Friday, April 06, 2007

John’s Health Insurance Ordeal

Last time I wrote about Jane’s exasperating treatment decision. This time I focus on John’s health insurance ordeal.

It was time for John to choose a new health plan for his family and he wanted to do it right. So he spent weeks visiting insurance web sites, using online calculation tools, and talking to numerous insurance professionals and other consumers. He gathered tons of data on dozens of health plans and put it all in a big spreadsheet. It listed the deductibles, premiums, co-insurance, co-pays, covered treatments and wellness programs, ceilings on coverage, estimated tax-savings and other details.

What’s the problem here?

Nearly everyone agrees that skyrocketing healthcare costs in the USA—much higher than any other country—are putting our nation in danger of financial ruin! Those in the know are also aware that there are very serious quality and efficiency problems with America’s healthcare. There are over 45 million uninsured. Many businesses can’t afford to cover their employees. Hundreds of thousands of patients are hurt or killed each year by medical errors and deadly drug effects. The quality of care delivered in our country is rated below many other industrialized nations. And the enormous Medicare debt we’re pushing onto our children is shameful!

To deal with these serious problems and others, our country has recently been trying to control costs and improve quality by having consumers put more “skin in the game.” That is, they must pay more for their healthcare. The logic of this “consumer-directed healthcare” strategy is that by paying more, consumers will take control and drive down costs. For example, consumers will be less likely to request unnecessary care. They will manage their own health better by making positive lifestyle changes. And they will seek out providers who deliver the most cost-effective treatments and get the best results.

While this strategy may seem sensible, many critical questions remain unanswered. How are consumers to be certain when care is required? How can they determine the most cost-effective treatments and find the providers who deliver the best care? And how can they select the most affordable health plans that meet their current and future needs? Jane and John—being bright, educated and motivated consumers—did a great deal of research, got tons of information, but ended up with no clear-cut answers.

Bottom line: The consumer-directed healthcare strategy is dangerous! This is because the most important ingredient is missing: Consumers need easy access to accurate, relevant and understandable information about the quality and cost of providers, treatments, eldercare and health plans. This information is essential for making prudent choices.

What health insurance policy is the right one?

Not surprisingly, John discovered that policies with lower premiums and higher deductibles, while costing less, carried greater financial risk. Such plans would save him money as long as he and his family remained healthy. This meant he would have to make very accurate judgments about likelihood of family members getting sick and the extent of care they would need in the coming year. A miscalculation, incorrect assumption, or just bad luck, could send John into financial ruin.

Unfortunately, research suggests that consumers consistently underestimate their risk of being seriously ill. This is especially true for individuals who have not used healthcare services often, because they don’t have the knowledge they need to fine-tune their judgments based on experience [1].


And consumers’ decisions don’t stop there. After you chose a health plan, you must determine what healthcare providers deliver the most cost-effective care and, if you’re not feeling well, you have to decide whether your symptoms require a doctor’s visit.

What’s the problem here?

As a consumer, you need information about health policies that enable you to compare different plans. You also need a clear-cut way to estimate your future healthcare needs and your out-of-pocket expenses in different scenarios. You then have to become a good diagnostician, so you don’t seek unnecessary care or allow unnecessary tests … Just don’t err and fail to go to the doctor for something serious!

Putting it all together: The role of the modern consumer

So, as a modern consumer, it’s your responsibility to know when you’re sick enough to make a doctor’s appointment. It’s your responsibility to choose the treatments that will do you the most good with the least risk when you are ill, as well as finding competent healthcare practitioners and hospitals that will deliver that care safely and cost-effectively. It’s also your responsibility to optimize your health and manage chronic illness through the right lifestyle changes and adherence to the right self-management plans. In addition, you may be responsible for assuring that elderly loved ones receive the right care and have a good quality of life. On top of all this, it’s your responsibility to choose the right health insurance policy for yourself and your family.

As a modern consumer, therefore, you have the daunting responsibility of researching all your health care and insurance options thoroughly, while avoiding information overload. Where essential information is lacking, you must somehow get the knowledge you need anyway. And then you must gain a clear understanding of confusing technical data and conflicting professional opinions. GOOD LUCK!!!

Click here for the next post in this series.

[1] Based on ConsumerReportsMedicalGuide.org

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