Coyote Blog

6 Comments

1. Mark Brackett:

   So, which group do you fall under?
   1) those with a low coverage, but cheap, plan because of
   a) high net worth, and assume you can self insure the lack of coverage
   b) are young and healthy, with little assets to protect and can afford medical bankruptcy but not the increased coverage
   c) are poor and can't afford decent coverage
   d) old, not healthy, not rich and not poor - but would rather privatize the win (lower premium) and socialize the loss (bankruptcy)
   2) those with a low coverage, but expensive, plan because of
   a) preexisting conditions or other health issues
   b) previously cancelled insurance
   c) poor playing of the sharks and minnows game of individual insurance
   Good news if you're in anything but 1a or 1d - either subsidies or cheaper coverage. If you're in 1a, you can easily afford the additional coverage - but don't need it. Your financial advisor would probably feel better if you got it anyway. If you're in 1d, well not much sympathy for you - you're basically complaining that your free ride is coming to an end.
   I suppose its possible that there's a mythical group 3 of people that had decent coverage at low cost, and will actually end up paying more for the same or worse coverage... the link you provided didn't identify any of these, nor has anyone else AFAICT - but I would be interested in details if you feel that's the case here.

   October 23, 2013, 5:06 pm

2. workingman:

   Mark, why do you want to force people to buy more cover than they need. I do not live in the US, but NZ. Over here I have a policy similar to admin, it covers me for large events with a $2000 deductible (per event). I have savings to cover the deductible, and also to pay for small events. Why do I want anymore?

   October 23, 2013, 9:50 pm

3. Mark Brackett:

   Obviously, I don't want people to buy more than they need... that'd be silly. We may disagree about how much someone needs, but I'm not even sure that's the case.

   Have you compared the available plans to your own? My guess is not, since you're in NZ - so let me add a few details.

   We don't do per event deductibles in the US, they're always per year. Not sure why, though I'd be curious how an event is defined since that seems it could get messy. Anyway, the Bronze plan has a $5k/year medical + $5k/year drug deductible - likely higher than yours unless you're having 3 events/year. The Silver plan has a $2k/year medical + $500/year (brand) drug - probably comparable to yours. Its possible those deductibles are individual and family is twice that - that's unfortunately not clear, but if that's the case your NZ coverage is actually a fair bit better I think.

   Not sure how it works in NZ, but in the US even after the deductible is met you're still paying co-insurance (percentage based)/co-pay (flat rate per service). On the Bronze plan, that supposedly works out to 40% of costs and the Silver 30%. As an example, the Silver plan will put you on the hook for 20% of hospitalization bills after the deductible (you're responsible for all until the deductible is met). As you see, this can easily end up as quite a bit of money.

   So we get to the third piece, and arguably the most important - the out of pocket maximum. I would argue that this is what you really want to budget for. This is really the only piece that limits your liability in the event of a catastrophe. Both plans are around $13k/year for a family. Some insurance also has lifetime out of pocket (to handle chronic cases) - I'm not sure what the Obamacare plans look like on that front.

   FWIW, compared to employer based coverage, these are nowhere near Cadillac plans. They have relatively high deductibles, and high co-insurance - though the out of pocket max looks reasonable. Again, I don't have details on Coyote's current plan - but assuming a high deductible plan (generally the cheapest you can get) he's looking at a max of $13k/year deductible + co-insurance and possibly an unlimited out of pocket maximum. Most high deductible plans are going to be closer to a $5k - $7k deductible (comparable to Bronze).

   Is that enough coverage? I don't know...but it's certainly better than nothing, and doesn't seem that much more generous than plans on the market in the cost sharing arrangements (except perhaps for the out of pocket limits).

   So, what is Coyote giving up to get his cheaper rate? It's not likely the deductible (the safest piece to gamble with). It could be the cost sharing, but at 40% for the Bronze I doubt you could get much worse. It could be the out of pocket max, but I'd argue that's the piece you want to keep (but could be reasonably raised). What most complain about is the unneeded coverage (substance abuse counseling, maternity coverage, birth control, etc.). Considering the relative costs of those vs. catastrophic or chronic cases (heart attack, cancer, NICU visits, diabetes, kidney failure, etc.) I'm not convinced those are enough to move the needle much (which explains why a lot of people are willing to self insure those).

   And the other, possibly bigger, problem that I'm not sure Obamacare affects one way or the other is that it's virtually impossible to compare plans (as evidenced by the ultra simplified 3 paragraphs above). Without unbiased info and comparisons, the free market isn't free since you can't depend on a rational consumer. Considering a large portion of un- or under- insured people are poor and/or not highly educated (and even the highly educated generally have a poor understanding of insurance), I'd wager that a fair number of those who did buy on the individual market are getting hosed. Luckily, that's a relatively small portion of the population - most have employer coverage, where some HR guy who lives and breathes insurance can at least make a somewhat informed decision (with a different conflict of interest). And yes, I realize that's incredibly paternalistic, but sit anyone down with their insurance contract (including myself) and try to prove it's not the case.

   October 24, 2013, 6:11 am

4. workingman:

   Mark,

   Thanks for explaining.

   In NZ we do have public healthcare for everyone, but I avoid that as much as I can as it is so bad. It is good for emergency, but if you want treatment before something gets bad, or after something went bad then the delays are long, sometimes very very long.

   My NZ plan costs approx. US$2000 a year for my wife and I. My premium has a 150% loading due to my weight etc :-( and my wife 50% loading. So we are paying high because of not looking after ourselves in the past but this getting better as I lose weight, as I used to have a 200% loading.

