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

Used to be you had the choice of buying insurance or not. Or, more likely, you got insurance from your employer or could not afford insurance because it was too expensive. Your employer paid your employment-based insurance totally, or in part. In this scenario, those with good coverage paid an average of about $4,000-5,000 per year – premium plus deductible and maximum out-of-pocket. Sometimes your employer paid some extra or picked up part or all of the premium portion of that $5,000. Premium plus the extra parts maxed out at about $4,000-5,000, maybe $6,000-7,000, and less if you had a really generous employer with a great insurance plan.

My own insurance was terrific. I paid a couple hundred dollars per month, my employer paid the rest, and it was a great plan. Thirty dollar co-pays for office visits, $100 co-pays for the ER and maybe $200 for a hospitalization. Generics were cheap and even brand names only had a $30-50 copay per month. My total cost per year was about $2,500 even when I had to visit the ER for an ankle injury and x-rays.

But there were lots of other plans out there that did not provide coverage as good as mine. Higher co-pays for medications, lower coverage for ER or hospitalizations and often no coverage for preventive care like wellness visits, colonoscopy, or immunizations.

When you could not afford health insurance or you had a plan that did not really cover much, and you had an injury or illness or developed a chronic medical problem, you were still asked to pay the bills. Without insurance you did not have to pay monthly insurance premiums, but you were expected to pay all the costs of care. Medical bills can pile up fast and a short stay in the hospital, cancer medications, or some of the newer specialty drugs and treatments could easily top $100,000 in just a few weeks. There are many new medications that can cost $1,000 per pill, $10,000 per month, or even more. Without insurance your maximum out-of-pocket (premium plus care costs) in a single year could easily be $30,000, $50,000, $100,000, sometimes even more.

Uninsured, or underinsured folks often simply could not pay their bill. Communities held bake sales, homes were sold, individuals and businesses went bankrupt, and hospitals sometimes just did not get paid. Over the 10 years prior to the ACA, about 60% of bankruptcies were due to medical bills. And hospitals charged those of us with insurance extra to make up for those that could not pay their bills.

The ACA leveled the playing field. All ACA approved plans have to cover a basic set of Essential Health Benefits (EHBs). These are mandated for all insurers with ACA approved plans. All plans sold on the state and federal exchanges must cover these EHBs. In Colorado the EHBs were chosen based on a basic Kaiser plan. While not perfect, it is a good plan and . Colorado, like other states complying with the ACA, have a tiered health insurance benefit structure. That is, some plans have higher monthly premiums and lower additional costs (co-pays, deductibles, etc.) and other plans have lower monthly premiums, but higher additional costs.

For instance, a Gold plan may cost an individual $400 per month. That’s $4,800 per year. Maybe your employer pays it, but someone writes a check to the insurance company. That plan is really great and you only have a $10 co-pay for a doctor’s appointment, and your brand name medication only costs $25 per month. Your deductible is only $1,000, and your “maximum out-of-pocket” is only $3,200. That means, the total you will ever pay during the year is $8,000 (premium plus extra costs of $3,200).

Continue reading part 2…