The question journalists need to ask when covering health insurance

Like many people, I’ve been following the stories of people who are losing their health insurance as insurance companies cancel policies because they don’t meet the standards of the new health care law. People insisted they “liked” their old policies.

And maybe they did. But it’s time to demand we get a look at those policies. Several journalists have followed up with policyholders who complained on national TV that they were losing the policies they liked and found out that in most cases, the policies were garbage. What they liked, in many cases, was the idea of paying a relatively small amount of money for garbage.

When’s the last time you sat down and actually read your insurance policy?

If you’re one of them, explain in-network vs. out of network? Explain co-pays to me. Explain out-of pocket maximums to me? Explain amounts allowed vs. provider responsibility. The best way to get educated on your insurance — and whether it’s worth the money you spend on it — is to try to use it.

I like to think I’ve got pretty decent health insurance, but even the people who sell it don’t know what it is. What hope is there for the likes of me?

Here’s an example: In my continuing struggle this year with the illness I described earlier, it was suggested I buy this Medtronic device, which retails for $3,500 and appears to have about $12 worth of parts.

I consulted this page on my insurer’s website and learned it’s “Generally covered subject to the indications listed below and per your member contract.” Well, good then.

Not having the member contract handy, I called the company and asked the representative about it. “You’re fully covered,” she noted, advising me also that I’d already met my “in network” deductible of $3,000, whatever that meant. But fully covered in the insurance world does not mean “covered in full.” It means the insurance company will pay for the portion of the cost of health care that they’re bound to pay for. And we all know without looking what that is, right?

So I bought the device, stuck it on the credit card and then submitted the claim to get reimbursed.

That’s when I found out that Medtronic is considered by my insurance policy to be an “out of network” provider. It also didn’t matter whether my “individual deductible” ($750 for in network and $1,500 for “out of network”) might have been met because there’s also the “individual out of pocket” ($3,000 and $4,000 respectively) to consider. There’s also the “family deductible” and “family out of pocket” to consider. (By the way, if you’ve met your out-of-pocket maximum for the year, many providers will still collect the co-pay for an office visit and the chances are pretty good you’ll never get reimbursed for it.)

When the dreaded EOB (explanation of benefits; a woefully inadequate term) arrived, it carried a check for about $1,600, which is better than nothing, but comes a bit short of the “fully covered” I had been led to believe.

They weren’t lying at my insurance company. They paid exactly what they were required to pay and it was all right there in the EOB which lists charges, the provider responsibility amount, the allowed amount, the co-pay amount, the deductible amount, the co-insurance amount, the patient non-covered amount and finally the grand total “the paid amount.” Armed with those numbers, a calculator, and maybe an hour of time and a good friend in the health insurance business, I could figure out how they reached that amount for the medical device, which, by the way, doesn’t seem to work that well.

I consider myself lucky to have the insurance I have and to have gotten what little I got for this one claim. But, though I consider myself a fairly intelligent sort I don’t pretend to fully understand the byzantine nature of the coverage and I don’t pretend to understand how anyone would be able to know how covered they are in this system that often seems to depend on the customer not knowing what they’re paying for.

You can’t get to the point where you like your health insurance if you don’t understand your health insurance.

It’s worth asking people who are upset that their policies are being canceled what the policies cover? In many cases, I suspect, the proper follow-up question would be obvious: Why are you happy with it?

Related: David Brauer goes shopping for health insurance.

Another Obamacare horror story debunked (Los Angeles Times).

  • Matt

    Thanks for posing the question, and it’s one I haven’t heard asked yet. Sebelius and Obama have made this point when pivoting from Obama’s campaign promise, but have failed to make it forcefully.

    The only thing close was an analysis on NPR/MPR last night regarding the reasons insurers are cancelling the coverages. In sum, the insurers are not required to refuse to provide someone’s current plan that doesn’t meet requirements of the ACA. They can re-new them, but only once. Because most people in the individual market buy their plans on an annual, calendar-year basis, they’re shopping now. The insurers are cancelling for a business or perhaps political purpose, but the ACA does not require them to refuse to cancel right now.

  • Andy
    • Matt

      Yes – that’s the exactly story I was referring to. Thanks.

  • kevinfromminneapolis

    As I said on Twitter last night, it’s funny the things that get chased down and the things that don’t.

