Ten years ago, it was very rare to hear of someone incurring a medical bill that topped $1 million. Twenty years ago, it was almost unheard of. But today, although it’s still not that common, it doesn’t surprise most people when they hear stories of seven-figure hospital bills.
According to a Kaiser Network article, 34% of American adults age 19-64 are dealing with problems paying medical bills, and 62% of them have health insurance. For some people, the problem is high deductible plans – which come with an appealing price tag. But if an insured gets a high deductible plan and then doesn’t save money to cover the deductible, coming up with the money after an illness or injury can be a stretch.
For a growing group of people however, the problem lies in the lifetime maximum that the health insurance policy will pay (or in the case of really shady plans, the annual maximum, which is usually a fraction of the lifetime max). Health insurance companies have been slow to increase the maximums on their policies, but medical bills have been increasing rapidly for years. So while a million dollar policy seemed like a guaranteed safety net in the early 90s, it could easily run dry today.
Last year I was talking with a rep from Anthem Blue Cross Blue Shield about lifetime maximums. I asked about the fact that most of their policies in Colorado had a $2 million lifetime maximum, and whether Anthem had considered raising that as time goes on and medical bills increase. She explained that if an insurance company makes a material change like that to an existing policy, they have to allow all existing policyholders an option to switch to any other individual policy the company offers, with no medical underwriting. That regulation makes it very difficult for an insurance company to increase their lifetime maximums, and might explain why most policy maximums stay the same for years and even decades at a time.
Lots of new policies – including some from Anthem Blue Cross – are available with $5 million and $8 million lifetime maximums, but who knows when even those amounts will afford only partial protection?
If an insurance company wants to increase the lifetime maximum payout on a policy, the Colorado Division of Insurance should make it as easy and painless as possible. They should encourage it, rather than making the insurance company jump through so many hoops that it becomes easier to just keep things as they are.
The whole point of having health insurance is to protect our assets and livelihood in the event of a catastrophic illness or injury. The vast majority of people can come up with a few thousand dollars on a payment plan to a hospital. But a $2.5 million medical bill combined with a $1 million lifetime maximum policy is a recipe for financial disaster any way you look at it.