Health Insurance in the US is a Nightmare.
Health insurance in the United States is a confusing, expensive mess.
A few months ago our company was merged with another. With this came a new health insurance plan. Our old company only had two plans to choose from, so I didn’t have much of a choice. My wife has type 1 diabetes, so because of insulin pump supplies, we hit that deductible every year. I picked the more expensive plan because it had a lower deductible and didn’t worry about the rest.
The new company has six plans to choose from so I did a deep dive into exactly what all the numbers and rates were. What I found was a confusing mess of terms and numbers. It’s next to impossible to tell if you are selecting the right plan for your situation. It also was surprisingly expensive, to the point where is almost worth it to decline coverage completely and just save money yourself.
Insurance seems intentionally confusing.
Deductibles, Out of pocket maximum, co-insurance, co-pays, all terms that even when fully understood, make it difficult to figure out how much you are going to pay. On top of that, there are separate rates for things like emergency rooms, ambulance rides, medical equipment, and drug plans. It’s enough to a mathematician's head spin. The average person doesn’t stand a chance.
HR representatives do their best to explain definitions, but more often than not, your HR person is just as confused as you are. They are in no position to make recommendations. When faced with a choice, people will pick the cheapest option or one at random.
Choosing the correct plan practically requires predicting the future anyway. Got a relatively healthy family? Go ahead and pick the cheaper plan. You’ll save thousands a year unless you get hurt. Then you’ll be responsible for that 20% coinsurance up to the max out of the pocket of $12,000. Don’t have $12,000 laying around for a rainy day? Have fun getting calls from debt collectors.
All this leads me to wonder why? Whose genius idea was it to have you first pay your doctor a $25 dollar co-pay. Then have your doctor later bill your insurance company then have to later bill you again for the remainder? And that’s the simple case. God forbid you to have to get a pharmacy involved as well. It’s a confusing error-prone mess of paperwork payments and bills. On multiple occasions, we’ve had to contact two or more parties to get bills straightened out because we were incorrectly billed hundreds of dollars.
Who benefits from this confusing mess? No one as far as I can tell. The patient gets confused, the doctor’s office gets confused and even the poor help desk employee at the insurance company is confused. Sometimes the mistake benefit me, sometimes my doctor, sometimes the insurance company. It’s insanity.
Insurance is Expensive.
Insurance is expensive, everyone knows this. But I figured with a diabetic in the family we were probably taking out more than we were putting in. Then I added up all the numbers.
My Family Plan:
$877.59 my contribution
+ $600.00 contribution from my employer
— — — — — -
= $1477.59 per month
That’s $17,733 per year!
Now our insurance options for a family plans vary from $500 per month for plans with a high deductible and 20% coinsurance to over $1000 per month plans that include out of network coverage. I chose the one in the middle.
Our medical bills are expensive. My wife is a Type 1 diabetic. Diabetics require a lot of medications and equipment. So we see the inflated costs all the time, but just for fun let’s add up the costs that the insurance company is paying for a year:
Insulin Pump: $4500
Insulin: $6,000
Continuous Glucose Monitor: $1700
Doctor Visits: $600
Other Meds: $300
Total: $13,100
When you add up all our medical expenses we end up paying $4600 more per year to the insurance company than if we would have paid for the expenses ourselves.
And keep in mind that the pump can only be replaced once every four years, so add another $4,500 for 3 out of the four years.
And that’s with a type 1 diabetic. Most families don’t have nearly this amount of cost, just a few doctor visits, and a few prescriptions. The insurance company can rake in $17,000 per year per employee.
Medical Costs Are Inflated.
The FDA in the United States does not have the power to regulate prices. People that need medication to live, have no choice but to pay whatever the drug companies decide to charge. There is no free market in medicine. There is very little downward pressure on costs.
Insulin prices have gone to insane levels. A $30 vile of insulin in Canada costs $250 in the US. Epipen prices have gone from $100 to $600 in the last decade.
An insulin pump cost $4,500. Continuous Glucose monitors cost $500 for essentially a disposable Bluetooth chip and battery wrapped in plastic that lasts 6 months. The most expensive iPhone cost $1000 and while insulin pumps are awesome, they are not nearly as complicated.
There is also no choice in medication. After switching insurance companies, we had the “choice” of paying $2000 for a 90 day supply of the current insulin or switching to the in-network brand and paying $160 for the 90 day supply. The insulins are both fast-acting, but not the same. Switching requires adjustments in basal rates and dosages until we get it right again. This results in more days with high and low blood sugars, taxing the body, and making for a week where you generally just don’t feel good till you get the settings right again.
Choice in Insurance Companies
Choosing your insurance is a myth, at least for an individual. Most Americans, don’t have a choice in insurance companies. They go with the insurance company their employer chooses. Insurance costs can’t be deducted from individual taxes as an employer can.
I should probably feel lucky that my employer offers several plans to choose from. When your employer decides to switch insurance companies, you have little choice but to go with them.
Open Enrollments Need Standardized
Most plans have what’s called an Open Enrollment period. Once a year, you can change your insurance plan. You can add or remove members as well.
If your spouse also works, you might be able to choose between her insurance and yours. Our company recently switched to a more expensive insurance company with terrible service. So we looked into switching. By moving her and our daughter to her plan and keeping me on mine we could also save about $250 per month. The problem is that our open enrollment periods don’t line up. My company has an enrollment period in October, her’s is in December.
For anyone to move off of my plan and on to hers, they would have to be uninsured for two months. This would be an unacceptable financial risk, especially during a pandemic. So we are stuck.
Our old insurance company had excellent customer service. Any issue with medications or supplies was just one call to them and they would take care of it.
The ACA is still terrible
The ACA does set some standards for insurance and protects people with pre-existing conditions. It also provides affordable insurance for people without insurance offered by their employers. The good it does pretty much stops there.
The Affordable Care Act doesn’t go far enough. It doesn’t address health care costs, only insurance. It doesn’t cover everyone. It allows for cheap insurance plans based on income. However, if you recently lost your job you are still stuck with expensive COBRA payments or choosing an expensive plan because your income from the last three months was too high to allow you to qualify.
When enacted it gave insurance companies an excuse to raise rates. And raise rates is what they did. At the time my company used to just pay for employee’s health insurance, no employee premium. Once the ACA was passed they could no longer do so because rates had gone up over 40% from the previous year.
Other Countries Have Figured This Out.
This nightmare in the US doesn’t exist in other countries. Follow any thread about healthcare in the US and you’ll inevitably see someone commenting from Europe, Canada, or Australia confused and amazed at how difficult this is for the United States. It’s cheaper in other countries. It’s more convenient. You don’t have this constant risk of financial ruin just because you got sick or injured.
We don’t need to figure out how to do it. Our current premiums would more than cover the costs and would cover everyone. This isn’t breaking new ground. Just copy what other countries have already done.
