Shopping for Healthcare in "The Greatest Country in the World"
2021 Foreword: I originally wrote this article in the fall of 2020 after hearing the phrase "Americans love their private insurance" on live TV. Since its publication I have gotten feedback from others letting me know that it either helped them understand their healthcare options, or it made them aware of the need for healthcare reform for millions of struggling Americans. It should be clear in this article that I'm not an expert. There are still parts of the health insurance system that I don't understand. This is an account of lived experience, not a substitute for financial, medical, or legal advice. It is my intention to update this article every year, clarifying and correcting misunderstandings, as well as providing an update on the latest plan options. Edits to the article will be followed immediately by an explanation of what was changed in the above paragraph and the year the change was made. Thank you for reading.
2024 Update: It was overambitious to assume I'd find time to update this every year. Since writing this article I've landed a role at a company with "better" insurance, which saves me roughly $8000 per year in healthcare costs. Though my personal situation is improved, this article still represents a reality for a large portion of Tennesseans.
It's the scariest time of year again. No, Halloween is over, I'm talking about something else.
In the USA it's "Open Enrollment" season; the only time of the year you're allowed to shop for lifesaving care.
I'll spare you my political opinions in this article. Everything you are about to read is a fact. This is my firsthand experience shopping for healthcare in the United States of America.
I hope this gives you a bit of insight, whether you're a new grad about to leave your parent's insurance, or outside of the US curious about our experience. Maybe you have decent healthcare and don't have a benchmark for comparison for what others are dealing with. Money and health are sometimes seen as private or taboo. Maybe this bit of transparency will help someone somewhere.
Hey, happy Diabetes Awareness Month by the way. You're about to become aware of a lot.
Bit of background:
I shop for health insurance every year.
I have to do so because we have a chronic illness in our family. Specifically my spouse has Type 1 Diabetes. Minor changes in plan details can swing the cost of our care by thousands of dollars per year (stay tuned for numbers and specific examples).
Clarification of assumptions before we begin:
If you're fortunate enough to not have a chronic illness in your immediate family, there are a few things you'll probably need in order to understand my calculations and assumptions.
When a family member has a chronic illness like diabetes:
1. You will definitely hit your deductible in a plan year.
2. You can reasonably expect to hit your max out of pocket (and should budget accordingly).
3. You are disqualified from seeking "short-term" or 3rd party insurance plans because of your "preexisting condition." Your only legally protected insurance options are
a. your employer's plans (if offered)
b. your spouse's employer's plans (if offered)
c. the ACA Healthcare Marketplace (if your employer does not provide coverage)
I'm not gonna debate these points. They are lived and observed facts in my life, and they are key assumptions in my yearly calculations and research.
The Yearly Saga
Here's the process I go through each year. I'll number the steps.
1. Receive email from HR that open enrollment is approaching.
I usually get this about 2 weeks in advance. It's a heads up that the preview tools are up and running, and that I can start shopping for health insurance. This usually makes my heart jump. The feeling of uncertainty is real. What changes has a C-level executive made that might significantly affect my take-home pay?
2. Check the benefits page to find out how my coverage has changed from the previous year.
I immediately pause my workday to check the benefits page. This year my coverage levels didn't change. That's good because usually if they change, they don't change the helpful way. This also makes comparison to last year easy.
Quick definitions:
Premiums: What you pay each month in order to have health insurance.
Coverage levels: A complex shell game of numbers that hides how much you'll be paying for healthcare this year in addition to your premiums.
Now I need to see what my premiums will look like this year. How much more am I gonna be paying in order for my coverage levels to remain the same?
3. Check the premium options for all plan levels.
My company provides a cost tool for us to use to find out what our share of our healthcare premiums are.
I work at an 8000 person company that offers a marketplace of plans. In my area we have 4 providers offering 5 levels of coverage.
We have to enter a lot of details in order to get our costs. The numbers used in the subsequent sections are based on the following inputs.
