There is No Perfect Health Insurance Plan Anymore

Health insurance plans are expensive and the coverage can be full of holes—we all know that don’t we? You can do your best to find the most effective coverage you can afford and still find that a procedure that you need isn’t covered or that the monthly premium rises to the point where you can no longer afford it.

On this site and others I’ve advocated going at least a little bit out of the box with recommendations like high deductible/catastrophic plans that cover medical catastrophe’s, or taking a part-time job to get health coverage if you’re self-employed or your full-time job doesn’t offer it. Those are solid suggestions for someone who has no coverage otherwise, or is reaching the point where they can no longer afford what they have.

A good time for a health insurance plan
A good time for a health insurance plan
Yet people will often poke holes in anything that isn’t the traditional soup-to-nuts coverage that we all expect. I get that. But if the alternative is to go without health insurance because you can no longer afford the kind of coverage you think you should have—that I don’t get. Life is full of choices and where health insurance is concerned those choices are becoming more difficult.

The worst advice is to go without health insurance of any kind as a way to save money. A single large medical claim will prove that immediately. A compromised plan is better than no plan. You may not like the coverage you can afford, but all you can afford is all you can afford, and you have to work within that restriction.

Let’s face certain realities:

Healthcare Reality #1: The U.S. healthcare system is a mess

I’m not going to get into politics here—this isn’t a liberal-vs.-conservative argument. Sure both sides have their own opinions as to who broke it and how it should be fixed, but both bear the blame for getting us to this point as well. How bad is it?

  1. Healthcare now consumes about 17% of the U.S. Gross Domestic Product (GDP), which is about twice the rate of other industrialized countries. That’s unsustainable.
  2. The percentage of GDP that healthcare eats up has been growing steadily. Will we be able to sustain a system that takes 20% of the economy? 25%? How much is too much? If we continue on the same path we’re going to find out.
  3. The annual rise in healthcare costs has grown faster than growth in the overall economy, and much faster than salary increases.
  4. As many as 50 million Americans are now without health insurance. Part of that is cost, part of it is un-insurability due to pre-existing health conditions. Obamacare has removed insurablity as an obstacle, but premiums continue to explode.

This is the backdrop behind all of our individual health insurance problems. No matter how we try to sugarcoat it, that’s a big mess. People who have traditional employer paid plans may not see it this way, but anyone who’s either had to buy private coverage or has been turned down for a plan knows exactly what’s going on.

If you’ve been unable to get coverage you can afford—or any coverage at all—it’s not your fault. But realize that you are working within a broken system and most likely will not find anything close to perfect health insurance.

Healthcare Reality #2: Perfect health insurance plans are expensive

We all want the best health insurance, with the lowest co-payments and deductibles, the widest provider network, and the greatest possible coverage. That’s a reasonable desire, but the cost of such coverage is anything but reasonable. Let’s look at an example of perfect coverage.

Let’s look at a family of four living in California, both parents age 45 and non-smokers, two minor children, all in perfect health. Using the Blue Shield Balance Plan 1000, with a $2,000 deductible, prescription coverage and unlimited doctor visits with a $30 co-pay, the monthly premium is $1,078 per month.

That’s nearly $13,000 per year! We haven’t even factored in that there might be a health issue or two that will raise the premium even higher. Worse, the premium will increase every year there after, most likely at a rate that will exceed the family’s pay hikes.

The family that could afford that kind of coverage would almost certainly need to earn over $100,000 per year. Factoid: the average household income in the U.S. is only $51,914.

Short of having an employer paid or subsidized plan, the average American family can’t afford perfect health insurance.

Healthcare Reality #3: Sometimes you have to make tough choices

We’re working within the scope of a very broken, very flawed system. Unless you’re covered under an employer or government plan, you have to accept that what ever coverage you can get will be anything but perfect.

Approach health insurance with these points in mind:

  • Be open to high deductible/catastrophic plans. If that means coverage doesn’t kick in until you hit the $10,000 mark, accept that it may be uncomfortable, but may also save your life in a major medical disaster.
  • Be ready to work 20-25 hours a week to get covered. If you can afford $1,000-a-month premiums, you don’t need to get a part-time job with health insurance. But if you can’t afford it, or are uninsurable, this option should be considered.
  • If you can’t afford insurance for yourself, get something for your kids. It’s one thing to go without insurance for yourself, but your kids are a different matter entirely. Policies for children are less expensive than for adults, and if you can’t afford them, look into low income health insurance options offered by your state. At a minimum, get your kids into a catastrophic plan that way you’ll have options in a worst case situation.
  • Don’t bank on a political solution. One may come at some point, but given the complexities of the healthcare situation, it may be a long time coming and full of bad options when it gets here. The proof is Obamacare. It’s removed health condition as an obstacle, but the price spriral continues.

