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Families Struggle With Health-Care Plans

Posted - Feb. 2, 2004 at 9:40 a.m.



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Health care is a major issue for families today. Costs are rising for doctors' visits and treatments, and for insurance.

"For insured people, payments have gone up and even more than that, people are paying more of their premiums," says Sherry Glied, chairman of the department of health policy and management at Columbia University.

The average employee contribution to premiums has shot up since 2000, from $336 for singles and $1,620 for families annually to $504 and $2,412 respectively in 2003, according to Kathy Stoll, health policy director for Families USA, a health consumers' advocacy group. Average annual deductibles - the amount insured people must pay before insurance kicks in - are up as well, from $248 for singles with conventional coverage in 2000 to $384 in 2003. Deductibles for a plan with greater choice, using what's called a non-preferred provider (also known as PPO), increased from $340 to $561 for singles in the same time period.

The trend is spurred largely by employers' efforts to hold down their insurance costs by shifting a larger share onto employees.

And employees can't expect the cost increases to end anytime soon. Employers continue to purchase plans with higher deductibles and higher employee co-payments, according to Stoll. A survey of 650 large employers by human resources firm Hewitt Associates released in December 2003 predicted a 14 percent increase in health insurance costs in 2004.

A Promise Unfulfilled

The cost increases can be particularly tough to swallow because they come on the heels of a relatively stable period for health insurance costs from the mid-1990s to 2000, says Glied. The promise of managed health care had been to reduce costs overall in exchange for more limited choices. But consumers resented those restrictions, so employers shifted to a health insurance model with more choices. "The good news today is that there are a lot of choices in terms of the kinds of insurance products that people can choose," says Susan Pisano, vide president of communications for the American Association of Health Plans (www.aahp.org).

But that choice means more consumer responsibility.

"You have more decision-making power, but more risk, because you have to pay more and make broader decisions," says Glied. Consumers may have not liked the restrictions of the old HMOs, but now they have to navigate a complicated world of plans offering different choices - and costs.

This means you may have to choose not only they type of health-care coverage you'll use but also the doctors and other health-care providers for you and your family. And health-care coverage decisions are so important that they can influence decisions in other parts of family's lives.

Pam and Craig Weiss of McFarland, Wis., have a son, Bryan, with diabetes. When Craig was laid off from his job at an engineering consulting firm, he wanted to go into business for himself but first had to make sure that Pam's three-quarter time position with the local school district qualified her and the rest of the family for the school district's health-care plan.

Because Craig's employer and the school offered the same insurance company, the switch was fairly simple - although their premiums rose, since Pam's part-time status meant her employer covered a smaller proportion of their insurance premiums. Getting individual coverage with a child with a chronic condition would have been almost impossible, because Bryan's diabetes is a "pre-existing condition," something often governed by a rider precluding coverage.

The Weisses need that coverage. As just one recent example, their son is getting an insulin pump that costs $6,000, of which their insurance covers a hefty $4,800. Insurance also governs some of their son's life plans. He's now in college and can be covered until age 25 by their insurance - as long as he's a full-time student.

Another family who are friends with the Weisses have a diabetic college-age son who thought he could save money for college by taking a break and working for a year. But that move cost the family an extra $400 or $500 a month for insurance.

Try to Get Insurance - But Beware

The uninsured, who are increasing in number (43 million Americans had no insurance in 2002, an increase of nearly 10 percent over 2000, according to the Kaiser Commission on Medicaid and the Uninsured) should do all they can to become insured, not only for their health, but to prevent financial devastation in the event of accident or illness.

That's not always easy. Insurance coverage for anyone not in a group or employer plan is very expensive. Many uninsured families with children are eligible for states' free or low-cost health insurance for their children. Such insurance covers doctor's visits, prescription medicines, hospitalizations and more. For details, call the U.S. Department of Health and Human Services special hotline, 877-KIDS-NOW or visit www.insurekidsnow.gov.

You can also look into plans that you may be eligible for through a civic group or professional organization.

But individuals and small businesses should be wary of insurance available through groups. Some can be legitimate, such as when a local chamber of commerce puts together a group of small businesses in order to gain some economies of scale in getting employee coverage. Trade associations such as the National Independent Businesses (www.nifb.com) can also be helpful. Still, be careful: Some organizations have good intentions, but don't have the resources or business sense required for a solid insurance program.

The health-insurance market is also full of scams, says Mila Kofman, assistant research professor at the health policy institute at Georgetown University. Kofman says that in a similar climate of rising health costs in the late 1980s and early 1990s, unscrupulous companies defrauded 400,000 people of their premiums and left them with $123 million worth of unpaid medical bills.

