I haven’t seen any new data released recently comparing the population with health insurance in 2007 versus 2009, but my guess is that there are a lot more uninsured Americans now than there were a few years ago.

As Joe pointed out, higher deductibles and copays also play a role.  Two years ago, before the recession had really taken hold, researchers had already found out that people with high deductible health insurance policies were two to three times more likely (compared with people covered by traditional health insurance plans) to stop taking medications to control chronic conditions.  For people who opt for a HDHP but then don’t set up and fund an HSA, paying for health care can indeed be a major hurdle.  And if people with high deductible health plans were skipping their meds back in 2008, it makes sense that after two years of a recession, health care costs have taken even more of a backseat for families struggling to make ends meet.

Copays and deductibles have risen for most families over the last few years, even those who don’t have policies that qualify as high deductible.  And at the same time, economic stability has decreased for most families.  This isn’t a good combination, and Joe’s right about the fact that when people skip necessary routine medical care, it will likely lead to increased medical costs (and declining health) in the future.

Joe’s article was included in the Health Wonk Review this week, hosted by InsureBlog.

Although we could see it, we couldn’t get it out.  We tried briefly, but were afraid we would push it further in or that it would somehow wiggle it’s way into his sinuses, so we decided that the wise choice would be a trip to urgent care.

After our son’s finger incident last winter, he’s understandably wary of doctors, and as soon as we got out of the car at the urgent care clinic, he started saying “no doctor, no doctor”.  Hopefully he’ll remember that next time he thinks about sticking something in his nose.

We went to an urgent care that is part of Poudre Valley Health Systems on Harmony and Timberline in Fort Collins.  The receptionist greeted us, took our insurance card and id, and started filling out paperwork for us.  She asked us if we had attempted to remove the stone ourselves, and we told her what we had tried.  Then she mentioned that if we wanted to possibly save $140, there was one more thing we could try:  Hold his other nostril shut and blow into his mouth.

So Jay did just that.  And on the third blow, the rock came shooting out of our son’s nose.  We were thrilled – no need to sit in the waiting room at the urgent care facility, no need to subject our son to whatever instruments doctors use to extract stuff from toddler noses, and no need to pay for an urgent care visit (we have an HSA qualified policy with a $5000 deductible, so we’d have been paying for the whole thing).

We were in and out of the clinic in under five minutes, and it didn’t cost us anything.

A lot has been said about over-utilization of health care lately, and the need to reduce both cost and utilization in order to make our health care system sustainable.  But I wonder how many urgent care clinic front desk people would be willing to give out free advice like that, and how many would have just taken our insurance info and sent us in to see the doctor?

It’s true that programs like Medi-Share are exempt from the regulations established under HR3590, because they’re technically not health insurance companies.  Of course that has it’s downsides too… they are not regulated by state insurance commissioners, and they are very clear in stating that the program is not health insurance and that payments are not guaranteed.

Although regular health insurance companies do impose various limitations and restrictions on various aspects of coverage, Medi-Share does so to a greater extent.  Pregnancies to unwed mothers are not covered unless the woman can prove that she was raped.  In the event that a member has fertility treatment that results in multiple births, the program will pay up to $25,000 for complications to the mother and/or children, including the cost of the delivery.  If you’ve ever known someone who gave birth to multiples with complications, you know that $25,000 won’t go far.  I guess this is an incentive for Medi-Share members to steer clear of fertility treatments that might result in multiples (the infertility treatment itself is also not covered, but that is true of most individual health insurance policies too).  Most individual health insurance carriers in Colorado don’t offer basic maternity coverage at all right now (although that will soon be changing), but they are all required by law to cover complications of pregnancy just like any other illness.  Since medical sharing programs aren’t actually health insurance, they don’t have to abide by the rules that mandate coverage for pregnancy complications.

Pre-existing conditions aren’t covered with Medi-Share.

The mental health parity law that was passed  in 2008 has no impact on programs like Medi-Share, and mental health issues are not eligible to be shared by other members.  Neither are any conditions that stem from acts that would be considered un-Christian, such as sex outside of marriage.   HIV/AIDS treatment is only covered if the disease was contracted via transfusion, rape that was reported to law enforcement, or by a health care worker in the line of duty.  Members are not allowed to smoke, use drugs, or abuse alcohol, and conditions resulting from any of those things are not eligible to be shared with other members.