Unless you have an employer or government plan you’re working within a set of very constrained options. You may have to accept high deductibles, no coverage for doctor visits and other out-of-pocket expenses. It isn’t pretty, but it’s the reality we have to work within. Simply put, the easy to afford options of yesteryear are gone.

The true purpose of health insurance is to cover us for really big medical expenses, and if your insurance does nothing more it’s still worth it. Having health insurance means having options in a crisis that you wouldn’t have without it. For that reason alone, having some type of coverage, even if it isn’t perfect, is well worth what ever you have to do to get it.

( Photo from Flickr by Autistic Psycho )

8 Responses to There is No Perfect Health Insurance Plan Anymore

  1. Healthcare is definitely becoming a major concern to most of us. A high deductible/catastrophic plan is great peace of mind and I spend money to prevent illness as well.

  2. Hi Felicia–It really is. If you’re self-employed or don’t have coverage healthcare may be the biggest issue.

    I agree with you about working on preventing illness. Catastrophic is far better than having no coverage–you’ll be covered for the big stuff and it’s a lot less expensive–but it does mean we should do what we can to take care of ourselves. We should do that anyway, but high deductible plans give a financial incentive.

  3. Oh for heaven’s sake, don’t worry. Obamacare will take care of you. Plus, it will be cheaper ala Affordable Care Act. Or if you like your current insurance plan, you can keep it. Isn’t that what we were promised?

  4. Hi Kathy – Well, there’s theory and then there’s reality. Which storyline one believes depends on which worldview one accepts. Seriously though, one positive I’ve heard on Obamacare is that an application can now be done over the phone in under 15 minutes. That’s because they can no longer ask health questions, other than smoker/non-smoker. That’s progress I guess?

    Now as to cost…

  5. Great points here. I’ve considered looking into healthcare.gov to try to find a plan with behavioral health coverage, but I don’t want to reduce my provider network or decrease coverage in other areas. It’s disappointing, but the best option might be for me to continue paying out of pocket off mental healthcare.

  6. Hi Addison – Your dilemma highlights the whole issue of imperfect health insurance. I’m going to email you the contact information for a couple of people who might be able to help you with this issue. I’ve beeen pleasantly surprised by their depth of knownlege, even with the rollout of Obamacare.

  7. Just a couple of quick comments on your recent post above.

    1. Like it or not, Obamacare is the law & mandates that the max out of pocket for someone is $6,350/year. This has the effect of limiting your plan choices (unless you’re willing to buy a non-compliant plan, pay those premiums + the Obamacare penalty/tax, too). No more inexpensive $10,000 deductible plans.
    2. It’s becoming increasingly difficult to find a part-time job that will include health benefits, too. O’care requires all businesses with 50 or more employees who work 30 or more hours/week (the new definition of full time) to provide benefits. With the higher premiums due to O’care, more & more businesses are (a) dropping any benefits for employees with less than 30 hours/ week and (b) are, in fact, reducing the hours worked by many to less than the 30 hour/week threshold so they aren’t required to cover their benefits.
    3. There are other solutions – plans and supplemental coverages – available, but they also, in many cases, will be “non-compliant,” meaning you’ll face a tax penalty (fine) from the IRS.

    It’s noteworthy that yesterday (Wednesday) Pres. Obama announced that he was going to “delay” the requirement that all individual health plans were to be “compliant” until after 2015 (that is, “if you like your plan you can keep it” for up to another 2 years). We don’t know how this will play out (can he really just change a law that Congress passed and he signed?), but it could – if state Insurance Commissioners and the insurance companies agree – let people who now have plans they like keep them for a couple more years. However, it most likely will NOT let someone buy an older, less costly, non-compliant plan.

    As you and others have said, our current health care (and health insurance) system is broken and not likely to be easily fixed. As we discussed before, each person will need to decide “how much” health insurance they need, want, and will pay for. Sadly, a large part of that decision is no longer up to you.

  8. Hi Art – Thanks for the updated information. I’m part of the great confused masses on the current state of healthcare, and you’re an expert whose opinions are always warmly welcome on this site.

    It looks like the options are being taken away, one by one. Any alternatives seem to end in a federal penalty. This was once the land of the free – not any more it’s safe to assume.

Leave a reply