-Nashville Area
-Coverage type: Employee (nonsmoking) + Spouse (nonsmoking)
-Spouse's employers do not offer insurance
What the tool sends back is something like this:
Four companies providing five different "Plans." These are the monthly paycheck deductions I'll choose from to get the coverage levels from above.
It looks like this year the premiums have gone up about $100 a month for each plan level. Nice. What's $1,200 between friends, right?
Fun facts:
-Not smoking saves $100/person/month
-If my spouse's work offered insurance, it would be an additional $150/month to add her.
-These are the numbers I'm responsible for after my employer has already paid a portion of my premium. Specifically for me this year, my employer is forking over another $964.37/month to the insurance company of my choice.
4. Data Entry
So it's just a matter of picking the coverage level that I want, and taking the cheapest price?
Well... yes, but actually no.
I've got two tables of numbers now, and I've got to do some analysis to see what the best deal is.
It's time to make a spreadsheet. This will probably take my entire lunch break.
In the interest of due diligence, I'm adding every plan to the spreadsheet, even the ones I know won't work.
I'm gonna plug the plan info in for all 20 plans to see what my real choices are actually going to look like. Key data for comparison will be
Premium Contribution: The amount of money deducted from my paycheck each month for health insurance no matter what.
Deductible (Individual, In Network): The amount of care a single person with no family plan would have to pay full price for per person before my insurance will help.
(2021 Edit: I was rudely made aware that the individual max out of pocket did not apply to my family plan because it was a "true family" style deductible. This year we paid full-price for insulin and pump supplies until we had paid $4,900 out of pocket. Be aware of the differences between "traditional" and "true family" plans. If your plan is "true family, you have to pay your entire family's deductible until your plan starts assisting you. Luckily for me, the math works out that this was my still best option for FY21.)
Max Out Of Pocket (Individual, In Network): The max amount a single person would spend on this health plan. All in-network healthcare after this point will be covered 100%.
(2021 Edit: This also does not apply to someone on a "true family" plan.)
Deductible (Family, In Network): The total amount of care my household have to pay full price for before my insurance will help.
Max Out Of Pocket (Family, In Network): The max amount my household will spend in the plan year. All healthcare after this point will be covered 100%.
My comparisons assume in-network care will be provided. Out of network doctors, services, drugs, and facilities have a separate deductible and Max Out Of Pocket that is often twice the in-network numbers. I assume for the purposes of these calculations that I will avoid out-of-network care.
I take the time to enter these values for all 20 plans. By the end, each plan will have a line that looks like this.
I'll use these numbers as an example for my data analysis.
5. Data Analysis
Behold in all it's glory the finished spreadsheet.
The intent of this spreadsheet is to estimate my yearly total healthcare spend (column J) for each plan and also the worst case scenario healthcare spend (column I).
I'll provide a link to this tool. You can double check my formulas or use it to compare you own options.
Here's how I got there.
Worst Case Scenario (Column I)
1. Multiply monthly premium contribution (column A) by 12 for the yearly premium cost (column B)
2. Add this to the Family Max Out Of Pocket (column H).
For our example, that's $5,388 + $7,800 = $13,188.
This is the maximum healthcare spend that I'll have in FY21 if I stay in network, and none of my claims get denied.
Estimated Yearly Cost (Column J)
1. Multiply monthly premium contribution (column A) by 12 for the yearly premium cost (column B)
2. Assume family members with a chronic illness will hit their max out of pocket (column F)
3. Assume family members without a chronic illness will hit their deductible (column E)
For this example, That's $5,388 + $3,900 + $2,450 = $11,738
This is, of course, and oversimplification. There's other details to get consider that I'll dive into in a bit.
(2021 Edit: These numbers were affected by the fact that the individual max out of pocket does not apply on the family plan. The estimated yearly cost is still fairly accurate, if somewhat low. I will correct the numbers and calculations in November when my company releases our new numbers.)
What does this tell me?
1. That healthcare is going to cost me about $13,000 this year.
With the estimated cost sorted lowest to highest, the top three plans are all Bronze+ plans. These are the plans I'll be considering this year.
2. That I should budget $1,100 for healthcare each month.
I added column L and M as budget tools to see what I'd need to set aside each month to take care of a worst case scenario.