  • DavidG

    One note: I was under the impression that co-pays generally fall out side of the “out of pocket” calculation.

    • Not on my insurance. Once you reach your out of pocket maximum, there are no copays. Now, nobody will actually tell you that. I had to research it so that when the clerk says “that’s a $40 copay,” I can say “I’ve already maxed out the out of pocket,” and they say “OK.” But since they have, apparently, no access to my account — even though the clinic is owned by the same outfit that owns the insurance company (which is a horror story all its own), they don’t know that. Or maybe they do and just figured they could grab an easy $40; I don’t know.

      But the point is if you don’t actually KNOW every nook and cranny of your health insurance and run just about every possible scenario when evaluating it, you’re going to lose money you don’t have to lose.

  • Well, the thing is: take the politics out of it. These realities — people not being able to understand health insurance — existed long before the health care law and I suspect there’s no way they’re going to be solved by the health care law.

    I also suspect that somewhere in everyone’s desk, there’s a dusty copy of their group insurance contract that they started to read once but gave up on after a couple of pages.

    Maybe there should be a Rosetta Stone for such a thing.

    • kevinfromminneapolis

      I gave a genuine effort to read my entire health care policy when I got it a few months back, thinking that I had enough experience reading legislation and stuff to understand it. It may as well have been written in Mandarin Chinese.

      • MrE85

        I hear you, Kevin. I worked for a insurer/health provider for many years, and I’m just as much in the dark about understanding my health insurance as everyone else.

  • Kassie

    One of the struggles of MNsure is to get people who have never purchased insurance before to understand the differences between policies and why similar looking policies cost different. One of the solutions was the rating of plans as Gold, Silver, Bronze, etc.

  • tboom

    I’m of the opinion the only people who like
    their insurance are healthy people who don’t need medical care.

    • Kassie

      Not true. Pretty much everyone I work with likes our insurance. I rarely hear complaints, and since I’m a union steward, I hear the complaints. We get a very simple to use plan and while it doesn’t cover everything, the employer gives us this easy guide which shows basically what everything will cost (pdf):

      Also, pretty much everyone on Medical Assistance likes their insurance. Also super easy. Basically everything is covered at 100% except glasses. Real simple.

      The answer for people liking their insurance is making it easy.

      • Everything is covered at 100%.

        I can only dream about such a land.

        • Kassie

          That land is extreme poverty. If you and your wife made less than $19,388 a year gross, you too could have that insurance.

      • TJ Swift

        “Also, pretty much everyone on Medical Assistance likes their insurance. Also super easy. Basically everything is covered at 100% except glasses. Real simple.”
        Thanks for brightening my day Kassie. Thankfully I wasn’t drinking anything when I read that!

      • tboom

        Okay Kassie. I guess the people that are happy are those who are healthy AND those remaining few who happen to have low costs coupled with simplicity. I share Bob’s pain.

        In my case (if anyone cares), my premiums and HSA contributions exceeds $8000 annually (low premium/highly deductable family policy for my spouse and myself). Since my maximum HSA deduction can’t cover the deductable plus costs insurance can’t/won’t cover, I pay additional from my disposable income. Our health care (with dental and optical included) easily exceeds $10,000 annually and last year flirted with $12,000 (and my employer makes premium contributions too!).

        Healthy co-workers with healthy spouses and healthy children love our “insurance”, the rest of us, not so much. My wife and I are slowly spending down our retirement savings.

        • Kassie

          I’ll point out that the difference between us, and I’m just guessing, is that I have a union and you don’t. My union has fought hard, including a strike a number of years ago, to not go down the complicated and expensive route. We have probably given up pay raises to do it, but everyone believe the fight was worth it in the long run.

          My hope is that ACA is the first step in getting more people to have simpler and more affordable insurance. And some people with jobs, but really terrible insurance, are able to purchase on the exchange. It may just be cheaper in the long run to bypass your employer.

          • Is the Cadillac Tax going to affect the state contracts?

          • Kassie

            Nope. We don’t have a Cadillac plan. We are self-insured, so we are able to keep costs way down. I would guess that getting the same plan through an insurance carrier it may be considered Cadillac.

            Also, do states pay taxes on things like that? I know the state pays in to FICA and the Feds for payroll, but do they pay other taxes? I don’t believe they pay into unemployment.

