How can people know when health insurance provides adequate coverage?
“Coverage When It Counts: What Does Health Insurance in California Cover and How Can Consumers Know?” suggests a new method for developing benchmarks to illustrate some types and costs of medical care consumers might need under a variety of scenarios, and for evaluating health insurance protection using these benchmarks.
What does it mean to be adequately insured? A growing body of research documents both health-related and financial problems that can arise when health insurance doesn’t cover enough. Rates of medical debt are growing, chiefly among the insured. One in five privately insured Americans with chronic conditions live in families with medical bill problems—an increase from 16 percent in 2003. When out-of-pocket spending for medical care exceeds just 2.5 percent of income—less for low-income persons—financial burdens on families become substantial. Studies show that the underinsured and uninsured face similar problems accessing medical care and managing financial burdens.
Knowing whether insurance provides adequate coverage can be a challenge. Health insurance policies are complex products, highly variable in their design, and key information about how coverage works is not always disclosed during marketing. Further, health insurance promises protection against future, unknown events. Consumers who are healthy today can find it difficult to anticipate future medical problems and costs and harder still to evaluate how insurance might cover those needs.
The protection health insurance offers today is highly dependent on the policy purchased. An insured person who becomes seriously ill might have to pay thousands, or tens of thousands, of dollars out-of-pocket for needed care. For many consumers that range represents the difference between health security and financial catastrophe. Consumers compare the prices of health insurance policies, but cannot always reliably tell if they are comparing like products. The affordability of health insurance premiums cannot be considered independently of the adequacy of coverage health insurance provides. At a minimum, the difference in protection health insurance offers should be readily available for all to see.
Health insurance should be transparent, so that consumers know what they are getting in a market filled with options that are not always equal. Many urge that consumers value this plan choice, and that choice is vital to efficient competition in health insurance markets. Yet, economists teach that well functioning markets require transparent information so that both buyers and sellers can understand and evaluate options. That’s why health insurance transparency and coverage adequacy go hand in hand.
This paper summarizes findings of two reports studying the adequacy and transparency of health insurance in Massachusetts and California. Those reports suggest a new method for developing benchmarks to illustrate types and costs of medical care under a variety of scenarios, and for evaluating insurance protection using these benchmarks. Using simulated claims scenarios for different types of patients we analyzed the content of coverage under a variety of health insurance policies sold to individuals and small employers in Massachusetts and California and estimated out-of-pocket costs for care that patients might face. We also reviewed the transparency and accessibility of information that consumers would need to understand how coverage works.
We recommend developing standardized health plan comparison tools—patterned on the U.S. Food and Drug Administration nutrition label, but for health insurance—that could help consumers appreciate the kinds of medical events for which health insurance may be needed and relative levels of protection provided under different policies.
How can people know when health insurance provides adequate coverage?
“Coverage When It Counts: What Does Health Insurance in Massachusetts Cover and How Can Consumers Know?” suggests a new method for developing benchmarks to illustrate some types and costs of medical care consumers might need under a variety of scenarios, and for evaluating health insurance protection using these benchmarks.
Using simulated claims scenarios for different types of patients—one diagnosed with early stage breast cancer, another who has a heart attack, and a third with diabetes—the authors analyzed the content of coverage provided by 10 health insurance plans sold in Massachusetts and estimated out-of-pocket costs for care that patients might face. They also reviewed the transparency and accessibility of information about policies that consumers would need to understand how coverage works. Massachusetts was chosen because of its precedent-setting reforms to achieve universal coverage that included the establishment of standards for minimum coverage for all residents.
The report concludes with a recommendation for the development of standardized health plan comparison tools—patterned on the FDA nutrition label, but for health insurance—that could help consumers appreciate the kinds of medical events for which health insurance may be needed.
Georgetown University’s Health Policy Institute has just released its latest FREE guide for consumers in the market for health insurance: Consumer Guide to Getting and Keeping Health Insurance in Massachusetts.
This guide includes important NEW information for Massachusetts residents related to recent changes in the law. Beginning July 1, 2007, all Massachusetts residents must obtain and maintain health insurance. Individuals who cannot show proof of health insurance coverage will lose their personal income tax exemption and face significant tax fines.