3. There is a cost for not doing my homework.
The Costs Avoided By Doing My Homework
1. If I choose the plan with the lowest premium, I will overpay by about $1,374 per year. For me, employee + spouse with one member of the family having a chronic illness, the worst case scenario would for the Bronze+ plan is the expected spend on the Bronze plan.
2. It is impossible to save money with a Platinum plan.
I set the sheet up to automatically highlight the unjustifiable premiums in red. The cheapest Platinum plan is $5,742 more than the worst case scenario on the cheapest Bronze+ plan.
3. It is impossible to save money with a Gold plan.
Three of the four gold plans are highlighted in red as well. The monthly cost adds up to more than the maximum total cost of the Bronze+ plan. That last Gold plan is technically under that number, but the only way to keep it that way is to not use any healthcare, in which case you'd have saved money by getting a cheaper plan.
4. It costs more to save money at the door.
The benefits of the silver, gold, and platinum plans are that doctor visits cost less at the door. But I've already been priced out of the Gold and Platinum plans. That silver plan there in the middle might look tempting at first, and for a family without a chronic illness, it might be the way to go. You pay less for doctor visits, tests, and procedures than you would with the Bronze plans. With chronic illnesses there are ways for that stuff to add up, and if it does I am liable to pay $4,492 more than if I'm on that Bronze+ plan.
6. Verify Everything
Oh, you thought we were done?
Lol, nope.
I've narrowed my scope down to three Bronze+ plans by insurance provider C, A, and D.
It's time to check that the healthcare I'm currently receiving will still be covered in by the potential new Insurance Company. That's right. It's highly likely that one or more of these plans won't cover all the care I'm currently receiving as "in-network care."
Remember when I said my spreadsheet was gonna ignore "out of network" costs. That's because I'm going to do my best make sure I don't go out of network for anything.
Out of network charges have their own individual and family deductibles and max out of pockets. The Bronze+ plan I'm considering has a family Max out of Pocket of $23,000. Yes, that number is correct.
There's no question that it's in my best interest to make sure I never go out of network.
So, what do I need to check?
Everything.
Okay. Not helpful I guess. Let's break it down.
Doctors and Facilities
I need to make sure that every doctor I'm currently seeing is covered on this insurance plan. Each insurance company has an online tool that allows me to search for each doctor by name.
To make things trickier, sometimes the online tool won't find my doctor by name, but they'll be on my insurance network under their facility's name. In order to confirm this, I'll need to make a phone call to the insurance company I'm considering and have a rep confirm that the facility is in network. If the person isn't sure, I can call the doctor's office themselves. At that point, however, it feels a lot like gambling. Is it worth saving $1000 per year if I might have to change doctors or pay thousands more to go out of network?
I also need to check facilities. Sometimes facilities send bills in addition to your doctor's bill. Tests, procedures, and sometimes just room usage can be billed from a facility. Emergency treatment is always treated as "in-network" so that you don't have to shop for a hospital when you're bleeding out, but I feel it's best to double check that my local hospitals are in-network anyway.
Our endocrinologist
The facility/practice he works in
Our retina specialist
The facility where his practice is located
Our GP
The facility where he works
Our local hospital
A second local hospital
A local urgent care facility
The Vanderbilt Surgery Facility where we've had surgeries in the past (just in case)
One caveat here is that even though a facility might be in-network, the private practice doctors within the facility might not be. I haven't found a way to double check that an anesthesiologist or lab is in-network in advance, since I won't know I need them till an issue comes up. I buy my insurance and then have a habit of asking facilities not to stray outside of my in-network coverage without my consent. Again, this feels a lot like gambling.
Depending on the year, I can end up calling 4 insurance companies and each facility listed above.
Prescription Drugs
Next I'll need to make sure the drugs I'm taking will be covered by the provider I'm considering.
Providers offer a pharmacy list of approved and preferred medications. If your drugs aren't on the list, they usually have an alternative that is, but it's not always apples to apples.