          • TJ Swift

            Most of the “Cadillac plans” are plans offered by companies that self-insure, and that includes many, if not most union contracted benefit packages. It’s why they have been trying to twist Obama’s arm for an exemption, but it didn’t happen.
            Time for everyone to pay their fair share.

      • kevinfromminneapolis

        Hey I was thrilled with my state insurance for 8 years, too! Never paid an insurance premium in my life until I left government.

        • Kassie

          I’m 37 and still haven’t. We will start paying premiums in January 2015 for the first time for single coverage.

          • kevinfromminneapolis

            I heard about that, how it went from an unconscionable attack on workers to an acceptable contract provision in such a short time. Fascinating!

          • Kassie

            That’s not exactly true. This was the second contract with this governor, so it isn’t like we rolled over for him. And basically we saw the writing on the wall. If we ever wanted a raise again, we had to allow for a small premium. I’d like to mention we also have a new Executive Director, so attitudes have changed.

          • kevinfromminneapolis

            It was in his first offer in 2011, then came out, then became mean-spirited and anti-middle class. Now it’s A-okay. Ultimately it’s good that it finally happened, just amusing.

        • DavidG

          I paid premiums when I worked a the U, for individual coverage in the private sector job the last 8 years, I ahd no premium, until this year.

      • tboom

        Okay Kassie. I the people that are happy are those who are healthy AND the remaining few who happen to have low costs coupled with simplicity. I share Bob’s pain.

        In my case, our low premium/high deductable policy cost us over $8000 annually. Include what insurance doesn’t cover, dental and optical and last year’s health costs flirted with $12,000 (and my employer makes premium contributions too!).

        Healthy co-workers with healthy spouses and healthy children love our low premium “insurance”, the rest of us, not so much.

        • tboom

          oops, and I repeat myself.

  • TJ Swift

    “People insisted they “liked” their old policies. And maybe they did. But it’s time to demand we get a look at those policies.”

    Wow. From any direction I look at it, the arrogance of that statement is both breathtaking and unsurprising at the same time.

    • I don’t know why. You don’t strike me as the type to take statements on faith. “Trust but verify,” as someone once said.

      • TJ Swift

        Maybe not, Bob. But I do know when and where my incredulity matters.
        I’d love to take a tour through Mark Dayton’s investment portfolio, but I’ve enough respect for the privacy rights of others to know better than to even express the desire, much less make a demand.

        • I don’t demand to see people’s insurance just to see their insurance. Nor would I feel an urge to look at Dayton’s portfolio unless he brought it up as a matter of material fact.

          To me, it’s like a court case. If one side brings something up, the other side has every right to go there.

          • TJ Swift

            But this isn’t a court case, Bob. It’s people saying “I had this, I liked this and now it’s gone after you promised it wouldn’t be gone.”

            It’s a prima facie case being played out in public that you’re objecting to because it so clearly sullies the integrity of the President and his signature plan.
            Honestly, look at what your argument has been reduced to: “Well it wasn’t good for you anyway.”
            I think you’re smart enough to see how bad that looks.

          • // It’s people saying “I had this, I liked this and now it’s gone after you promised it wouldn’t be gone.”

            Exactly. And that point is a matter of material fact which I wrote about last week.

            I can’t really defend your characterization of my argument — it doesn’t matter because it was garbage — since it’s not my argument. You had to reinvent it in order to create the reality you needed to satisfy your paradigm. That’s not up to me to defend.

            It’s OK with me if people want to pay for garbage coverage. And I have no problem with asking people who say they like their coverage to explain to me what it is and why they like it. Do they know it’s garbage coverage? If they do, they’re better at reading through their health insurance contract than I am.

            The president’s rollout of the plan has been a disaster; that much is clear and I think mostly undeniable at this point.

            That one solution to it is advocated to go back to the insurance we had, I think it’s healthy to ask, “hey, what insurance was that, anyway?”

            As far as I recall, understanding our insurance coverage and dealing with insurance companies is not at all a political question. It’s a structural one that far predates the last half dozen presidential administrations at least.

            Having said that, I fully understand why some people might characterize that question to be arrogant and not useful to their daily conversations which require a political good guy and a political bad guy. Life is simple like that. It avoid a lot of complexity, nuance, and thoughtful consideration.

            That’s not something everybody likes. Especially on the InterTubes.

