When The Full Sticker Shock Of Health Coverage Hits Our Family

medical bill

(Attercop311/ Flickr Creative Commons)

As the new state Health Policy Commission begins its work to bring down health care costs, here’s one Massachusetts family’s reminder of why the issue is so urgent. The excruciatingly high prices of both insurance and care mean that some must choose between health insurance and a new furnace, or health insurance and a car. This is not an abstract policy issue; it is a daily burden with major effects. One mother’s story:

By Sara Cushing
Guest contributor

A few weeks ago I resigned from my job as a project manager at one of the largest health care delivery systems in the United States. I have worked in different capacities in the health care industry in the Boston area for the last eleven years, but decided to leave my career because I wanted a change — to follow my dream of becoming a writer.

Many things needed to be considered about such a family-life-altering decision, including one that hadn’t been a concern of mine in the past: what my family’s next steps would be in purchasing health insurance. I have always carried the health insurance — a very robust PPO (“paid provider option”) family plan that was largely subsidized by my employer.

Sara Cushing

Writer Sara Cushing

The direct cost to me (paid bi-weekly on a pre-tax basis) was roughly $400 a month. In discussing my career departure with my husband, we knew that the monthly cost for a similar plan purchased through the Health Connector (the Massachusetts state agency that acts as a vehicle to allow uninsured residents to purchase health insurance through local health insurance companies) would likely be higher. Much higher.

Try something closer to $1700. About the same as our monthly mortgage. About half of what my take-home pay used to be — money that was no longer coming in. And we see no way around it.

Because my husband is in a higher income bracket we’re not eligible for subsidized coverage though the state; and because my husband is a contract employee, his employer doesn’t provide subsidized health care coverage.

This means that we’re looking at the same cost for a family plan whether we buy through his employer; the Health Connector; or through my employer’s COBRA plan (which allows me to purchase the same health care coverage as offered by my employer for up to 18 months after ending employment, though I am responsible for 102% of the cost — the additional 2% is for administrative fees).

I live in Massachusetts, where legislation was passed a few years ago mandating health care coverage for all residents. The legislation helped to create the Health Connector agency so that people could purchase health insurance in larger risk-pools instead of directly from health insurance companies, to allow for more competitive pricing and coverage options for individuals and families.

This all sounds great, right? What many people do not understand, however, is just how steep the monthly premium cost gets, just how painful a $1700 bite out of a family budget can be.

Of course there are other plans offered through the Health Connector that have less expensive monthly premiums (for example, $1000/month for a family plan) but these plans have higher co-pays (the flat dollar amount that you would pay for an office visit, for example); coinsurances (usually a percentage of the cost for an office visit); individual and/or family deductibles; and/or out-of-pocket maximums.

If not for my previous work in researching health insurance coverage for patients, I would have no idea what any of these words mean. A deductible is a monetary threshold that an individual (or family) is responsible for paying before their coverage kicks in. For example, if I (God forbid) have to go to the hospital for emergency surgery, I would be responsible for paying up to my individual deductible before my coverage kicks in to cover the rest. This deductible could be anywhere upwards of $2,000.

An out-of-pocket maximum is the annual maximum that I am responsible for paying for my care. For example, if (again, God forbid), my hospital admission required extensive surgery, treatment, or extended stay in the emergency room or intensive care unit, and I have a $10,000 out of pocket maximum, then I am only responsible for the first $10,000 in cost for my care and my health insurance will cover the remaining costs, if they’re determined to be medically necessary. So in the event of something catastrophic, I will pay $1,000/month in premiums and could accrue up to a $10,000 personal expense in the cost of my care.

A lot of the current political conversation about national health care coverage ignores the actual cost to the purchaser. I think that mandating coverage for all is a good thing and will help to initiate access to primary care and preventive health services. But if people can’t afford the monthly premiums and costs of care, what good does the mandated coverage offer for the people who have to pay for it?

My family – thankfully – is healthy and currently does not ‘consume’ a lot of healthcare services; our trips to the doctor are primarily for well-visits. To pay $1,000/month for services we might not even use means drastic cuts to our already pared-down lifestyle and budget: Do we sell one of our (two) cars to eliminate monthly expenses? What if our thirty-year old oil burner doesn’t survive this winter and needs to be replaced? How do we save? How will we continue to contribute to our son’s college tuition savings account?

Families like mine have to evaluate the risk-benefit analysis of whether we can afford to pay steep monthly premiums in anticipation of worst-case scenarios or keep the roof over our heads.

It seems our only other option is not to purchase insurance and, instead, incur a tax penalty when we file our state taxes next spring. But this also means that we will then take our chances that we won’t need extensive health care services in the near future. And like many parents, this doesn’t sit well with my often overly responsible personality and family management style.

Mandating health care coverage through state or national legislation doesn’t mean that the cost of care is going to go down anytime soon to make a difference to the end consumer. Until the cost of care is managed, the cost of health insurance isn’t going to be eased. The industry movement away from fee-for-service payment models will directly impact the out-of-pocket cost to individuals and families – but again, not in the immediate future. And this central issue to those of us paying steep costs for coverage isn’t part of the political or news media conversations. It should be.

I fully appreciate the irony in my leaving a job that provided a health insurance benefit that was at a small cost to my family. But choosing a new career path – one with different benefits, like flexible time to take care of my son and the fulfillment of doing something that I love – shouldn’t present my family with such a financial dilemma. Until the cost of providing care becomes better managed, families like mine will continue to have to evaluate the risk-benefit analysis of whether we can afford to pay steep monthly premiums in anticipation of worst-case scenarios or keep the roof over our heads.

Sara Cushing is a freelance writer. She lives with her family on Cape Cod.