Medi-Share also does not cover routine preventive care.  In Colorado, well-child visits, mammograms and PSA testing are required by law to be covered by health insurance carriers, but since Medi-Share is not a health insurance policy, it’s exempt from the mandates.  Personally, I believe that health insurance should be more about providing a safety net to cover huge medical bills rather than focusing on small, routine, expected expenses.   But it’s something that people should be aware of if they are considering a medical sharing program… actual out of pocket medical expenses might be quite a bit higher than the “annual household portion” simply because of the things that aren’t eligible to be shared with other members.

Out of curiosity, I got quotes on the Medi-Share website for my own family.  We have no interest in joining a medical sharing program, but I was interested in seeing what the difference in price would be.  We currently have a $5000 deductible HSA qualified policy.  For a policy with a $5000 annual household portion, we’d pay about $240/month (including the discount we’d receive for being healthy).  We currently pay $336/month for our health insurance policy.  To me, the extra money we pay to have a policy that comes with written guarantees, a contract, and oversight from the division of insurance is worth it.  Medi-Share’s website states that “Health insurance comes with a contractual guarantee to pay your medical bills. For over 17 years our participants have been faithfully sharing medical bills on a non-guaranteed basis…”  For some people, that bit about no guarantee of payment might not be a concern.  But the reason I have health insurance is to protect our family in the event of a catastrophic illness or injury.  If that were to happen, I want to know that I have a real health insurance company paying my bills, and legal recourse in the event of a dispute.  I like knowing that my health insurance policy is regulated by Colorado’s Division of Insurance, and I like the fact that it doesn’t say “this is not health insurance” anywhere on my policy information.  For that peace of mind, I’ll pay an extra $96/month for my family’s coverage, which does come with preventive care coverage.

Obviously doctor’s offices would have to be fully electronic with medical records and billing in order for real-time claims adjudication to work.  But if electronic medical records systems were designed with instant billing in mind, they could be made more more user-friendly in terms of the time required to sort through codes.  Imagine if all medical providers carried a device that would do most of the work for them.  After seeing each patient, the provider would be able to access a simple touch-screen menu that would narrow down the field of possible codes dramatically with each touch.  While it will take a person a while to search through 14,000 diagnostic codes and 4,500 procedure codes, a computer can do it in the blink of an eye.  Once the provider had selected the appropriate billing codes for the visit, the data could be sent directly to the health insurance carrier for approval.

Another benefit to such a system would be that providers could being to collect the patient’s portion of the bill immediately.  The way the system is set up now, copays are due at the time of service, but deductibles are not usually paid until after the claim has been processed by the health insurance company.  So the doctor sees the patient, and then sends a bill to the insurance company.  Then the insurance company processes the claim and determines what amount will be written off, what part is the patient responsibility, and what will be paid by the insurance company.  At that point, the patient and the doctor are both notified of the payment breakdown, and the provider is able to send a bill to the patient.  We had to take our son to the emergency room for stitches earlier this year, and we knew that we’d be responsible for the entire bill as we have a $5000 deductible HSA qualified plan.  But it was nearly 6 weeks after the incident before we got the final bill, which means that there was quite a lag-time between when the doctors provided care for our son and when they got paid.

Real-time claims adjudication could allow the doctor and the patient to see right away what the patient’s portion of the bill will be.  This could be collected at the time of service or a payment plan could be set up for people with high deductibles.  Either way, it would mean that doctors wouldn’t have to wait as long to collect their payments, both from the health insurance carriers and from the patients.

