A $10,000 Headache

I’ve received a number of questions from people asking about my experience with short term health insurance (our current plan). I responded with the truth (worked as planned, we’ve been healthy, yada, yada, yada) but we’ve never had a good test for our plan. Well, that recently changed and I wanted to share the details with you.

What Happened?

The good news is I’m fine. The bad news is that my wife called an ambulance because what started as a severe headache turned into severe disorientation and me not making any sense. Obviously, my wife was concerned that what we thought was a migraine might actually be a stroke, or worse, when I couldn’t answer basic questions. Sending me to the hospital was the right thing to do. As you might assume, the ER sprung into action and ran a number of tests to determine if something more serious was going on. The CT scans and MRIs ultimately were clear and the issue was an atypical migraine. I received treatment, and after a longer period than the team in the ER expected, I regained some level of normal thought. I left the hospital just short of a 24 hour stay.

This was an extremely scary situation filled with uncertainty. While I’ve had a handful of migraines in my life, I’ve never experienced something that limited my ability to think and answer basic questions. I was provided with some pills that should help address a migraine if I feel one coming on in the future. I can assure you I was not thinking of the costs I was incurring when I could not identify what day it was!

So, What Health Insurance Do You Have Again?

I’m glad you asked because the hospital certainly did as well. As you might recall from this post, we transitioned to short term health insurance from United Healthcare in 2019. 2019 and 2020 went by with no major health issues (we were fortunate with COVID!). So, in 2021 we did our normal health insurance evaluation and quickly agreed on another year with short term health insurance. We’ve been blessed with good health and our medical needs have been minimal. The details of our plan for 2021 are below:

Plan Name	Deductible	Lifetime Benefit	Coinsurance (Insurer/Us)	Coinsurance Maximum	Maximum Out of Pocket per Person	Maximum Out of Pocket for Family	Annual Cost	Cost per Month
United Healthcare One - Short Term Medical Plus Elite  - $12,500	$12,500	$2,000,000	100/0	$-	$12,500	$62,500	$4,668	$389

The key number to remember in order to keep up with the story is the $12,500 deductible. This means we need to pay $12,500 before our health insurance covers any costs. Oh, and with the short term insurance there is a $12,500 deductible per person…remember that when you see the Obamacare plan comparison below. Of course, we receive the rate negotiated with our insurer, which is less than if we paid out of pocket, but our insurer won’t fully pick up the tab until we spend $12,500. It’s also worth noting the $389 cost per month.

Another piece of information you’ll need to understand the full story is what our alternative would have been with Obamacare (i.e. buying insurance through Healthcare.gov). Similar to our 2019 choice, in order to utilize our existing providers, we would have needed a plan through Oscar and this would have been our cheapest option:

Plan Name	Deductible	Lifetime Benefit	Coinsurance (Insurer/Us)	Coinsurance Maximum	Maximum Out of Pocket per Person	Maximum Out of Pocket for Family	Annual Cost	Cost per Month
Oscar Simple Bronze	$7,300	Unlimited	100/0	$-	$8,550	$42,750	$18,672	$1,556

Keep in mind the deductible here is per family, whereas the short term plan we have is a $12,500 deductible per person. Now, let’s compare this against our short term plan. We have a lower deductible of $7,300 but a much higher cost per month at $1,556.

So How Much Did This Cost You?

The cost of being admitted to the ER, spending 24 hours in the hospital, CT scans, a MRI (a quick one because I tapped out due to being claustrophobic!), visits from a number of doctors/specialists, a special IV that quieted the migraine and one awful breakfast mush meal was approximately $10,000 based on negotiated rates with my insurer. Actually, the hospital’s suggested retail price before insurance was closer to $19,000. Isn’t this system great? Our health systems have created a list price so high that even when you have to pay $10,000 for something like this you can say you’ve saved $9,000 by having insurance. It works something like this:

Hospital: Hey, let’s just make the full retail price so high so that when we negotiate rates with insurers we make them feel like they are getting a huge discount and adding a ton of value. Plus, no one will see these prices until after they’ve been provided the service so it’s not like we really need to compete.

