Health Insurance: catastrophic versus insular? (Part 2)

Dr John�s conclusion is that �(t)o bring down utilization (and therefore costs) from both the patient and the doctor side, one can require more direct patient out-of-pocket contributions.�

While I don�t disagree, I think that this ignores other factors which contribute to the overall cost of coverage. For example, in any given policy (group or individual), up to 17% of the price is due to government mandated benefits. Such benefits are an integral part of the plan, and cannot be reduced or eliminated. This means that, even if you don�t want or need that benefit, you can�t request its removal in order to reduce premiums.

As to Econblog�s dismay that folks choose plans which are contrary to their best interest: folks still eat Big Macs, smoke, watch way too much TV, and don�t exercise enough, either. All of these are antithetical to one�s good health, yet many (most?) of us are guilty of at least one or two of these �sins.� So it should come as no surprise that health insurance consumers would choose a plan which ill serves them. Then, too, many agents choose the �easy route;� that is, pushing the generic plans because that�s what everyone wants (or so they believe). This is true, BTW, regardless of whether we�re talking group or individual.

By way of example: I�m currently working on a small group case which has experienced major rate increases (I know, shocking; kinda like seeing the sun rise in the east). The plan has a $250 deductible, and then pays 90%, with a maximum OOP (out-of-pocket) of $1,500 (including the deductible). Also, office visits require a measly $15 co-pay. And, of course, there�s the ubiquitous rx card.

As Dr John observes, this type of plan just begs for over-utilization.

My ideal solution would be to move them to an HSA plan with a MUCH higher deductible, and without the office visit co-pays and rx card benefit. This would save the group (and the employees) a lot of premium dollars, which could fund the savings account itself, with plenty of cash left over.

But that�s not my call, it�s the employer�s. No matter what I say, the decision ultimately comes from the man (or woman) writing the check. And if that person doesn�t perceive it in his best interest, or if he fears a negative reaction from his employees, then that plan is never going to be installed.

Remember, too, that the employees have a financial stake in this, and the cost savings would ultimately redound to their benefit. And yes, it�s my job to enlighten said employees that this is the case. But if I can�t convince the employer to make such a change -- and in this case, the employer �gets it;� he understands how HSA works � then the best to be hoped for is that we can increase the deductible a bit, and maybe the office co-pays.

Such is the real world.