Vol. 223 December 15, 2019 A Health Insurance Premium Is Just A Bet


“Private insurance is a defective product. Their business model is based on collecting premiums, avoiding sick people, and denying coverage for expensive services whenever possible. Insurers boast in their reports to shareholders about their low “medical loss ratio” (MLR), the low share of premiums they pay for for care.”
-David Himmelstein, MD and Steffie Woolhandler, MD,
Hunter College and Harvard Medical School

I have been covered by Medicare for 15 years and have no complaints about it. Medicare has been “berry, berry good to me”. For 15 years I have also purchased a Medicare Supplement policy and a Part D prescription drug coverage policy from a private insurance company. The combined premium for those two private insurance policies is about $1700 a year. This year, having been attracted by the ads for Medicare Advantage HMO plans providing the same coverage for zero ($0) premiums and being a low utilizer myself  of medical services and prescription drugs, I decided to explore joining a zero premium Medicare Advantage HMO plan.

How hard could that be? I like my primary care physician and the few specialists I go to; my local hospital and the tertiary hospitals I favor all participate in Medicare Advantage plans;  I am a physician, a retired medical care administrator, and I have actually served on the board of a health insurance company so I am familiar with insurance jargon; and I don’t have diabetes, cardiac disease, or chronic pulmonary disease, so I suspect that I will look like a good candidate to an insurance company.  I anticipated that I could readily figure out if joining a Medicare Advantage HMO would save me money while providing the excellent coverage I have grown accustomed to.

It was NOT easy.

I focussed on only two private companies, Blue Cross and Harvard Pilgrim, both reputable companies in Massachusetts. I ignored the other companies that sent me all sorts of spam and junk snail mail during the limited enrollment window. So, why was it not so easy to figure out?

First, I needed to confirm that all my doctors participated in any plan I joined , i.e. would they be reimbursed by either company? When I called my doctor’s office to do that I was told to call the insurance company. Two phone calls later (one to each company) my physicians’ participation was confirmed. The good news was that I avoided lengthy “holds” on the phone calls since during the open enrollment window (deadline of December 7) both companies had an abundance of marketeers ready to answer my questions. My second phone call to both companies was to confirm that my specific prescription medicines were in their formulary, i.e. their cost would be covered. Some of my medicines were in Tier 1 and some in Tier 2 (different copays for each Tier), and there were slight differences between the companies. The short news here is that none were in Tiers 3 and 4 (the much higher copay Tiers), but two of the drugs would need “pre-authorization” of medical necessity by my physician (actually the same requirement as my current policy).

So far so good, but, of course, one never knows what medications you might need in the future, so the first whiff of being in a gambling game wafted into my mind. When I then delved into the morass of copays, deductibles, and co-insurance percentages (all of which are different kinds of “out-of/pocket” payments by the subscriber, i.e. i n addition to the premium ), I really felt like I was in front of a roulette wheel or at a craps table. I didn’t feel at all like I was playing Black Jack where the odds are so well known that  books have been written about how to “beat” them.

In each plan some physician visits had a $20 co-pay, some had $40 a visit. A Medicare-approved outpatient surgery could have a $150 or a $250 copay. An “inpatient” hospital stay was $150 or $360 a day for the first 5 days (no information available on “observation status” or “ER overnight stay”  which are other kinds of hospital stays). Diagnostic X-ray had a $20 co-pay unless it was for an MRI or CT scan and then it was 20% “co-insurance” which means, I think, I would pay 20% of whatever the MRI charges are (I assume both facility and physician charges are counted). One plan dropped the MRI 20% coinsuranse for a straight $200 copay. Chemotherapy medications and “Other Part B Prescription Drugs” (drugs ordered and administered by a physician ) also had 20% coinsurance payments.

Reeling from this game of variable numbers, which I am not good at (remember I’m just a pediatrician), I then went on to compare some of the “perk” benefits like coverage for eye exams, eyeglasses, hearing exams, hearing aid purchase (from $699 to $999 copay), selected dental, Over-the-Counter allowances, and finally the “wallet benefits” (reimbursements for “qualified health and wellness benefits”). Some were included in one company’s policy and not in the other. There were different copays and different “annual limits” between perks and also between companies. . . . Ahh, “annual limits” ??

So where did I place my bet? I decided it was worth saving $1700 premiums a year to go with a Medicare Advantage Plan with a $0 premium for continued Part A and Part B Medicare coverage while also providing prescription drug coverage and Medicare supplement coverage.

Which of the two private Medicare Advantage HMO plans did I choose? — The one with an annual Out-of-Pocket Limit of $4500 rather than the almost identical . . . I think . . . plan with an Out-of-Pocket limit of $6700. I figured that if I bet wrong on all those deductibles, copays, coinsurances, medication eligibilities, and hospital inpatient days, or if my good health odds really tanked, I would lose $2200 less while trying to save $1700. At least I wouldn’t lose the whole pot. Illness and medical bills contributed to two-thirds of all personal bankruptcies in 2007 (three quarters of those medical debtors had private health insurance).

So, as one saying goes, “Youse pays your money and youse takes your choice.” As another saying goes, this one from one of my medical student buddies when we were a lot younger, “Life insurance? You lose (die), you win ($). You win (live a long life), you lose ($).”

So, did I make the right choice?  I’ll know in a year if I won the bet or the house did.

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