Anyone with a chronic illness knows that different medications will have different effects person to person. A diabetic can develop a resistance to a specific brand of insulin, for example. The "plan approved alternative" might not actually be a realistic option for the patient. The person who choses which insulin to carry is in all likelihood not an Endocrinologist or a diabetic. The interplay between multiple medications might also be a delicate balance. It'll take a doctor to review whether switching medications to an "approved alternative" will actually be safe for their patient.
It's my job each year to make sure that my medications are covered so that switching anything up isn't necessary.
Every medicine we take will have to be reviewed for coverage. I think this is up to 10 different name brand or generic drugs.
Depending on how usable the insurance company's website is, I may end up calling customer service for every company whose plan I'm considering here as well.
Durable Medical Equipment
Remember how my coverage levels remained the same? Well that's true for most people. A select few get to explore the hidden categories. You see, an insulin pump and the hardware that goes with it is considered "Durable Medical Equipment" or "DME." Nothing about DME is listed on the summary of benefits. There is no guarantee from the plan summary that it is covered, or at what level. I have to call each insurance company to determine whether the coverage exists where those charges will apply.
This year I'll have to call customer service for.
1. What is the coinsurance for DME?
2. Does DME apply to in-network deductible/out of pocket?
3. Is the insulin pump we use considered in-network?
4. Is the pump we've considered switching to in network?
I will also ask, while I'm on the phone.
1. Is the hardware/accessories for the specific insulin pump we use considered in-network?
2. Is the hardware/accessories for that pump considered in-network?
Insulin pump supplies can cost over $1000/month even at the insurance company's negotiated rates. I will not consider an insurance company that cannot answer these questions with a definitive "yes."
I generally take the time to ask about the cost of the supplies under the plan, but it's not necessary. I've got to assume that I'm going to hit that individual max out of pocket and budget accordingly.
All in all, I usually spend three or four lunch breaks making these calls. Getting to this point usually takes a week from the time I receive the original email from HR.
Avoid Misleading "Helpful Tools"
My company provides a tool during open enrollment that will automatically search your doctors and medications, and ask you a series of questions like "would you prefer to pay less per visit or to pay less upfront?" Depending on your answers to "would you prefer" questions, you might end up on a plan that costs you more than if you'd done the math yourself.
7. Choose the plan that's right for me
Finally I can choose my plan.
I'll choose the lowest estimated yearly cost, but only a long as the max out of pocket is reasonably low; they cover all my doctors, medications, and supplies; and local facilities are in-network.
This year it's the 7th cheapest paycheck deduction on my list of options, the third cheapest estimated spend on my spreadsheet, and the only plan to cover all my current care.
It's intuitive really.
And it's about time for you to choose yours as well.
Don't worry if you choose incorrectly. You'll only be locked in to whatever plan you choose for one calendar year. Of course if you want to qualify to change plans mid you could always get married, divorced, fired, or change jobs.
8. Get overcharged anyway.
I will probably still pay more for healthcare than the $13,000 estimate.
Health insurance is still insurance after all.
Denied claims
Each doctor bill becomes an insurance claim, and the thing about insurance claims is that the insurance company can deny them if they don't think it's their legal responsibility to do it. This could be for failing to follow proper procedure, like seeing a specialist without being referred by a GP. They tried to nail me with that one when I joined, even though we'd been going to the specialist for 3 years. We managed to get that one cleared up and avoid an $1,100 charge that wouldn't apply to our max out of pocket.
Services Partially Not Covered
My current insurance company has a list of maximum allowable prices that procedures and tests are allowed to cost. If those procedures cost more than their allowed cost, they don't fight on my behalf, they just quietly don't pay it and two weeks later I get a surprise bill in the mail.
Underhanded policies
They also have a shady practice of only allowing one-month prescriptions. I used to get my prescriptions in a 90-day supply. My share of prescriptions is a fixed rate, something like $10 for generics, $40 for name-brands. My insurance company decided they'd like to get that $40 from me every month instead of every 90 days. There's really nothing I can do about it because "it's just policy."
