Balancing low cost insurance and personal financial risk — How the ACA helps us all share the balancing act

Cheaper by far. Your monthly premium is just $200. Twenty-four hundred dollars total per year. Your co-pay for a doctor’s appointment is $30 and your medication has a “co-insurance” which means a percentage of the total cost of the medicine instead of a fixed co-pay cost. Fifty percent co-insurance is common. Your deductible is $4,000, and your maximum out-of-pocket is $6,500. The total you will ever pay during any given year is $8,900 ($2,400 premium plus extra costs of $6,500). For a family plan, the numbers go up a bit. Gold total is about $14,000-15,000 and a Bronze is about $16,000-17,000.

Source: Andrew Magill (Flickr/CC)

Source: Andrew Magill (Flickr/CC)

If you have a chronic illness or develop cancer or have an injury that requires surgery or spend a few days in the hospital, you will likely hit your total maximum. A typical year of healthcare needs after a heart attack that includes a stent or open heart surgery runs about $175,000. The average hospitalization for a medical condition in America is about $10,000 and for an acute injury about $15,000. The average cost of a year of specialty medication for multiple sclerosis is $35,000. Insurance companies use pooled premiums from everyone in the insurance plan to cover the rest of the medical bills, anywhere from $5,000 to $105,000 or more, as there is no longer any annual or life-time maximum. There are no more pre-existing condition exclusions, and you can’t lose your insurance because you forgot to put your middle initial on your application. Remember, if your total cost of care is more than your premiums plus your out-of-pocket costs your medication, hospital bill, or other treatment is being paid by the other members of your insurance company; your neighbors, friends, community.

If you know you are going to need medication, hospitalization or surgery, it kind of makes sense to buy the Gold plan. They cost more in premiums, but it is a regular monthly amount (good for budgeting) and you have lower extra costs. Your total amount paid per year will be slightly lower than if you bought the Bronze plan. But only slightly lower.

Really, if you need specialty medication, surgery, or hospitalization, it is likely you will hit the maximum out-of-pocket regardless of what plan you buy. Pretty much, if you have a serious illness or injury, you need $8,000-10,000 per year for your health care (premiums plus extra costs). For a family it goes up to $16,000-17,000. Those really expensive specialty medications may come with a high co-pay or co-insurance. But, it is likely that you will hit your maximum out-of-pocket pretty quickly, regardless of what plan you have. The theoretical diamond plan that comes with no additional out-of-pocket costs could easily be implemented. It would cost about $8,000-10,000 divided by 12 for a monthly premium of about $750.

See the pattern here?

The balance in American health insurance used to be cheaper healthcare costs for some (with insurance) and really high costs for others (leading to bankruptcy). Now the balance is a bit more even, a bit higher costs for some of us, but none of us gets ruined by a $100,000 hospital bill. And many other components in the ACA are working to decrease the overall costs of healthcare by investing in primary care and preventive services.

What this means is that all of us covered by ACA-approved plans now share the risk; we are all in this together. No-one in my neighborhood, community, or small town, is going to get hit with a $40,000 or $50,000, or $100,000 bill. My neighbor won’t have to sell their home and move because he developed cancer, ALS, or broke his leg skiing.

None of us is likely be able to purchase one of those uber-awesome plans of yesteryear that only cost a couple thousand dollars per year. Most employers are shifting to these ACA EHB plans. My new insurance is not nearly as generous as my old insurance, but I know that I am joining in the risk pool so that more folks can afford health insurance and no one will get stuck with a bill that makes them sell their home or small business just to pay for profits.