Health Insurance and You!

In the near future you may find your state legislature playing the role of the tooth fairy, protector of children’s gums and enemy of plaque. According to today’s New York Times, a new regulation calls for all Massachusetts children who attend preschool or daycare for more than four hours each day, or who eat lunch at school to brush their teeth in class.

In spite of the fact that parents may choose to opt out of the requirement, there is a very vocal outcry against the new mandate. Parent protesters are citing a variety of objections including concerns about spreading germs, swallowing fluoride, over-burdening caregivers and even wearing away tooth enamel from over-brushing. (see Mom’s Nation blog) Many parents are just shocked at the level of government intrusion into their children’s personal hygiene. What’s next? Mandating that children wash their hands after using the bathroom? Hmmm, sounds like a good idea to me. That would certainly be an effective way to prevent the spread of many illnesses. But, back to teeth.

Maybe parents would be less outraged if they knew about a study conducted by British medical researchers that found tooth decay reduced by 11-30% in under-privileged five year-olds who brushed at school. It’s an impressive finding. Or maybe they aren’t aware of the connections between oral health and coronary disease. Even if a child were a paragon of oral hygiene virtue, a little extra brushing after meals is not a bad thing. I would trust most daycare providers who manage to feed and change their charges without causing epidemics to assist children in brushing their teeth. Imagine the health complications, pain and expense saved by all that prevented tooth decay.

As for government reach – I recall similar outrage aimed at legislators who passed mandatory child car seat laws. But the early opposition evaporated and we are left with a law that has become second nature to us all. Who would think of putting a toddler in a car without first strapping him into an appropriate safety seat?

In a nation that spends over $100 billion on dental care (according to the Dep’t of Health and Human Services), it makes sense to train children early in health-sustaining habits. To Massachusetts parents I say: get over it. To everyone else I say: let’s watch to see the outcome of this practice and consider following in the steps of our neighbors to the East. What an easy way to help make our children healthier.

If you are buying health insurance for the first time, be sure to consider the entirety of your potential medical expenses.  It is easy to be wooed by entry-level premiums, but you may end up spending more in the end. 

For example, a healthy family of four may be offered plans with premiums as low as $3,200 and as high as $19,000 per year, but it is not clear that the bargain-basement policy is best.  In addition to considerations such as their overall risk tolerance and budget, this family needs to calculate its total out-of-pocket expenses.  Total out-of-pocket-expenses include deductibles, coinsurance, copays and any medical treatments and pharmaceuticals not covered by the insurance plan.  

When evaluating health care plans here are the variables to compare:

Premiums – your monthly payment to your insurer

Deductible – the amount for which you are responsible before the insurer begins coverage

Coinsurance – The percentage of your medical bills for which you are responsible after you’ve met the deductible

Copay – a flat fee you pay for doctor visits, emergency room visits and prescriptions

Out-of-pocket maximum – The maximum amount for which you are responsible in a given year.  After hitting this limit, the insurer pays 100% of approved expenses.

Services covered – for example, if you require mental health coverage and prescriptions or plan to get pregnant, make sure your policy covers these needs.

Providers in-network – make sure you like the doctors and hospitals in the plan’s network.  Out-of-network care can be very pricey.

Taxes – The effect on income taxes

Personal control – The degree to which you can control your own expenditures

The chart below compares two representative plans that might be available to a healthy family of four.  Both are actual plans available at GetInsured.com.  Plan A offers a low premium of $3,540 and has no coinsurance or copays once the deductible is met.  The deductible however is very high — $20,000.  In addition to these outlays, the family has to pay for its own prescriptions, mental health and other non-covered expenses.  Based on average medical expenses identified in the 2009 Milliman Medical Index , their expected out-of-pocket expenses could range from $7,000 to $27,000 depending on the medical expenses they actually incur.  Plan B has a premium of $12,216 and a deductible of $7,000.  It includes pharmacy coverage, but has 30% coinsurance and $40 copays for doctor visits.  The minimum expected outlay is about $16,000, and the maximum out-of-pocket should be $23,000.  Plan A could be either less expensive or more expensive than Plan B depending on the family’s health care needs for that year*.

Additionally, the buyers have to consider their tax burden. Many insurers now offer high-deductible plans with Health Savings Accounts (HSA’s).  Beneficiaries can place a designated amount of their salaries into a tax-free account from which they pay their medical expenses.  As with coinsurance rates, HSA’s motivate beneficiaries to save.  So, while you may end up paying more of your own medical bills, not only your premiums but also your income taxes may be lower.

