care bill:

Wendy Williams and her husband liked their health insurance plan.  The premium and annual deductibles made sense for them, and a more "gold-plated" plan was not worth the money.  Yet Massachusetts' health care regulators disagreed, and forced the Williams to pay a $1,000 fine if they wished to keep their insurance plan "” a plan they prefer to a comparable state-approved alternative....

If the federal government adopts an individual mandate, Ms. Williams fears her experience could soon replay itself nationwide.  She's right to fear.  Once there is an individual mandate, interest groups will flock to Washington seeking to have their preferred treatment or service incorporated into the requirements for acceptable health care plans.  Over time, the requirements will grow, and the cost of health care plans for many Americans will increase as a result.  Consequently, many individuals who have health care plans that fully meet their needs will suddenly find themselves "underinsured" "” and taxed fined as a result.

  • Allen

    But he said you don't have to change your insurance 😉

  • spiro

    When I was in grad school the university had a forced healthcare policy which amounted to "unless you can prove that you already have other health insurance, you must pay for the school's (EXPENSIVE) HMO plan.
    So, my wife and I shopped around and discovered the HSA/MSA option -- PERFECT for a healthly, childless couple in their mid-20's. We kept in contact with our insurance agent was as a family friend, and he would send me emails whenever there was legislation put on the table that would affect healthcare options. This was the beginning of my conversion from a moderate-liberal to a full on libertarian and it became quickly apparent that leftists in D.C. (especially Ted Kennedy) were hell-bent on removing the medical savings option and forcing me to pay at least 2x more for medical coverage that I NEVER used. The monthly premium + the monthly deposit into our health savings account was less than 1/2 of what we would have paid for just the premium of the highest deductible traditional plan -- AND, after 4 years on the MSA we had over $16,000 in our account (available for medical coverage OR retirement), $16k that would have been flushed away in premiums on a normal plan.
    America used to be about freedom, informed decisions, and responsibility. America as an idea is dying.

  • Bob Smith

    It's likely that deductible and copay limits under Obama's plan would mean there was no HSA-eligible insurance available, even though it doesn't formally repeal the HSA legislation.

  • sch

    The democrats really hate the HSA plans, which are very attractive to the young and healthy, because they are basically a cherry pick plan
    for that reason, and thus exclusionary to the impecunious, sickly and elderly. The democrats are really torn on the concept of egalitarian
    plans (every body pays the same regardless of age/sex) versus plans that charge on the basis of age/sex/prior medical history. What has
    come out so far is a split between the two with feet in both camps, final stance to be determined. Realistically children are dirt cheap
    to insure, the 80yr old with diabetes, heart disease, hypertension and a history of cancer, MI and TIAs would be very expensive to insure
    in an egalitarian world. Not requiring every one to buy a policy with minimum coverage means the young and healthy skip it, resulting in
    less income to pay for the people who really use a policy to the hilt. The progressive drop in the 'fine/tax' or whatever you call it
    from $3800 to $1000-1200 for not buying a policy will result in higher costs for the insured, less ability to hold down future increases
    in costs and hence an explosion in the deficit in 5-15yrs. Massachusetts has run into this problem with healthy people who develop medical
    problems that are not hyper acute, but need optional intervention, buying policies after the problem develops, having the problems dealt
    with and then dropping out again.

  • Greg

    Assuming national health care doesn't pass, I would recommend kicking your deductible up to $15k or so, and just paying cash all year for day to day medical expenses. We currently do this, and don't submit any bills to the insurance company. Cash prices are typically 30-50% less than the insurance rate. We have no intention of hitting our deductible, and only have it there in case of serious illness.

  • frankania

    I have NO insurance, am 69 years old, and pay for everything cash, after shopping around and investigating online my options.
    The trouble with the current USA health debate, is that they only talk about INSURANCE, not health care.
    Where I live there are almost no medical malpractice lawsuits, you don't need a prescription to buy almost all medicines, and some PRIVATE clinics charge as low as TWO DOLLARS for a doctor visit. NOT govt. subsidized.
    Guess where I live????

  • ap

    I'll bite. Costa Rica or Mexico.

  • richard

    Warren

    > or reasons I don’t understand, by increasing my deductible from $100 to $2500 I save over $3,000 a year

    Interesting! However, it makes perfect sense. Going to a high deductible plan will save the insurance company not $2500-$100 = $2400, but you are much less likely to break the $2500 limit than you were before.

    You are just as likely to break the $2500 limit as you were before to break the $3100 limit.

    > we have actually started price-shopping health care services, and that has been a real eye-opener as well.

    Exactly!

