Thinking About Health: Choosing health insurance in a confusing marketplace

Anyone buying health insurance this fall faces a daunting task: having to choose among multiple, often-complex options that offer widely varying degrees of protection.

For starters, association health plans are back, allowing small businesses to band together to buy insurance. So are the short-term policies that may last from only a few months to a year. Then there are plans offered by church ministries that look like insurance but really aren’t. Plus, multiple and complex options remain from the Affordable Care Act.

And to complicate matters further, if a bill just introduced in Congress passes, it would require insurers to sell policies to people with preexisting conditions and not use health status in determining the premium. But here’s the catch: Although an insurer could insure a person with preexisting conditions, the carrier would still be allowed to exclude coverage for those specific conditions. It could, however, cover you for other illnesses you might get in the future.

Prior to the Affordable Care Act, the insurance industry used this tactic for avoiding claims from sick people. They would sell the policy but would waiver or “rider out” coverage for any preexisting condition. That meant someone with asthma would not be able to get coverage for asthma-related illness. Some companies went even further: They would cover no diseases of the respiratory system at all.

But in general, before you comb through the fine print in an insurance policy, think about these major factors.

The more you pay in premiums, the more you get in benefits. Many of the new options don’t have to cover all of the Affordable Care Act’s 10 essential benefits, and most insurance experts believe that in order to offer cheaper premiums, many of them won’t.

At first glance, a low premium and fewer benefits may seem attractive. Those essential benefits that are part of an Affordable Care Act policy include mental health and maternity coverage, which many older people have squawked about, arguing they don’t want to pay premiums for coverage they would never need.

The essential benefits, however, also include prescription drug coverage, generous hospital coverage, emergency services, and rehabilitative services that are important to older people. But those coverages get little attention in stories about 60-year-old women being forced to buy maternity coverage.

Look for some of this fall’s new policies, for example, to limit hospital coverage to a certain number of days, or they might limit radiology services or drug coverage. The new so-called short-term policies will come with few if any regulations from the federal government or state insurance regulators.

After understanding the relationship between premiums and coverage, the next big decision is how much risk you want to assume if you become seriously ill. In other words, how much can you afford to pay out of pocket? For a large portion of Americans, the answer is not much. The Commonwealth Fund recently found that nearly half of working age adults could not pay an unexpected medical bill of $1,000 within 30 days.

Over the years, I’ve heard too many families say they are healthy, aren’t going to use the insurance, and might as well buy the cheapest policy possible – or none at all. I’ve interviewed many people who took that position only to end up later in bankruptcy court when unforeseen illness struck because they had no insurance and not enough money to pay the bills.

How large a bill can your family assume? If you have a large pool of resources to weather a serious illness, then skimpy benefits might work. If you don’t, think carefully before buying a policy with few benefits. Families tend to underestimate how much coverage they’ll need.

Once you understand these two basic principles, the next step is to look at the offerings on your state’s insurance exchange. Obamacare polices have gotten a bad rep almost since the beginning because they tend to be pricey for families that don’t receive an income-related subsidy to help cover the premium. About 87 percent of people who buy on the exchanges do get a subsidy.

If you are eligible, see if you are also qualify for a second subsidy the law provides — the cost sharing subsidies that are available only for those with very low incomes who buy certain Obamacare policies. Those subsidies help pay for the deductibles and coinsurance that many of the policies require.

People not eligible for subsidies must brave the new confusing marketplace. For instance, the Texas Medical Association just reported that it is carefully watching the health care sharing ministries, which are not insurance but are organizations that allow those with similar beliefs to share each other’s health care costs. The ministries, which I’ll explore in a future column, may be confusing consumers into thinking they have real insurance, according to the medical association.

For 2019, there’s no longer a tax penalty for not buying health insurance. But before rejoicing at that prospect, think about what it would mean for you and your family to be totally on your own when it comes to paying for health care.

What trade-offs are you prepared to make this year? Write to Trudy at trudy.lieberman@gmail.com.