          • TJ Swift

            “It avoid a lot of complexity, nuance, and thoughtful consideration.”
            I recognize that from somewhere….oh, right.
            “Public school funding is much to complex for the lay person to understand”
            I understand why some people fall back on… intellectual laziness… rather than admit to awkward truths that are damaging to a particular thing they wish to protect.
            I’m glad it’s acceptable to you, Bob, if people buy insurance that suits them, but I still don’t see a justification for them to deliver their decisions up for your, or anyone else’s consideration; thoughtful or otherwise.

          • That’s because you don’t understand that the point at which I’m justified asking the question isn’t the part where they buy the insurance, it’s the part where they go to the news media with their complaint, demanding it be covered.

  • TJ Swift

    “this Medtronic device, which retails for $3,500 and appears to have about $12 worth of parts”

    I happened to have built a lot of machines for Medtronic; machines that assemble the devices they sell…maybe the one you’re talking about. You’re right. The raw material costs for those parts may be $12.

    But to that add:

    The engineering that went into designing it, and building the machines that manufacture it.

    FDA validation of every component that ever touches any part of that product.

    Record keeping of every step of every batch of every part of that product.

    Liability insurance to cover Medtronic when someone sues them after plugging it into a wall socket to recharge it.

    And of course, the Obamacare device tax.

    You should be happy to pay that $3,500 while you can, Bob. After Obamacare runs it’s course that device will be a scarce as an MRI machine in Canada.

    • Or maybe it was the cost of Medtronic buying up the company that did all of that. Also: There was no Obamacare tax on it.

      BTW, your description of the process sounds very much like the process for certified airplanes, which is why the number of experimental airplane registrations now exceeds the number of certifieds.

      • TJ Swift

        FDA; FAA…playing by rulebooks written by the same people.

        • The old saying at the FAA. “The rules are written in blood.”

          • TJ Swift

            Not arguing the necessity of safety related regulations, just explaining the costs involved with complying with them.

      • Jon

        My understanding is Obamacare tax isn’t on the device, it’s on the company. You as a consumer would not see the tax, but more than likely if the product is newer or the pricing is newer, then there is a obamacare cost rolled into the cost of the medical device.

    • DavidG

      Of course, all those batch records and validations make it possible to track down the source of specific device failures.

      These regulations don’t spring up in a vacuum. They arise because things happen, and the public demands them

      Take the Pure Food and Drug Act: it arose because people were falling ill and even dieing from unregulated “medicines” and devices.

      • TJ Swift

        Yup, that’s their purpose and necessary or not, they account for a lot of what medical devices, and medicines cost.
        People have no idea what a $3500 device, or an aspirin, goes through to make it to the shelf.

        • They gave me the choice of buying a used one for $2400, but there was a waiting list. Oddly enough, there’s one listed on Ebay now for $2500. No bidders.

          • Dipper Well

            It’s probably available in Belgium for $275. But you’d have to pick it up in person, and you may not be allowed to bring it back into this country because it’s not FDA approved (the Belgian version, that is, which is the same as the US version except for your point of purchase). Such is the lobby power of America’s most inefficient, wasteful and corrupt industry.

  • PrimeMN

    Sigh. I left an incredibly long story trying to explain just exactly why I was happy. It showed briefly and the Disqus ate it up. 🙁 I hadn’t copied and pasted it. Posted it as a guest, but they didn’t say there was a character limit.

  • Tyler

    The whole Explanation of Benefits thing drives me CRAZY. It’s like buying a car, being told it will be $15k after $5k of incentives, then finding out your TRUE cost will be $18,750.

    Healthcare is the last and greatest bubble to pop in this country.

  • Kyle

    I think Kassie and I might be in the same group policy. Anyway, of course there are people that like those individual policies, for many of those individuals that coverage is high deductible, high co-pay but low premiums. Of course people that live paycheck to paycheck are going to like that idea, but when they actually get sick they will likely be stuck with huge out of pocket costs. To the point about how confusing health insurance is, I always imagine that episode of Seinfeld where he’s at the car dealership arguing about a “Finders fee.”

  • Jack

    Time for single payer. Medicare for all.
    Insurance (in the current time) should be seen as something to hopefully prevent catastrophic financial disaster in the case of a serious injury and sickness.
    I’m not the healthiest person but I am on a HSA.

    • Kassie

      Medicare is sort of crappy. Medicaid for all!!!