HDHP Minimum Deductible
You must still have coverage under an HSA-qualified “high deductible health insurance plan” (HDHP) to open and contribute to an HSA. Federal law still requires that in 2011 the health insurance deductible be at least:
Single          $1,200
Family         $2,400

HSA Contribution Amounts
Single          $3,050
Family         $6,150
Catch-up      $1,000

Maximum out-of-pocket amounts
Single          $5,950
Family         $11,900

These are the clients we work with on a daily basis, and we have definitely seen a significant increase in both premiums and deductibles over the years we’ve been in the individual health insurance market in Colorado.  Eight years ago, we frequently saw people selecting deductibles in the $1000 range.  These days, it’s rare for our clients to choose deductibles under $2500.  HSA qualified plans have become very popular, with people opting to take on the entire cost of the first few thousand dollars of health care expenses each year, in trade for lower premiums than they would get on traditional policies.

In Colorado, the average household income in 2008 was $56,993.  The average family health insurance premium for a non-group policy was $5939 in 2009 (see page 6 of the report).  With the recession that begin in 2008, it’s reasonable to assume that average household income in 2009 was lower than in 2008.  But even if it remained the same, the average premiums for family health insurance policies purchased in the individual market amounted to more than 10% of the average household income in Colorado (and Colorado was on the lower end of the scale in terms of the cost of individual health insurance in 2009, according to the AIHP report referenced earlier).  Premiums for health insurance in the individual market are lower than those in the group market, but there’s no employer paying a portion of the premium.  And the premiums alone amount to 10% of household income.  When you add in the deductibles and other out of pocket expenses, it’s not surprising at all that nearly half of everyone buying insurance in the individual market was considered high-burden in 2006 (spending more than 10% of household income on health care).

One thing that should be noted is that the states at the top of the list (page 6) in terms of the cost of individual health insurance are the ones that require all policies to be guaranteed issue.  The median household income in NY in 2008 was $55,980, but the average family health insurance policy in the individual market was $13,296.  A whopping 23.7% – just for the premiums, before any other out-of-pocket expenses are included.  While making health insurance guaranteed issue does solve the problem of denials based on medical history, it is not a solution in and of itself.  This is why the mandate requiring everyone to have health insurance is such an important piece of the equation, as it will help to balance out the premium increases that will go along with covering pre-existing conditions.

A new report from AHIP notes that the number of Americans covered by HDHP/HSA policies reached 10 million in 2010, up from 8 million last year.  In Colorado, 9.2% of the under-65, privately insured population has HSA qualified coverage, which is the third-highest percentage in the nation.  A recent study by the Mountain States Employers Council reports that 27% of Colorado employers surveyed are offering consumer-driven health plans this year, up from 21% last year.

I doubt that everyone who has a high deductible health insurance policy would choose that option if money were no object (although the tax benefits of having an HSA are very attractive to healthy people who are looking for an additional savings vehicle).  For a lot of individuals and businesses, the annual premium increase notice tends to provide motivation to shop around for a lower priced policy.  And often the fastest and easiest way to lower the premium is to increase the deductible.  My guess is that this is what is driving the demand for HDHP/HSA coverage.  The IRS currently limits the annual out of pocket expenses for an HSA qualified plan to $5950 for an individual and $11,900 for a family (this is adjusted annually by a small amount).  HDHP/HSA coverage has only been available for about six years (established as part of the Medicare Prescription Drug, Improvement, and Modernization Act, signed into law in December 2003), so it makes sense that the number of people opting for this coverage has grown rapidly over the last few years.  Whether the demand for HSA qualified plans will continue to increase at the current pace remains to be seen, but for now, they are quickly becoming a consumer favorite in the individual market.

I doubt that such a truly simplified plan design will ever become the norm, but House Bill 1166, introduced by Colorado Representative John Kefalas (D – Fort Collins) would at least make policy details easy to read and understand.  His Plain Language In insurance bill passed out of the House last week, and is headed for the Senate this week.  It would require that all auto, dental, long term care, and health insurance policies sold in Colorado be written at no more than a 10th grade reading level starting in 2010.  It would also require that all the fine print be no finer than a 10 point font.

To help offset the cost to insurance companies of re-writing policy details, an amendment in the bill allows for electronic administration of policy paperwork.  In addition, the expenses of rewriting the paperwork to make it more readable should be a one-time cost, while the benefits for consumers will be continuous.  All in all, this is a solid bill, and I hope that the Colorado Senate agrees.