   I have never had a problem with a per event deductible nor my friends. For example one of them went in for an Angiogram, this would have had a deductible, but the result of that was he needed a stent, then both were combined and he only had one deductible. There is no limit to the deductibles in a year, e.g. If I had 12 events in a year then I would have 12 deductibles. There is no annual limit to the out of pocket deductibles. There is no coinsurance, once I go past the deductible then the insurance pays 1005 of everything.

   On top of that of course I pay for the public healthcare out of my taxes, even though I choose not to use it. This is approximately US$8000 a year for my wife and I.

   As I said at the top public healthcare is good for emergencies, if you drop down with a heart attack, break a leg etc then it will deal with you reasonably quickly. If you need say an MRI scan, then there will probably be a 12-18 MONTH delay. This occurred with my wife, as we were using a temporary Doctor whilst our one was on leave, and he said "you need an MRI, and they are showing 13 months until they can see you". My wife told him we have insurance, another phone call and the scan was done 2 days later. The papers are always full of complaints about long delays for treatment, 9 hour waits in the emergency department for a non urgent treatment. It seems to me healthcare is always rationed one way or another. If it is 'free' then it is rationed by waiting, if not 'free' then by cost.

   October 24, 2013, 3:08 pm

5. Mark Brackett:

   Yes, you are of course right - health care is at least somewhat limited (I'd argue a lot of is limited by artificial barriers to entry) so it needs to be rationed somehow. But, even with insurance in the US, there is no "free" healthcare. You're generally looking at 60% - 70% discounted healthcare for most cases (though that greatly depends on the 150 pages of contract language) and maybe free after you've spent $10k or so. Obamacare doesn't change that - though it does obviously give that discount to more people than had it before (meaning it's cheaper, meaning they'll likely consume more; which may not actually be altogether bad if they're taking advantage of preventive care).

   But, overall - I think it's a win to ration healthcare by priority instead of payment, at least in medically serious cases. I have no problem with someone paying $2k/year in convenience fees to get seen quicker - but when it comes to a $100k bill to treat a prematurely born baby in NICU, it does seem a little much that the 15% of the US population without insurance is going to have to seriously consider their options there (and not have any good ones). Even a large portion of those *with* insurance will need to check their coverage to determine just how screwed they are, and maybe 15% of those are going to figure out they're actually pretty screwed because of contract provisions or under coverage. And sure, maybe you can cover the $10k appendectomy or heart attack treatment - but if it's a question of $10k (without insurance) versus $300 (with insurance) I would argue that's a much greater incentive not to go to the ER (not to mention the $150k heart surgery you may need once you get there)...I don't think that's really the thing we should be incentivizing, though.

   That said, your $10k/year (about $8500 USD) is a relative bargain. Decent insurance (for a family) in the US is closer to $16k/year (for employer coverage, which is often cheaper and more generous than individual). For $8500 on the individual market (which would likely be higher after medical underwriting), I'm looking at a $15k/year deductible, 30% coinsurance and $25k/year out of pocket max (which roughly seems less than half of your coverage; especially as I'm sure it excludes a large portion that yours covers, and comes with significant limitations). I'd expect if all New Zealanders (can I call you Kiwis?) paid twice as much in taxes, the waits would be significantly less.

   BTW - if you're uninsured in the US and need an MRI that wasn't a medical emergency (aka, they thought you were about to die or lose a leg)...there is no wait. You don't get one. Ever (not that you'd know that, because you likely didn't pay the $250 to see the doctor to begin with). And, if they thought you were going to die and went ahead and did the MRI - you'd eventually get the $15k bill, which would likely be sold to a bill collector (the hospital realizes you can't pay, but a bill collector is happy to pay the hospital 10 or 20% for the opportunity to collect) who will harass you daily and will end up suing you (if you have any assets they can go after or feel it's worthwhile to try and garnish your wages). You'll eventually not pay or declare bankruptcy, leaving your credit shot for the next 7 years. That will translate to universal default on your credit cards or any other revolving debt, restrict you to usury rates for any additional credit (with fees and such added, 100% interest rate would be in the ballpark), disqualify you from buying a house or car or renting an apartment (hope the car you have doesn't break down...you're going to need that job, since you won't be moving anytime soon), and possibly disqualify from a host of well paying jobs (since they see bad credit as a character flaw and/or an embezzlement risk). And, it's entirely possible that you weren't even conscious for that fateful MRI (if you show up at the ER, it's not like the doc is going to wait for you to wake up from a possible brain hemorrhage to sign a consent form) . Remember - that's an entirely possible sequence of events for 15% of the US population (about 50 million people, or 10x the population of NZ). It'd be closer to 40% if you want to drop the government run Medicare/Medicaid. All from a $15k medical bill (which could be 50% or more of your yearly income).

   Tell me again how NZ is worse than the US in this area? Because you have the *option* of "free" public care (with a long wait at half the cost)?

   October 24, 2013, 9:03 pm

6. Not Sure:

   Based on Mr.Coyote's post, it would appear that Mr. Obama lied when he said that, if you were happy with your insurance plan, you would be able to keep it but the discussion was immediately diverted into an inquiry as to the characteristics of the group of people Mr. Coyote's insurance most aligns him with. Interesting. Why is that even an issue? If Mr. Coyote is happy with his insurance plan, shouldn't he be able to keep it as he was promised?

   October 27, 2013, 2:46 pm