Insurer: We don’t love your high prices because we need to pay more for our sick patients. However, at the same time, your artificially high prices allow us to show consumers we’ve saved them a lot of money with our negotiated rates, which allows us to charge them more. In fact, we can make a lot of money and then just blame the healthcare providers as the problem…it’s actually kind of nice.

(Most) Consumers: Wow, thank goodness I had insurance because it saved me a ton of money. Since my employer pays for most of my low deductible insurance plan I don’t even really know how much my insurance costs. They just suck it out of my paycheck!

In a bit of foreshadowing, you’ll see my primary gripe after this experience remains the high cost of the actual health services provided.

Oh My Gosh, Don’t You Wish You Had Obamacare Now!

Well, yes, if we had a subsidy from the government that covered the cost of a low deductible health insurance plan then it would be great to have an Obamacare plan. The problem is we don’t have a subsidy so even with $10,000 in medical bills for a headache we should still come out ahead financially vs. if we would have signed up for a plan via Healthcare.gov. Let’s walk through the numbers and examine this!

The Short Term Health Insurance Atypical Migraine vs. The Obamacare Atypical Migraine

Let’s run some numbers through March to start the comparison:

	Short Term Insurance	Obamacare Plan
Monthly Premium Costs through March	$1,167 ($389 x 3 months)	$4,668 ($1,556 x 3 months)
Medical Costs through March	$10,000	$7,330 Assuming we would have only had to pay our deductible amount
Total Costs through March	$11,067	$11,998

 The short term insurance costs $931 less through 3 months but what about the rest of the year? With the Obamacare plan we wouldn’t have any more out of pocket costs since we’ve reached our deductible. With our short term insurance each member of the family must reach their deductible so there’s a lot of uncertainty. Let’s compare our premium costs for the rest of the year:

	Short Term Insurance	Obamacare Plan
Monthly Premium Costs for April - December	$3,501 ($389 x 9 months)	$14,004 ($1,556 x 9 months)

 The difference between these monthly premium costs is $10,503. Thus, for the Obamacare Plan to have been more economically feasible for us this year we’ll need another health issue that costs us over $11,434 ($10,503 + $931). Now, if that other health issue is with me I’ll only need to pay an additional $2,500 since I’ve already paid $10,000 towards my $12,500 deductible. If the health issue is with one of my family members we have the full $12,500 in front of us.

We also have the thorny issue of pre-existing conditions with short term insurance. Now that I’ve had an atypical migraine I suppose my insurer will consider that as a pre-existing condition. What would happen if the preventative pills I was prescribed don’t work and I end up hospitalized for a similar episode? I’ll save you the suspense, I doubt they’d cover anything…pre-existing condition!

Based on our health history we are unlikely to have another severe medical issue, but I was also unlikely to be admitted to the ER for an atypical migraine!

So What Did We Learn?  

I’m not sure we learned anything new but we certainly confirmed some of what we already knew:

The high cost of medical services is the main problem. $1,000 for a 15 minute visit from a specialist. Thousands of dollars for a CT scan. The prices we are charged make no sense. There is a significant pricing failure amongst healthcare providers.

Our short term insurance plan operated as advertised. To be clear, there are a lot of short term insurance plans that are of poor quality and there are also a lot of people who don’t know what they are getting into when they buy one. However, in our case we knew what we were getting into and can say our plan operated as described. I remain a proponent of providing consumers the ability to purchase basic plans like short term insurance. They are not perfect but there’s a lot of “not perfect” to go around in healthcare.

It’s complicated. It’s too easy to say Obamacare is awful and is government overreach. It’s too easy to say short term insurance is awful and predatory. It’s too easy to say health providers just need to lower their costs. The system is so far broken that there’s no “one size fits all” solution. Like most debates these days we tend to over simplify and not think critically.

Thankful we did not have Liberty. We are a few years removed from working with Liberty Healthshare, but if the issues we faced are still around I can’t imagine how stressful and complicated it could be to get reimbursed for this type of medical issue.

 

One last thing: As I was writing this article Freakonomics happened to release Episode 465 of their excellent podcast. The title of the episode: How to Fix the Hot Mess of US Healthcare. Seems about right.