Consumers, legislators, researchers, policy experts and social workers will all find this 49-page guide to the protections consumers have, and lack, as they seek health care coverage, of use. Download the guide now.
The Health Insurance Consumer Guides for Tennessee and West Virginia have been recently updated and posted to our website, where you can get them for no charge.
Click on the link below to go to the appropriate guide:
healthinsuranceinfo.net has just revised its list of State High Risk Insurance Pools with the latest contact information for each, available on our website at: www.healthinsuranceinfo.net/managing-medical-bills/high_risk_pools_chart.htm
Thirty-two states operate high-risk pool programs for people who have trouble buying individual health insurance because of their health. Eligibility for these programs varies, as do premiums and covered benefits. Contact the program in your state for more information.
We strive to keep this information as current and useful as possible. If you know of any changes or updates, please leave us a comment below!
Georgetown University’s Health Policy Institute has released updated Consumer Guides for South Carolina and Nevada.
Health insurance consumers, legislators, social workers and advocates use these guides for clear, comprehensive information on the rights that consumers have, and lack, as they enter the health insurance market in their state.
These guides are available in their entirety, for free, on this website in PDF format; see our copyright notice for reprinting and redistribution guidance.
Georgetown University’s Health Policy Institute has released updated Consumer Guides for Florida and Iowa, as of January 2007.
Health insurance consumers, legislators, social workers and advocates use these guides for clear, comprehensive information on the rights that consumers have, and lack, as they enter the health insurance market in their state.
These guides are available in their entirety, for free, on this website in PDF format; see our copyright notice for reprinting and redistribution guidance.
The December/January 2006 issue of Health Affairs, a Health Policy Journal, includes an article by our researchers:
Association Health Plans: What’s All The Fuss About?
The presumption that association health coverage has more market clout is not necessarily borne out by the evidence.
by Mila Kofman, Kevin Lucia, Eliza Bangit, and Karen Pollitz
ABSTRACT: Policy makers have tried to address the problem of the uninsured and to help small businesses with rising premiums by encouraging associations to offer coverage. Although supporters and opponents have made claims about the potential impact of this strategy, the association market has not been studied in depth. Examining current standards might explain why proponents seek changes. This paper discusses states’ approaches to regulating health insurance offered by associations, including “self-insurance,� as well as existing state exemptions from state insurance laws that otherwise would apply to coverage sold to small businesses, self-employed people, and individual purchasers. We also examine market problems such as insolvency and fraud.
Three new consumer guides offer important information for people seeking to get and keep health insurance or trying to cope without it. MANAGING MEDICAL BILLS: Strategies for Navigating the Health Care System is a series of three booklets sponsored by the National Endowment for Financial Education (NEFE) and authored by researchers at Georgetown University Health Policy Institute. These consumer guides help people understand the insurance coverage they have, explore avenues for obtaining new private or public coverage when the need arises, and identify options that may help with medical bills when both private and public coverage options fail.
“Navigating insurance transitions and problems can be confusing, even treacherous, especially for people with serious health care needs,” observed project director Karen Pollitz.”Gaps occur when coverage is not available or adequate or affordable, or when it’s just too hard to find and use. The medical and financial consequences can be devastating. Policymakers need to make it as easy to get health insurance coverage as it is to lose it. They need to find ways to make insurance more affordable without sacrificing coverage adequacy.”
The first booklet, “Understanding Private Health Insurance,” offers tips for evaluating the adequacy of private insurance options and summarizes laws that protect consumers with health problems when they transition from one plan to another.
The second booklet, “Medicare and Medicaid: A Health Care Safety Net for People with Serious Disabilities and Chronic Conditions” outlines coverage assistance offered by these government programs, including eligibility requirements, covered benefits, and federal and state agencies to contact for more information.
The third booklet, “Options for Avoiding and Managing Medical Debt,” discusses possible sources of free and reduced cost care and their limits, and provides an overview of recent changes in the bankruptcy system that may restrict this option for people with mounting medical debts.
These publications are available free of charge and can be obtained online at www.healthinsuranceinfo.net/managing-medical-bills, and on the National Endowment for Financial Education consumer website, www.smartaboutmoney.org.