    So going to high deductible plans will save everybody (3000-2500)/2500 = 25%

  • richard

    Sorry, my math is faulty.

    I meant to say (3000-2400)/2400 = 25% (typo), but then I ignore the cost of people who pass the $2500 (=$3100) mark. So the savings can be max 25%, probably half of that, as a figure of merit.

  • macquechoux

    "The democrats really hate the HSA plans, which are very attractive to the young and healthy, because they are basically a cherry pick plan."

    Yes, the Democrats do hate HSA plans, that is a fact. I got my first MSA when I was 55 because it made sense. I can budget and save. I later changed it to an HSA when they became available. As a result I have a considerable amount of money saved in my HSA. When I remarried I was 61 and I showed my wife the benefits of HSA's and she switched at age 54. Monthly, she deposits the difference between the low deductible premium and her lower cost high deductible premium. In short, you don't have to be young and you can be of average health to benefit from a HSA.

    Perhaps, if the government is going to force something down our throats it should be HSA's with automatic deposits and high deductible insurance policies and some sort of debit card tied to the HSA valid only for medical expenses.

  • Highway

    I just really wish they'd stop pulling out these people with serious diseases who have to pay a lot on radio and TV and lamenting that they don't get 'insurance' to lower the costs of their care. While I realize that retail prices for care are inflated by the whole system, but those people are not getting 'insurance'. They want cheaper care that they know they will need. That's contrary to the entire idea of insurance. And it's another reason they need to drive non-consumers into 'insurance' plans, to subsidize the care of those people who they'll be forced to cover.

  • frankania

    That's right, Ap, Mexico. We run a B&B here and many guests come for dental and health care, and to buy medicines.

  • Esox Lucius

    I was at a town hall meeting with my Federal Representative, Peter Roskam. I asked him to explain to me the logic behind banning my HSA in this new proposed health care bill. He said that the logic was, "the people in Washington think that they are smarter than you are" pressing him, I suggested that Washington couldn't possibly be that "Brazen" and he said, that is exactly what it was.

    It freaks me out that personal decisions by the grubby faced masses are considered so contemptible.

  • gn

    It never ceases to amaze me how ingenious the wealth distributors are getting to be. They'd have trouble passing a pure "tax" that takes thousands of dollars from a healthy person and gives it to someone with health problems, but by outlawing plans that reward health (HSAs) and forcing everyone into common high-cost plans they can essentially accomplish their goals.

    As economics is a function of incentives, and being on an HSA plan does tend to incentivize someone to price-shop, make wiser decisions, etc, it sure feels to me like the one hope we had for cost control is about to be outlawed...

  • Doug

    "If the federal government adopts an individual mandate, Ms. Williams fears her experience could soon replay itself nationwide."

    That is why I just my head when people say, "Let's let people buy insurance from any state and avoid the mandates their own state imposes." More likely, everybody will get all the mandates.

    I'm all for cross-state insurance sales, this just isn't the reason to do it.

  • K

    Something like ObamaCare is going to pass. It will greatly irritate many. They will lose. The trend is always for government to take what it can in resources and/or powers from those within its borders. And often outside.

    Every government will work steadily to regulate more and more. And in finer and finer detail. That is what governments do. The process rewards everyone within the government whether they be employees or elected officials. In this case no one there will be subject to ObamaCare, they have set aside better deals for themselves.

    Since we already accept so much regulation it is inevitable that we will get ever more. Reagan probably had the keenest insight about that and yet he stopped nothing. He simply couldn't do it. Clinton saw it too and definitely had mixed feelings. But the trend continued. Both Bush's were oblivious about domestic matters but paid a great deal of attention to foreign affairs.

    The only question is whether a government feels strong enough at a given time to force new programs upon the electorate. If they do they will. Currently the Democrats believe they can. At heart the GOP favors the same expansions the Democrats want; they just speak differently.

    Nader got one thing right, there is one party with two names.

  • DrTorch

    "My husband and I weren't convinced. It all seemed inane, but we are neither politically or socially conservative and figured the plan wouldn't affect us much."

    So what's her problem?

  • Uno Hu

    God help us if NATIONAL health insurance passes. At least one can (and I would) move the h### out of Massachusetts.

  • MGW

    I worry that all this talk of "insurance" is basically a code for "I want someone else to pay for my expensive healthcare." However, as long as it is billed as insurance, people don't feel like it's a handout, they just feel like they're getting what they pay for (even if the benefits they received greatly outweigh what they contribute to the system). Instead of saying "insurance companies need to cover my horrible disease" I wish the people they put on TV would say "I want all of you to pay to treat my horrible disease." It's just more honest.