If you're buying insurance as an individual, get the insurance company's exact name and check it out with your state's insurance department to make sure the company is authorized to do business in your state. And remember that fraudulent companies often use names very similar to those of legitimate companies, so be sure to get the exact name. You can also peruse the Yellow Pages for the names of insurance agents and shop around for a policy, then check up on the provider.

Tips for Managing Your Health Care

Here are some more ways to maintain your family's health while not undermining its financial well-being.

Do your homework. Today employers often offer range of insurance options with varying degrees of choices and costs. It takes time and study to determine the best for your family. A topnotch site that gives you the questions you should ask when considering various plans is Families USA (www.familiesusa.org). Click on the "Consumer Info" tab. It also contains links to other helpful sites, such as COBRA (Consolidated Omnibus Budget Consolidation Act, www.cobrahealth.com ) for continuing or temporary health-care coverage if you leave or lose a job. Do the same when picking your primary doctor - although that can be tough. Aside from the American Medical Association and medical specialty board certifications, there are national magazine and local media evaluations of doctors. But the methodologies for these can vary. One way to evaluate a doctor is to find out how often he or she has done a certain procedure or seen certain conditions, says Glied. Geography is important, too. Your doctor and the hospital he or she is affiliated should be accessible from your home or office.

Be an aggressive consumer, know your coverage. Study your policy's summary plan description so you know what's covered. "We get a lot of calls from people who went to an out-of-plan provider and didn't know that until after the fact," says Elizabeth Landsberg, supervising attorney for Health Care Hotline (www.hrh.org), a California consumer rights group. Consumers should understand exactly what is covered and what kind of cost sharing they're signing up for. That's important to know in an era in which consumers face higher deductibles and higher cost-sharing fees. For help in translating what are often difficult-to-understand documents, go to your company's human resources department.

Look closely at out-of-pocket maximums. That is, how much do you have to pay for major costs such as hospitalization before your insurance company will pay 100 percent , says Glied.

Make sure all professionals participating in a procedure are covered. Families USA is seeing a lot of instances in which patients go to their in-network provider for some out-patient treatment, such as colonoscopy, and then learn afterwards that, for example, the anesthesiologist was out of network and they're faced with a $600 bill for that service.

"You shouldn't just accept that, you should talk that through with the insurance company," says Stoll. So far, insurance companies are making good, but to avoid the surprise, it's best to make sure in advance that all participants involved in a procedure are covered.

Know your right to appeal. If your insurance denies coverage, you have the right to appeal. Get the denial in writing. It's required by law. Generally, insurance plans say "no" to a claim because a treatment isn't covered or it doesn't consider the treatment effective, says Landsberg. If the reason given for the denial is that the treatment is not medically necessary, "pull out all the stops," says Landsberg. Get letters from doctors, know all you can about the condition and write a case to prove it. This is where having a close relationship with your primary physician can make the difference.

Use pre-tax health spending accounts, such as flexible spending accounts (FSAs) and health savings accounts (HSAs). The flexible spending accounts require a certain amount of risk taking. Families have to look at their health spending over past years and estimate what their out-of-pocket expenditures for the next year will be. The gamble is that if they over estimate, the use-it-or-lose-nature of these accounts mean they've lost the chance to spend those pre-tax dollars on their health care. Underestimate and they pay for health-care expenses after taxes. There is legislature in Congress that would allow families to rollover any unused portion of an FSA into the next year.

The new HSA (touted by President Bush in his State of the Union speech two weeks ago) is simpler, but so new that it takes some footwork to institute it. Originally designed for employees of small businesses, it is available through some insurers and from banks and financial institutions that offer individual retirement accounts. If it is unavailable through your employer, try investment companies or the bank that holds your IRA, suggests Kate Sullivan, director of health care policy for the U.S. Chamber of Commerce, who had to make several phone calls herself to find one.

Again, employees make a pre-tax contribution to this account, which will cover their deductible. That means a worker in the 28 percent tax bracket with $1,000 deductible in effect reduces that deductible to about $650 because of the tax savings it generates, according to Sullivan. And anything left unused in this account at the end of the year can be rolled over into the next year.

Establish a strong relationship with your primary care physician. "That's who the plans regard as the gatekeeper," says Landsberg. Your primary caregiver can be an ally in instances when treatments are denied. So talk to your doctor, and don't assume he or she will tell you what you need to know without being asked.

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