As both premiums and deductibles have increased Americans are asking: “Is health insurance worth it?” And that is a question that cannot be taken lightly. In this article, we will take a closer answer the question is health insurance worth it.
Why Would Someone Choose to Not Buy Health Insurance?
To really understand the reasons why you might choose to not buy health insurance, we have look at a couple of real-life examples.
Imagine that you are a 40-year-old male married to a 40-year-old female and are looking to buy health insurance. Plus, you make too much money to qualify for a premium subsidy on healthcare.gov.
The Cheapest plan that you find would cost $580 a month. That equals $6,960 annually. Unfortunately, that plan also comes with an $8,550 deductible. With this plan, you are required to pay 100% of your medical costs until they exceed the deductible. Of course, due to the Affordable Care Act, the plan will pay 100% of your annual preventative visit.
As you do the math you realize that if you have a medical event having this health insurance will cost you $15,510 (the premium plus the deductible). Even if you felt that this was acceptable, you must recognize the fact that premiums will increase every year. Even assuming the premiums remained level, over ten years you will have paid $5800. And assuming the deductible stayed at $8,550, a claim in the tenth year would have cost you $14,350.
Of course, as you age the premiums will increase regardless of inflation. And the annual maximum out of pocket costs on ACA compliant plans is adjusted annually.
At this point, you might ask is health insurance worth it if you buy catastrophic health insurance as a solution, so let us take a closer look at that.
What About Catastrophic Health Insurance?
In the days before the Affordable Care Act, a catastrophic health insurance policy might have had a $10,000 or larger deductible and out of pocket liability. But today, if you are looking for an Affordable Care Act compliant health plan, the largest deductible available in 2021 is $8,550.
If you look at some of the short-term health plans (https://myhealthcare360.org/should-i-buy-short-term-health-insurance/) you can still find deductibles of $10,000, $15,000, and even $25,000. Now, looking at a plan with a $25,000 deductible, your first thought is probably “if I have to pay the first $25,000 in medical bills, why do I even need health insurance?”
To answer that question, you should understand the purpose of insurance. Insurance was never designed to pay for small-dollar expenses such as a doctor visit for a sore throat. It was designed to protect you against a loss such as Coronary Bypass Surgery that can cost over $100,000.
To better understand this, think about your auto insurance for a minute. Imagine what the cost would be if your auto insurance had to pay for your regular oil change. If it had to pay for that kind of routine care your premiums would skyrocket.
Health insurance policies that include copays for doctor visits, lab work, and prescriptions will cost more than a similar policy without those copays. The lower the deductible, the higher premium simply because insurance begins paying sooner.
What is a Chargemaster? Why Does it Matter?
The Chargemaster is the list of prices for every procedure, service, or supply that a hospital can provide. This is an exhaustive list of more than 300 different prices.
As a result of legislation passed in the Senate on June 30, 2020 (https://www.congress.gov/bill/116th-congress/senate-bill/4106/text) every hospital must make this list of prices public effective January 1. 2021. In theory, having access to this list should help you become a better consumer of healthcare. Unfortunately, the reality is that the Chargemaster Pricing has nothing to do with what you will actually pay for your medical care.
To understand this better I went to the pricing tool of a local hospital. As you can see from the picture below pricing is not very cut and dry. When it comes to the price for any service, that will depend on which insurance company and the network. Even then, the tool cannot tell you what your price will be without knowing more about which policy you have. That is because within a given health insurance company there will be several different healthcare networks. And each network will have negotiated a different discount from the chargemaster price.
What is especially interesting is that if you are a cash-pay patient the system easily provides you the price. And if you are trying to answer the questions: is health insurance worth it, looking at some prices might be helpful.
But even within the same medical system, prices can vary widely. Check out the pricing for an inguinal hernia repair at two facilities within the same hospital system.
As you can see there is a $7,439 difference between two hospitals within the same hospital system. Furthermore, these two hospitals are less than 15 miles away from each other! If you do not have health insurance this can make a huge difference.
Healthcare Consumerism – Shopping for Your Medical Care
Healthcare consumerism came to the forefront of the healthcare cost discussion with the passage of the Medicare Prescription Drug, Improvement, and Modernization Act in 2003. The idea was that if you purchased a high deductible health insurance policy you would become a better healthcare consumer. Sadly, that is a myth. As you can see from the examples of an inguinal hernia repair above, you would reach your $8,550 deductible regardless of which hospital you used.
But if you have decided that health insurance is not worth the monthly premium, you have a lot of incentive to become a better healthcare consumer. Still, it is difficult to shop for medical care despite the transparency rules. That said, it not impossible and easier today than even five years ago.
Before I talk about how to engage in healthcare consumerism, it is important to talk about medical emergencies. For example, if you suddenly experienced chest pains, severe shortness of breath, or even blood in your urine, you cannot take the time to shop costs. You must get to the emergency room as fast as possible.
Healthcare Consumerism – Tools for the Healthcare Consumer
In answering the question “is health insurance worth it?” you may have chosen to remain uninsured or to buy a high deductible health plan. Either way, you must become a better healthcare consumer.
Many hospital websites provide a tool that allows you to get an estimate of the cost of your medical procedure at their facility. These tools provide both a cash-pay price as well as the negotiated rates through your health insurance.
However, you may find better prices by using some of the newer tools. Your first tool of course is Google. Do a search of facilities that are cash-pay and do not accept health insurance. You will find multiple medical facilities that are cash-only. One such example is the Surgical Center of Oklahoma (https://surgerycenterok.com/). On their website, you can find every procedure along with pricing. How valuable is this? Look at the two inguinal hernia repair examples above. The cheapest cash-pay price was $11,945. But if you chose to go to the Surgical Center of Oklahoma your cost would be $5,750. That is a savings of $6,195. Even factoring in airfare for two and two nights in a hotel you would still save approximately $5000.
