Last week, I had a toot that received a great deal more engagement on Twitter than I am accustomed to. It was about how health insurance sucks in the United States in response to a real writer's tweet about how health insurance sucks in general.
I've spent the past few months working an entirely new job. It's my first proper job since I ended my employment enlistment with the Air Force. I work at a middle-to-largish company in the Midwest that handles medical management and customer service for self-insured programs offered through employers. While I enjoyed the training and learning about the incredibly convoluted practice of administering a healthcare plan, the more I work here the more I come to despise our current system.
HIPAA is an immensely important part of any healthcare-related job. It was incredibly important when I had to discuss a person's most recent sexual contacts in the Air Force to break the chain of infection related to Sexually Transmitted Illnesses — maintaining the anonymity of everyone involved. It is also incredibly important while offering examples of how utterly fucked our health insurance actually is. I will use some fairly realistic, possibly even relatable, examples that will be devoid of any truly identifiable information. I won't use proper names, most people will — as a throwback to my Air Force days — be referred to as Mr./Ms. Snuffy. I will maintain the names of Pharmacy Benefits Managers like CVS/Caremark or Express Scripts because those are the only two in the game. I will most likely use CVS in examples as they are the PBM I am the most familiar with.
This account will not cast the current US health insurance system in a good light. That's the point and I don't care if you don't like it. The only people who still genuinely approve of how health insurance works in this country are those who actively profit from it. This is not being written for them.
A Tale of Two Networks
If you have any experience with health insurance, you're probably familiar with the importance of Network status. Most plans have two sets of benefits: an In Network (INN) and Out of Network (OON) benefit level. If you stick with your INN providers, you get the best benefit: there's a discount for staying in network and providers are contractually obligated to charge you a lower price. INN coinsurance is often higher with somewhere between 75-90% of costs covered by the plan after the deductible is met. Deductibles, depending on what kind of plan you have, are typically high. They range from $100 to $4800 in my experience.
The deductible is something I get a lot of questions from members about. I'll take a moment to explain what the deductible, out of pocket max and coinsurance are because it can be somewhat difficult to follow.
Deductible:
The deductible is the minimum amount you have to spend out of pocket before the plan starts paying coinsurance towards your medical claims. Most plans will have two deductibles and INN and an OON deductible. The OON deductible is typically twice the size of the INN deductible.
Out of Pocket Max (OOPMax)
Your OOPMax is the most that you are allowed to pay out of your pocket in a year. The year is defined either as a "Calendar Year" (your accumulations reset every year on January 1st) or a "Plan Year" (your benefits begin at a defined point in the year i.e. your accumulations reset on July 1st, and last until June 31st). After you meet the OOPMax for the year, covered medical claims are paid at 100%. Similarly to the deductible, many plans will have two sets of OOPMax: INN and OON. The OON OOPMax is typically twice the size of its INN counterpart.
Coinsurance
Coinsurance is the rate the plan pays towards claims once you meet your deductible. If your coinsurance per your plan is 80%, then you're responsible for 20% of the allowed amount (we'll get into that later) of what a provider charges you for covered services.
Now that we've explored those concepts briefly, let's take a look at an example of an INN service after Mr. Snuffy has met his deductible.
Mr. Snuffy has been under the weather for a little while and goes to a sick office visit with his Primary Care Provider (PCP). Mr. Snuffy's PCP diagnoses him with bronchitis, and sends him home with the advice of drinking plenty of fluids and getting as much rest as he can. A few months later, Mr. Snuffy receives an Explanation of Benefits (EOB) in the mail. He sees that he had met $3500/$3500 of his deductible. The allowed amount on the bill was $100 and his coinsurance rate is 80/20. The patient responsibility for the bill is $20 and he goes merrily on his way.
That's how it works in an ideal world where Mr. Snuffy has already met his deductible. Ideally, he didn't have to pay the whole deductible on his own and his employer put money into a fund called an HRA that helps offset the cost of a High Deductible plan. Mr. Snuffy only has to pay twenty bucks and that money is applied to his OOPMax.
Why is that money applied to his OOPMax? Think of it this way: you have two buckets that you need to fill during the year — these are the deductible and OOPMax. The ded is the smaller bucket which is inside the OOPMax bucket. If water is poured into the smaller bucket, it will eventually fill up and what doesn't fit inside will flow into the larger bucket until that one fills up too. So that $20 that can't go into the deductible because it's already full pours into the OOPMax instead.
This time, we're going to go through another example. Mrs. Snuffy doesn't like any of the INN providers near her. There's a doctor her family has been going to for years and she trusts that provider over the 24-year-old who just got out of med school who she doesn't think knows the difference between a Bandaid and Ibuprofen. Mrs. Snuffy has the same bronchitis as Mr. Snuffy, she gets the same advice for treatment. She goes home, feels better and waits a few months for the EOB to come in the mail.
The EOB arrives and Mrs. Snuffy opens the envelope reluctantly. She has some sense of just how much this is going to hurt her pocketbook, but she has her justifications. She sees that she's met $7000/$7000 out of her OON deductible. The doctor charged her $500 for the visit knowing they don't participate in her network of providers, and they don't have to abide by a network discount. Mrs. Snuffy sees that the Usual and Customary (U&C) amount is $100.
A quick aside on U&C:
U&C is like the allowed amount found on the EOB of an INN provider. U&C is the rate that is deemed to be the average amount charged for similar services in the same geographic location. The coinsurance for OON services is paid towards the U&C amount.
Mrs. Snuffy continues reading her EOB seeing that the OON coinsurance was 65% of U&C. The insurance plan paid $65 for the services rendered. Mrs. Snuffy's responsibility as the patient is drumroll intensifies $435!
Wait, what‽ The coinsurance was paid. The plan paid most of the allowed amount. Why is Mrs. Snuffy responsible for $435 when her husband spent $20 for the same service? The answer is balance billing. An OON provider is able to balance bill the entirety of what wasn't paid under U&C.
Oh, and there's one more really shitty thing about going OON. Even though Mrs. Snuffy has to pay $435 out of her pocket, only $35 of that applies towards her OON OOPMax. The amount that is balance billed does NOT count towards the OOPMax.
There is a huge difference between going to an INN and an OON provider, and that difference can be quite painful for the majority of Americans who don't have $435 to spend on a trip to the doctor.
This huge difference becomes almost insurmountable if you apply it to an emergency situation involving an ambulance. You're completely out of control in that situation as to which ambulance service picks you up, which hospital they take you to, and which doctors at the hospital treat you. The responsibility of the member can be in the tens of thousands of dollars and it's all perfectly legal.
So, yeah. Our healthcare system is fucked.
I'm considering making a series of posts out of this. If you learned something or enjoyed my writing, please let me know.