Highway Robbery
There is a pill that one must take before an eye surgery that... well... is very expensive and not considered in-network. You need it though. If you want the eye surgery to work you gotta take this pill. Your choices are to buy the pill or lose an eye. If you pay for this pill on your insurance, it's about $300. Luckily, entire companies exist to reduce this price. The pharmacist will have a stack of membership cards for these companies and tell you to go join this service for free and come back and use the service for a discounted rate on the pill. So... you do that. Who knows where your personal infomation goes after you do so, but you do it and get a $220 discount. You pay $80 for the pill and I guess you're supposed to feel like you've saved money. It still hurts. That $80 might go toward your out-of-network deductible, or it might not get reported to insurance at all. Either way you're not any closer to hitting your in-network deductible. Theoretically you could pay for an infinite amount of discounted medicine through these programs and not have them count towards your max out of pocket.
9. Fight like Hell
My wife's insulin prescription has been partially denied all year. Every time we'd go to fill it they'd give us three bottles instead of four. They tell us only 3 bottles are covered. The fourth one will be full price, $350, and won't be covered by insurance.
Someone with a spreadsheet who isn't an endocrinologist decided that the fourth bottle is too much. Never mind that insulin resistance is unavoidable over time. Never mind that the doctor might know more about the needs of his patient.
At one point this year, one of the largest insurance companies in the nation tried to tell me that one vial of insulin is a month's supply. In reality it will last between 7 and 10 days. We had to have the doctor call in multiple prior-authorizations. We had to escalate the problem through customer service with the insurance company. I had to contact my HR department and have the corporate benefits team investigate the problem. They fixed it, but not without wasting hours of my time. We were concerned we may have to pay full price for a vial while HR and insurance could get to the bottom of things.
At the end of the day, the insurance company is more concerned about shareholders and profits than they are about me. They have incentive to deny me coverage. They have incentive to make me fight for every ounce of care. This is the service that I pay $13,000 per year for.
Conclusion
In my experience, shopping for healthcare is the illusion of choice.
Three different ways of paying about $13,000/year, and 17 options for insurance companies overcharge me in case I'm bad at math.
In the end only one of the insurance companies ended up being a viable option for my family.
It will cost me approximately $13,000 this year.
My employer will pay another $11,572 towards my premiums, for a total of around $24,500 (about $12,250 per person) to provide my family with healthcare.
Insurance companies are snakes. They'll lower your premiums, but increase your deductible or your max out of pocket. They'll change your DME coverage terms. They'll sell you a silver/gold plan where you "pay less for care but more in premiums" and hope you don't do your homework.
If you have the choice, do your homework.
In some ways, I'm lucky. My company gives me plan levels and insurance carriers to choose from. I have worked at places with one insurance provider and only one or two plans so similar that there's no choice at all.
Side note
My plan comparison tool also works for the plans available in the ACA Healthcare Marketplace. I'll follow up with a review I did of 2020's ACA plans here in a bit.
If you don't qualify for insurance through your place work, I encourage you to check out the ACA Marketplace when open enrollment opens up. Depending on your yearly income, you may qualify for a tax refund that covers the entire cost of your premiums.
Make sure to dive into the details and do your homework.
Testimony
The facts and experiences above are mine. The numbers are real. Company names have been hidden to protect me from being sued by the guilty. If anything above is found to be misleading, or in error, I'll come back here and edit the post with an explanation of what I changed. Again, I do not claim to be an expert, nor do I recommend this article as a substitute for advice on your personal situation.
I mention this in case you're reading this from outside of the US, or if you're on your parent's insurance, or if you're employed at a place that fully covers their employee's premiums. These numbers could sound unbelievable if you're not living them. Maybe you laughed when I used the word "lucky" before. Maybe you're horrified. Good for you.
Believe it or not, I chose to work at my company because the health insurance was better than my previous job.
I'll leave the political opinions off this article, but believe me I've got them.
I want these facts to stand on their own. I want people to understand my experience.
I do this every November.
This is a not-abnormal cost for healthcare in The Greatest Country in the World.
The Greatest Country in the World...
How dare we call ourselves that?