Obamacare Mistakes: Consumers Continue to Make Errors in Choosing Benefits
by Ellen Chang
October 02, 2015
Source: The Street
Consumers are still choosing the wrong health care plans and missing out on key Obamacare benefits such as keeping the same doctor or selecting a deductible they can afford.
These mistakes continue to crop up because an overwhelming number of consumers only look at the bottom line - the monthly cost. Focusing simply on the premiums means people are not considering how much money they need to spend in addition to the monthly premium. Some of the confusion is based on complicated websites or ones who provide only scant information.
“You’ll probably overlook things like co-payments and deductibles – the things that really matter when it comes to seeing the doctor or going to the hospital,” said Nate Purpura, vice president of consumer affairs at eHealth.com, an online health insurance exchange based in Mountain View, Calif.
Out of Pocket Costs
Determining ahead of time how much just one doctor’s visit along with some basic tests and medication will cost you on top of your premium is vital, so your budget is not hit with surprises.
“Public health advocates have long thought that consumers don’t spend enough time selecting their insurance plans,” said Devon Herrick, a health economist and senior fellow at the National Center for Policy Analysis, a non-profit think tank in Dallas. “For instance, it isn’t always easy to verify your doctors are in the preferred provider network.”
Calculating additional costs aren’t always as simple as it appears and requires planning ahead. Consumers rarely want to “really analyze various plans under different scenarios because it requires comparing each plan under different usage,” he said.
“Imagine using a spreadsheet to compare five health plans where you calculate out-of-pocket expenditures for annual health use of $1,000, $2,000, $5000 and $10,000,” Herrick said. “This could become very time consuming.”
Deductibles are rising steadily and many people are facing higher amounts than they realized, said Purpura. The deductibles on Obamacare plans selected during the last open enrollment period averaged $4,120 for individuals and $7,760 for families, a steep amount especially if you have not budgeted for the extra costs.
Even for people who receive their health insurance through their employer, the deductibles are also increasing. The September Kaiser Family Foundation/Health Research & Educational Trust survey of 2,000 small and large employers showed that 81% of workers are in plans with a general annual deductible, which averaged $1,318 for single coverage this year. Employees at smaller firms with three to 199 workers face an average deductible of $1,836 this year.
Too many people who wind up choosing a high deductible health insurance plan “don’t do so knowingly” and really intend to just purchasing a plan with low premiums, Purpura said.
“Shoppers who come to high-deductible plans in pursuit of lower premiums don’t always understand what they’re getting themselves into,” he said.
Younger consumers like Millennials who are healthy, see a doctor occasionally or use prescription drugs rarely, could find that a higher deductible plan may work out for them. They just need to ensure they have extra money for doctor’s visits or when they need to fill a prescription.
Choosing the amount of the deductible isn’t always a clear cut decision, said Herrick.
“As an economist, I tend to think consumers are making rational decisions when they choose high deductible plans,” he said. “By contrast, public health advocates tend to favor low deductibles because they view deductibles as a barrier to care.”
For a Millennial or Gen X-er who goes to the doctor only for an annual physical, a high deductible health plan with a $5,000 deductible and a $200 premium “maybe great for a very healthy person,” said Michael Levin, CEO of Vericred, a New York healthcare information services company. The total costs for the year could be only the cost of the premiums of $2,400 because in-network annual physicals are covered. On the flip side, if that person needs to see a doctor regularly, their annual healthcare costs which come from that seemingly inexpensive plan “could well exceed $7,400,” he said.
Seeing Your Favorite Doctors
Rushing through the process means it is easy to overlook whether the doctor you have seen over the past five years is in the network.
In some cases, people who have a long relationship their doctor or trust them implicitly, might seek a certain network simply because they can continue seeing the same physician.
“Provider participation may well trump all,” said Levin. “However, our experience has been that even these deep relationships may be marginalized if the individual has to pay too much to see that doctor.”
A plan which includes access to many doctors who are accepting new patients is critical, he said.
“You want to know that should you have a problem, you will be able to find a doctor reasonably close to you who is accepting new patients,” Levin said. “A narrow network can save 15% to 35%, but if you cannot find a doctor that is accepting patients and that meets your needs in the network, that savings may well evaporate.”
Using an out-of-network doctor can be rather expensive even if you have a plan like a PPO with these benefits. The plan will usually pay a percentage of the allowed cost for that service, meaning consumers could be responsible for hundreds or thousands of dollars for even a simple procedure, said Levin.
“The allowed cost will likely be less than the full cost of that service for which you are responsible,” he said. “If you undergo an out-of-network procedure for which you are billed $1,000, but for which your plan’s allowed cost is $600, then a typical 50% out-of-network reimbursement will actually only reimburse $300 or 50% of $600, leaving you on the hook for $700.”
Now that all health insurance plans are equalized and cover the same federally-defined “ten essential health benefits,” but they can vary widely in cost sharing, said Purpura. Cost sharing is the amount the consumer is responsible for in the bill. A portion is paid by the individual while the other amount is the insurance company’s responsibility.
The different metal levels dictate the amount of money the individual needs to spend for healthcare services since the amount of care and services offered by a bronze plan “may not differ much from a gold plan, if at all, in terms of the kinds of medical services it covers, said Purpura.
The difference, which can be far-reaching for people on a budget, is the proportion of costs the consumer needs to pay such as the deductible, so choosing the “right” plan is not as easy as it appears.
“You’ll typically pay more out of pocket with the bronze plan than with the gold plan,” he said.
Finding Information from Websites
The majority of consumers said when they researched their benefits they ran into trouble with 48% of employees who said the information available about their benefits was too complicated to understand, while 27% stated the information was too hard to find, according to a recent Aflac survey.
“Many consumers simply do not take the time to thoroughly research and understand their options before making a decision,” said Matthew Owenby, chief human resources officer at Aflac, the Columbus, Ga.-based supplemental health insurance company.”
Most information about costs, networks and the level of coverage is presented in documents which are “complex, lengthy and difficult to understand,” said Shawn Pynes, head of employee benefits at San Diego-based Barney & Barney, a Marsh & McLennan Insurance Agency.
Consumers who find the information daunting often just chose last year’s plan even if it has changed.
Now some employers are revamping the information by implementing mobile, cloud-based applications for employees.
“With an online platform and accessibility via any mobile device, employees can easily retrieve information 24/7,” he said.