Whether you are a first time buyer of individual insurance, are re-enrolling in a group plan or have had the same health insurance for years, it is worthwhile to take some time to consider the total amount you spend annually on health care.  Even if you are happy with your current situation, new products and new laws warrant that you conduct such a review.  Additionally, as you begin filing 2009 tax returns you want to make sure that you’ve asked for the appropriate deduction for medical expenses. 

GetInsured.com can help you choose from an enormous number of health plans, taking into account your total health care budget, so that you get the plan that is most cost-effective for your family.

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Assumptions are based on Milliman Medical Index, May 2009.  This index shows the average medical expenses for a family of four.   

*       Plan A assumes an average pharmacy expense of $2,484, plus $1,000 of mental health expenses.

*       Plan B assumes 30% coinsurance for average inpatient and outpatient expenses of  $7, 860 = $2,358, plus 16 doctor visits at $40 each, plus mental health expenses of $1,000.

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Since the first in-store clinic opened its doors in 2000, CVS, Walgreens, Target, Rite-Aid and of course, the big daddy of them all, Wal-Mart have opened more than 1,200 clinics, and served more than 3.5 million customers, according to the Convenient Care Association. After a decade of experience, and with near-universal coverage only a breath away, it is a good time to evaluate the success of in-store medical clinics, and to determine the changes needed in order for them to be an important channel in the health care delivery system.

There is no question that these clinics, staffed by nurse practitioners and physician’s assistants are enjoying some success. In a recent study published in the Annals of Internal Medicine, a publication of the Journal of American Medical Association (JAMA), researchers compared retail clinics with physician visits, urgent care centers and emergency room visits* for three common ailments – ear infections, sore throats and urinary tract infections. They measured patient costs, quality of care and whether or not patients received any preventive care, such as routine tests, as a result of the visit.

• Cost: The study found that retail clinics were less than two-thirds the price of physicians’ offices and urgent care centers.

• Quality: Quality of care was found to be essentially equal to physicians’ offices and urgent care centers.

• Preventive Care: Follow-up preventive care in retail clinics was similar to that received by patients in physician’s offices and urgent care centers.

* Emergency room visits for these common ailments were substantially more expensive, provided lower quality care and resulted in fewer preventive care follow-up tests.

But there are significant challenges to be met in order for retail clinics to serve both their shareholders and their communities.

• Adding services to compensate for seasonality: In- store operations excel with regard to colds and minor infections, most common during the winter months. But, they are struggling at other times of the year. This past summer, MinuteClinic, CVS Caremark’s clinic division, temporarily closed 89 of its 545 locations. To meet this challenge, MinuteClinic has dramatically expanded its services to treat non-seasonal conditions such asthma and diabetes management, vaccines for HPV and shingles, school and sports physicals and more.

• Managing criticism from doctors: Concerns voiced by medical associations include the threat to public health from clinics over-prescribing antibiotics, patients failing to maintain relationships with their primary care doctors and the inability of clinics to expand their offerings to non-episodic illnesses.

Retail clinics will have to use data such as the results of the JAMA study quoted above, to show patients and policymakers that physicians’ concerns are unfounded. For example, that study found that clinics prescribe antibiotics at the same rate as doctors and that patients receive an equal amount of preventive care. Similarly, data can be used to show that clinics are alleviating the burdens of treating non-urgent cases in emergency room and physician’s offices, allowing doctors to treat sicker patients.

• Serving the under-served: As providers of medical care, retail clinics are expected to benefit society, and should be accessible to needy populations. As publicly held corporations, they are required to return profits to their shareholders, and therefore tend to be located in more affluent neighborhoods. In fact, a separate report conducted by the Annals of Internal Medicine, showed that most clinics were not located in areas with greater medical need. The authors of the study conclude that operators of retail clinics must reconsider their location strategies in order to be an integral player in the future of health care delivery.

With health reform, we are expecting physician shortages and long waits for care. It seems we have no choice but to increase accessibility to non-emergency care. With a ten-year head start, retail clinics are positioned for a major role in our national health care delivery system.

What are your thoughts? Can clinics serve shareholders and patients? Do clinics erode the critical relationship between doctor and patient? Would you go to your local Wal-Mart for medical care?