To reiterate, this does not work when dealing with a medical emergency. However, most medical events are not medical emergencies. And you can save thousands of dollars.
Free Market Medical Association
Another great source of consumer information is the Free Market Medical Association. They offer a great consumer tool. That tool is the ShopHealth Healthcare Marketplace which can be accessed at https://fmma.org/shophealth. If you require any non-emergency medical procedure use this tool before committing to any provider. I also highly recommend reading some of their success stories at https://fmma.org/testimonials.
New Choice Health
Another good tool can be found at New Choice Health (https://www.newchoicehealth.com/). You can enter your medical procedure and zip code and tool will provide a range of prices from Great Price to Expensive Price. They even provide a list of providers along with their price ranges.
Clear Health Costs
If you are a good negotiator, I suggest that you check out Clear Health Costs at https://clearhealthcosts.com. Clear Health will display the Medicare pricing for your medical procedure. In the case of a laparoscopic hernia repair that is $420. You may not be able to convince a provider to agree to that price but it does give you negotiating power.
Fair Health Consumer
Fair Health Consumer is another price transparency tool that might be useful. It gives a range based on uninsured to in-network pricing. https://www.fairhealthconsumer.org/.
Healthcare Consumerism and Prescription Drugs
By now you should be able to see that you can create big savings on medical procedures by becoming a better healthcare consumer. But you can also become a better healthcare consumer when buying prescriptions. Here are a couple of consumer tools that can help you.
Blink Health (https://www.blinkhealth.com/) is a great online tool that can save you a ton of money on prescriptions. Simply enter the name and dosage of your prescription along with your zip code and get a price at your local pharmacy. You simply purchase the prescription on their website and take the receipt to the pharmacy.
More than likely you are already familiar with Goodrx (https://goodrx.com). With GoodRx you enter your prescription, dosage, and zip code and a list of prices will be generated. Download the coupon and go to your pharmacy.
Prescription Assistance 360
Prescription Assistance 360 (https://www.prescriptionassistance360.org) is a great resource if you are uninsured and have a very expensive prescription such as Zeljanz. This website will help you find any financial assistance programs that you may qualify for.
Medicine Assistance Tool
This tool can be found at https://medicineassistancetool.org/. This is what their website states: PhRMA’s Medicine Assistance Tool (MAT) is a search engine designed to help patients, caregivers, and health care providers learn more about the resources available through the various biopharmaceutical industry programs. MAT is not its own patient assistance program, but rather a search engine for many of the patient assistance resources that the biopharmaceutical industry offers.
Can a Hospital Refuse to Treat a Patient Without Health Insurance
The biggest worry about not having health insurance is whether a hospital can refuse to treat a patient without health insurance. The short answer is that they are required by law to treat you in an emergency. The 1986 Emergency Medical and Treatment Labor Act (EMTLA) expressly forbids a hospital from not treating you in an emergency.
But what happens if you are diagnosed with cancer or need bypass surgery? In this case, you are in a bit of a gray area. Technically, if this is not deemed an emergency a doctor can refuse to treat you. None-the-less, if your condition worsens significantly or becomes life-threatening, that doctor or facility may be liable. As a result, it is likely that you would receive treatment.
When it comes to routine illnesses such as a sore throat or a sports injury, finding treatment without upfront payment may be more difficult.
What Happens if I Do Not Pay Doctor or Hospital Bills?
After wondering about whether a hospital or doctor can refuse to treat you, this is the second most important worry. If you do not have health insurance and incur large medical expenses what options do hospitals and doctors have?
For the purposes of this article, I am going to skip any discussion of financial assistance plans. If you have chosen to not buy health insurance it is probably because you make too much money for a premium subsidy. In addition. You feel that the premiums are too high for the deductible that you would have to purchase.
Under those conditions, hospitals and doctors can go after you and your assets to get their bills paid.
If you cannot pay your medical bills in full, I suggest that you first try to negotiate with your provider. In addition, you should ask about a payment plan.
- If you simply try to avoid paying your medical bills, your providers can:
- Turn your account over to a collection agency.
- Report you to the credit rating agencies.
- Impute interest and penalties.
- File a lawsuit against you.
- Garnish your wages.
- Place a lien on your property.
- Place a levy on your bank account.
In short, they are going to collect. Still, many individuals see a monthly payment plan as less challenging than the monthly premiums for a health insurance policy. This is an idea worth looking more closely at.
Remember the example at the beginning of their post about the 40-year-old? The Cheapest plan would cost $580 a month. That equals $6,960 annually. This plan also comes with an $8,550 deductible. As you do the math you realize that if you have a medical event your cost would be $15,510 (the premium plus the deductible).
Now imagine a coronary bypass surgery. According to Lively.com the average cost of coronary artery bypass surgery in 2018 was $123,000. We know that if you had purchased health insurance you would have paid $15,510between the premium and deductible. So let us subtract that and we owe a balance of $107,490. You would have to pay off that amount over some amount of time.
So, Is Health Insurance Worth It?
This article will close where we began. Is health insurance worth it? Personally, I do not want to risk getting hit with a medical bill of $100,000 or more. More importantly, I want to know that I can get the best possible care. And I want to get the best follow-up care.
The most common objection that I hear from people who choose to not buy health insurance is that they never get sick. Or another way of saying that is that they never go to the doctor.
And while you may be extremely healthy today, we never know what tomorrow will bring. In 1990 I was extremely healthy and ran 3 to 7 miles a day. Then I had a kidney stone and my blood work showed a liver disease. The treatment in 2002 cost more than $75,000.
One unexpected medical event can cost you your life savings and more. And that is what insurance is for. To protect us against unforeseen emergencies.