Last month I was talking to an employee at my eye doctor (the woman who adjusts customers' glasses) and she mentioned how worried she was by the increase in premiums and deductibles on the Pennsylvania Health Exchange, where she gets coverage and where the plan she has had for the past two years is being discontinued.
When she told me with tears in her eyes that the cheapest plan had a premium of about $300 (which she said was two or three times her current premium, if I understood her correctly) and a deductible of $6,000 I was understandably shocked. She had no idea how she would be able to afford a new plan and obviously doesn't have $6,000 lying around if she gets sick. She is also a very inspirational woman, having broken the gender barrier on her local first-responders' team several decades ago and being so committed to her community that she continues to volunteer for them in a supporting capacity, in addition to other things that make her a really amazing woman. You would think politicians from both sides of the aisle would make it affordable for people like her to purchase health insurance.
It is one thing to know at an intellectual level that the middle class is being decimated in this country but quite another to be staring at an exemplar who doesn't know how she can possibly afford the premiums for the health insurance she has to get. Further, it motivates people who struggle financially to further postpone receive expensive treatment. This cannot have a good outcome.
This got me curious to see what her options were. I went on the healthcare.gov site, picked Pennsylvania as the state and made guesses on her age and zip code. I knew that she lives alone and has no dependent (her children are grown). I picked a salary range that wouldn't give her a tax rebate since she mentioned she made "too much money" for the rebate. And sure enough, the cheapest plan, a Bronze HMO from Keystone called "Healthy Benefits Value HMO 6300.50", has a monthly premium of $296 and a deductible of $6,300, which is very steep for the area we live in, especially for people in such a situation that they must get health insurance through the exchange. I suppose people are supposed to be able to afford that thanks to Health Savings Accounts but to many it seems that they have to pay a lot of money every month and then when they actually have health problems and have to use their insurance they still look at a hefty deductible before the insurance kicks in.
The plans on the healthcare.gov website are ranked by increasing order of premium but this year the site also provides cost estimates for three scenarios (low, medium and high healthcare costs).
- Low: 4 doctor visits, 1 lab or diagnostic tests, 7 prescription drugs, $100 in other medical expenses,
- Medium: 8 doctor visits, 3 lab or diagnostic tests, 15 prescription drugs, $400 in other medical expenses,
- High: 20 doctor visits, 11 lab or diagnostic tests, 45 prescription drugs, 2 days in the hospital, $17,700 in other medical expenses,
What surprised me the most is that the Keystone plan with the cheapest deductible is also the best deal if you anticipate low or medium health care costs. I say it surprised me because it is a bronze-level plan and it is common wisdom that you should buy a silver-level plan instead. But if you don't anticipate high healthcare costs, maybe you should rethink. (Of course we can argue about what is a medium cost and what is a high cost, but the website lets you change the scenario definitions of each. My hunch is that high costs involve spending the night in the hospital.)
Also, the 11 plans with the cheapest premiums as well as among the cheapest costs for low, medium and high healthcare costs are all HMOs. They held their ground even for high healthcare costs, although they tended to be not as cheap for the customer as a plan selected specifically with high healthcare costs in mind. The plan that seemed to offer the best all-around value based on this admittedly cursory look was "Healthy Benefits Value HMO 3500.0", a Silver HMO plan from Keystone. This was also the "optimal" plan (cost-wise) to select if the prospective enrollee knew from the beginning that his healthcare costs next year would be high. Its premium, however, is $62 more expensive per month than the cheapest premium, representing a 21% increase, which might dissuade some.
Ultimately, the five cheapest healthcare plans for patients who know their healthcare costs would be high were all Keystone plans. This of course raises questions of what makes Keystone capable of offering so cheap rates (scale? efficiency? contracts with providers?), and when my then PhD student Tengjiao Xiao (now Senior Consultant at Ernst & Young) and myself evaluated health plan efficiency in a previous round of open enrollment, we did have to consider the fact that the cheapest plans may have been cheap to draw in enrollees, including healthy ones, rather than out of a particularly cheap estimate of treating them. Once patients were enrolled, then it has long been thought that they would stick with their health plan even if premiums increased. Yet, this applied to a different segment of the enrollee population, who receives benefits through their employers. People who find coverage through the public health exchanges seem much more willing to shop for deals, in part because many of them are in precarious financial situations.
You can find the data in this spreadsheet I put together by keying in all the numbers from the healthcare.gov result pages. The cells are color-coded per columns with green representing cheapest and red most expensive.
Further reading: some interesting thoughts on trends on the PA health insurance marketplace are provided here.