How Sick Do You Plan To Be?

As I've mentioned earlier, this exercise is only academic for me at the moment because I'll be able to keep my current, non-compliant policy until December 31, 2014. I'll be repeating the exercise next autumn, however, so this is good practice.

Because I have no known chronic health issues, I really only care about two things:

1. Minimizing my costs for occasional, acute conditions,

2. Protecting myself against calamity.

The ACA does a good job with part #2, giving everybody a $6350 out-of-pocket maximum (beyond premiums, that is.) So that frees me up to focus on minimizing my costs for occasional, acute conditions. With dozens of plans to choose from and no helpful Medicare Part D-style calculator to analyze costs, people are on their own to figure out the best deal for their situation. We must play a fun game of “How Sick Do You Plan To Be?”

I do occasionally require some medical attention. In 2013, I've made two non-preventative visits to my PCP, which is typical enough. The most recent was a brief trip because of a lingering cough, for which I was prescribed a quick course of antibiotics. Under my current plan (which some consider “junk insurance”) I paid a $25 copay for the visit, plus $7 for the generic antibiotics. (I have a $10 generic Rx copay, but the cash price was less.)

Let's look at the underlying cost of that visit, which is a good exercise for everybody but is especially important in the post-ACA world:

Procedure	Charge Amount	Allowed Amount	Not Covered	Copay/ Coins/ Deduct	Paid	Reason Code
99214-EST, LEVEL IV OFFICE VISIT CPT(R)	254.00	225.92	0.00	25.00	200.92	3, 45

So, the office billed the insurance $254. The insurance company in turn scoffed and said “That was only worth $225.92, nice try.” I chipped in $25, the insurance picked up the remaining $200.92. (And, as noted, I paid 100% of the cost of the antibiotics.)

This is relevant because in many markets, including my home, the lowest-cost ACA plans will not cover any services until the deductible is met—not even providing this type of copay protection for perfunctory office visits. And this phenomenon is not limited just to “bronze” plans—there are a few higher-tier plans with similar limitations. Typically, but not necessarily, these plans are linked to HSAs.

With this in mind, our search becomes fairly straightforward. If I'm paying full fare out-of-pocket until I reach my deductible, I can expect to pay about $225 every time I have to see my PCP. (Charges will doubtless vary a bit from HMO to HMO, but with four of them operating in my county, let's assume a relatively competitive marketplace in which that figure won't be off by more than 10% or so.)

The lowest-cost plan available to me in 2014 would be Unity UW Health Bronze C, at $172/mo. With a $5400 deductible and a $6350 max out-of-pocket, there's not a lot to love about it, but it definitely does job #2: if a piano falls on me and I'm hospitalized for weeks, I won't pay more than $6350 to have my body repaired. I pay the full amount for all services until the deductible is reached, and then in that narrow window between $5400 and $6350 I pay 50% coinsurance.

One has to browse quite a way down the list in order to find the first plan which provides bona fide copay protection: Unity UW Health Silver E. For $251/mo, one gets $35 primary care, $110 specialist care and $300 ER visits. There's a $4300 deductible and a $5400 max out-of-pocket, plus separate $950 drug max out-of-pocket bringing us to the magic $6350. But for the occasional nasty cough or sore throat, I'm not worried about those. I only care about the $35 PCP charge.

Let's review annual costs.

The cheapest, bare-bones ACA plan (Unity Bronze C) would cost me $172 x 12 = $2064.

The cheapest copay ACA plan (Unity Silver E) costs $251 x 12 = $3012.

I save $948 in 2014 by buying the cheapest plan. But on the cheapest plan, a plain-jane PCP trip will run $225. On the nicer plan, I'll pay merely $35.

So from here, it's just a matter of playing with the numbers to see how many PCP visits it would take in order to tilt the balance in favor of Unity Silver E... and it turns out that number is five.

Unity Bronze C: $2064 + (5 x $225) = $3189

Unity Silver E: $3012 + (5 x $35) = $3187

Could I need five PCP visits in a single year? It's certainly plausible, although it's never happened to me before. (That's excluding a basic physical, mind you, which are zero-copay even on the cheapest, barest-of-the-bare-bones plans now.) If I expect 2014 to be like 2013 and I have just two non-preventative office visits, I save hundreds of dollars on Unity Bronze C.

There's another wildcard in my decision matrix here, which is that having been in the UW Health network for years in the past, I can't say I was terribly impressed by access to my PCP, who often could only make appointments several months away. So I may not actually be able to see my PCP in a reasonable amount of time for a cough—and if I go to urgent care, that's considered a $110 specialist trip, skewing the math considerably. It's difficult to predict exactly what's going to happen to the demand for a particular HMO's services in the upcoming year, although as the low-cost leader, I expect UW Health patient base will be growing, not shrinking.

I could also further complicate the math if I chose to pay for my PCP visits in Unity Bronze C out of an HSA, because then I could consider those visits paid for with untaxed income. That would probably shift the breakpoint out to a sixth PCP trip.

And, of course, even one lousy trip to the ER could well shift the balance in favor of Unity Silver E, since racking up far more than $300 in charges is easy to do in that setting. And if I planned to see some specialists, I'd likely be looking at a completely different set of plans. But controlling for unknowns is a full-time job, after all. The kind of thing insurance companies want to be compensated for doing. (Except when their profits are capped, that is.)

The ACA has done a lot of valuable things. But it certainly hasn't freed individual insurance buyers from the tricky responsibility of predicting how sick they'll be.