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  • Ruth Rankin

    Imagine how much less healthcare would cost if we put the profits taken by the giant insurance companies back into the system. Their CEO salaries, advertising budgets, company skyscrapers and planes, etc all come at the expense of medical care for our citizens… but then, they have a better lobbying structure than people like Sara. Single payer is a step in the right direction, but a public option can rid us of the profit motive in our health care system.

  • mumtothree

    Great post, Sara.

    Just for giggles, I used the Mass. Connector 2012 Affordability Tool. Based on our family income of just over $97,585 but under $119,270, the amount of monthly premium that the Commonwealth deems we can “afford” is $862. But our income is more than 3x the federal poverty level for a family of 4 ($69,156). So we do not qualify for a subsidy. Then you go to a table based on age and county of residence, and look up the LEAST expensive insurance for a family. That premium is $1314, which is greater than $862 – the amount we can “afford.” The result of this exercise is that we may NOT be subject to a penalty for NOT buying health insurance, because there is NO affordable coverage available to us. Great. But what if you WANT to be insured, as Sara does? You just pay, whether the Commonwealth says it’s affordable or not. Sara, my family pays about the same as yours – over $20,000 a year, for a plan with deductibles and co-pays. This problem is nowhere close to being solved.

  • CastleGordon

    Those of us who have been paying obscene monthly premiums for years, each year significantly more expensive than the last, realize the problem. My husband and I are self-employed with 2 children, and I have a chronic disease. With the approach of open enrollment each year I am consumed with number crunching; comparing plans, deductibles, out-of-pocket expenses, covered services, prescription plans, network providers and specialists, etc. I try not to think of the education I could be providing for my children if I did not have this monthly expense.
    A family member who now lives in London recently required immediate medical attention- not life threatening, thankfully, but urgent care. He walked in to the emergency room, was treated, given after care instructions and a prescription which he picked up, and went home. His cost? Round trip cab fare.
    I know many smart, educated people with great business ideas who have decided to stay in their lackluster jobs rather than become entrepreneurs for one single reason; having to pay their family’s health care costs. This is absolutely the reverse of what America should be nurturing right now.

  • Ellie

    Heath Connector even further complicates the issue by only allowing individuals to purchase self-payer insurance plans during their five week open enrollment period in July/August. If an individual or family needs to purchase health insurance at any other time of the year, they must meet a variety of requirements. Effectively, the state makes it extremely difficult, and expensive, for individuals to comply with the law mandating health insurance.

  • Art As Social Inquiry

    Mass. has had 6 years to establish their healthcare overhaul. They are now working on cost controls. Ms. Cushing knows well that had she or a member of her family had a preexisting condition and gone shopping in a different state, she might be uninsurable altogether, stuck in a job for the benefits and unable to pursue her dream to be a writer.

    Although her income bracket does not qualify her for subsidies, she still has made the choice to go out on her own. That might not even be conceivable in another state.

    As the country shifts to the idea that all citizens need health insurance, I believe we will see more innovation in achieving the goal of universal healthcare which we so desperately need to compete globally.

    Considering that almost 18% of our GDP (France is at 8%) is eaten up by healthcare costs, we need to start somewhere.

    The healthcare law gives states wiggle room to put in place something better than Obamacare. And if some states opt for single-payer, we may see the rest of the country follow.

    Also, the more people learn about the healthcare law, the more they like it. Access to care might just spawn a national movement for single-payer.

  • Christine

    Great blog post. Well put and a hugely important issue.

  • bluemoon

    This is a perfect description of why a free market cannot work for health insurance. For a market to work individuals must know what they are buying and what it costs. Most people have most of the costs paid by their employer and have the sense that that is “free” and until they actually get sick or injured they have no idea what devils are hidden in the fine print. Thus they cannot make economically rational decisions which a “market” requires. Ms Cushing is obviously much more sophisticated than the average consumer in understanding the complexities of competing plans, but even she was shocked when faced with the real total cost..

  • julie anderson

    I can understand the situation it is very worse!

    http://www.medicaremaryland.com/

  • CircusMcGurkus

    Many of us have been living with this reality for a long time and believe that the employer-driven model is not only obsolete but harmful to the economic engines of innovation and creativity that prompt people to follow their hearts and create real and meaningful change in the world. People who pass these laws and who do not understand their impact are largely covered by medical insurance coverage (NOT “health care” – insurance has nothing to do with health; only reimbursement for illness and injury). They are not bad people and they have the best of intentions, but they are misguided. Influencing their lack of clarity is the fact that as politicians they want high employment and the insurance companies and hospitals – drivers behind the implementation of the law – employ a lot of people.

    Bay Staters need to stand up for single payer medical insurance coverage – everyone gets treated the same through a tax based system. It is unfair – outrageously unjust – that some people pay significantly more money than others and often for worse coverage. This is especially true in a rapidly changing economy where job security is a fantasy and contract work is the norm.

    The only people who benefit from the current system are insurance companies, hospitals and doctors. The system is not designed to provide outstanding care (which in this world can only come from collaboration, not the MA model of competition); it is not designed to keep costs low (which can only come from a broad view of patient needs vs. the current view of pharmaceutical companies and big business of hospitals). It is designed to reimburse providers – and because of who is involved in the administration of the law (providers) – it is a fox watching hen house absurdity.

    Patients (or as they like to say “consumers”) come in last. The hospitals get magnificent grants and are therefore ranked highly by their jealous peers, but the actual care is expensive and mediocre to bad in MA, particularly at the institutions that suck 80% of the medical insurance revenue. But, most of us do not even know that because we are so busy trying to make the premium payments while living in fear of actually needing care.

    This system is broken – baby with the bathwater broken – and the remedy (which is not perfect, but is far better) requires a single payer tax and significant regulation.