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