I don’t know any more details about Mr. Abbate’s specific situation than what was included in the article about the rally.  I don’t know if he has chosen to carry a private Medigap policy or Medicare D for prescriptions.  But I wonder if he’s aware of just how much a private health insurance policy would cost if such a thing were available.

Individual health insurance is available until a person reaches age 65, but the prices increase dramatically with age; people in their 60s pay substantially higher premiums than people in their 30s.  Statistically, health care costs increase with age, and it would stand to reason that if people could continue buying their own health insurance past the age of 65, the prices would continue to climb rapidly.

Out of curiosity, I ran quotes for a perfectly healthy non-smoking, 64 year old male living in Pueblo.  The premiums for my hypothetical client ranged from $123/month for a bare-bones, $10,000 deductible policy with 50% coinsurance, all the way up to $1,788/month for a very comprehensive, 100% coverage HSA plan with a $1,200 deductible.  Most of the popular policies were in the $300 – $500/month range.

I’m not able to run quotes for an 80 year old, but obviously the premiums would be significantly higher for an 80 year old than for a 64 year old, if such policies existed.  Even if Mr. Abbate has chosen to have the very best Medigap and Medicare D coverage he can get, my guess is that his combined monthly premiums for his health insurance is a fraction of what it would cost if he were buying all of his health insurance from private carriers.  I wonder if he would still be saying “If I can’t afford health care, that’s my problem…” if his only option were to purchase his own policy at 80 years of age?

Individual health insurance is a great option for people who are healthy, and especially those who are relatively young.  For people who are self-employed, it’s a good alternative to higher-priced group of one policies, and it gives people the flexibility to pursue entrepreneurship without being tied to employer-sponsored health insurance.  But the price increases with age, and many early retirees find it a challenge to pay for health insurance during the years before they are eligible for Medicare.  My guess is that even if private individual policies could be purchased by people over the age of 65, very few people would take that option, simply because of the price.

How can we most fairly spread the total cost of care for all Americans across the whole population?  Should sick people pay more than healthy people?  Should overweight people pay more than their slender neighbors?  Should a family with six children pay more than a family with one child?  Should older people pay more than younger people?  Should people with higher incomes pay more for their health care than lower income families?  These are the sort of questions that address the issue of how to fund our current high-priced health care.  And they are a huge part of the reform debate, including all the discussions about mandatory health insurance and guaranteed issue coverage.

But value in health care is another cost issue, and one that I don’t believe has been adequately addressed in the current health care reform bills.  Earlier this year, we had to call a plumber to have some work done in our bathroom.  He did a great job, and our total bill came to $165, including parts.  A week later, our son caught his finger in a door, ending up with a pretty severe cut.  We took him to the emergency room (unfortunately it happened after the lower-priced urgent care center had closed for the evening) where he had an x-ray and got three stitches.  We’ve started to get the EOBs from Humana, and so far the total amount that we’re expecting to be billed is over $1,400 (that’s after the network negotiated discounts, and there are likely more EOBs to follow).

We have an HSA qualified policy with a $5,000 deductible, so we’ll be paying the whole bill for our son’s finger ourselves.  But that’s not really the point.  Regardless of whether a bill is paid by the patient or by the health insurance company, we all need to be asking ourselves whether we’re really getting a good value for our money.  When the average household income in America is just over $50,000 a year, does it make sense for a cut that requires three stitches to cost more than $1,400?  Health care spending in the US is 16% of our GDP, which is dramatically out of proportion with what other countries spend.  And all of those dollars being spent on healthcare aren’t available to be spent on other things like education and quality food and clean energy.

Both the plumber who came to our house and the PA who stitched our son’s finger performed a very necessary service for us.  Both are highly skilled in their areas of expertise, and we’re grateful for the work that they did.  But was the work that the PA did ten times more valuable than that of the plumber?

Perhaps the question we should be asking is not who should be paying for healthcare, but rather, why in the world are we paying so much in the first place?  Health insurance premiums will continue to rise as long as health care costs do the same.  It won’t do any good to try to address premiums without first figuring out why we’re paying so much for our health care in the first place, and doing something about it.