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Health insurance choices become complicated amid rising costs

TAMPA — Recently at Dr. David Lubin's family medicine practice, a patient came in with symptoms that suggested a possible thyroid problem. Lubin recommended she get an ultrasound, but the patient said it would have to wait.

She hadn't met the deductible on her insurance plan, meaning she would have to pay about $250 out-of-pocket for the test.

It's the kind of calculation that millions of people insured through their employers must consider as they embark on open-enrollment season, the time to choose insurance options for the coming year.

Insurers expect that on average, premium increases will remain in the single digits. But consumers will feel a bigger hit to their pocketbooks, since more and more companies are looking at so-called consumer-driven plans that shift more costs to workers.

So it's more important than ever that employees understand what they're getting into when they pick their options, experts say.

"You have to live with this for a year," said Deborah Henry, who oversees employee benefits for the Hillsborough County School District.

Average premiums in 2013 are expected to rise between 5 and 9 percent, according to interviews with insurers that serve Tampa Bay and national surveys of employers. Both insurers and researchers attribute the increases to another uptick in health care costs, though the increases are smaller than they have been over the past decade.

In 2012, the average family health insurance plan purchased through an employer cost nearly $16,000, an increase of 4 percent over a year ago, according to a study last month by the nonprofit Kaiser Family Foundation. Policies for individual employees rose in 2012 about 3 percent to an average of $5,615.

These premiums are a lot higher than they once were, but they're still lower than those for folks who can't get insurance through employers and must contend with the individual market. Covered workers paid about 28 percent of the premiums for family coverage and 18 percent for individual plans, with employers making up the rest.

• • •

Employers expect to add more workers to consumer-driven plans, which feature low premiums but require the insured to shell out more money before coverage kicks in. The deductible on such plans is typically several thousand dollars.

The plans are often combined with personal accounts that can be used to pay a portion of medical expenses. Employers, who save money on their portion of the premium on such plans, often contribute to those tax-free accounts.

Nearly 60 percent of large companies have such a plan in place, and another 27 percent expect to add one in 2013, according to a survey conducted by benefits consulting firm Towers Watson. Nearly 12 percent of companies surveyed offer only those plans.

In the past, many people with insurance gave hardly a thought to the costs of care. They had a flat copayment at the doctor's office, and that was all they knew.

No more. Now people are shopping around for price or avoiding doctors altogether. For that reason, these new plans are credited with helping curb health costs. But critics say it's also possible that they are just getting people to postpone care until they are even sicker — and more expensive to treat.

"There are clearly decisions made where if it were free you'd get it done now … but if you have to pay for it, you're going to think twice about opening your wallet," said Dr. Jeff Lowenkron, CEO of the University of South Florida Physicians Group.

At the Hillsborough School District, about 11,000 out of the 24,000 insured employees have signed up for one of two plans with a $1,000 deductible offered over the past three years.

Henry, the benefits manager, said the new plans have been popular because of the reduced premiums. Employees also get a $500 set-aside that can be used toward their initial costs.

"More and more people are joining once they hear other people talk about it and it's not as scary as they thought," she said.

Lubin, the South Tampa physician, said the plans are playing out in ways both good and bad. On one hand, he said, patients are much more engaged with their treatment since they are paying more of the bill. Some even seek discounts by paying with cash for testing rather than using their insurance.

On the other hand, they may put off care they need. "Higher deductibles keep people from getting things done," he said.

Lynn Quincy, a senior policy analyst with Consumers Union, said studies have shown people with high deductibles reduce both unnecessary and necessary care.

The plans aren't a good choice for people with chronic health problems and "they're certainly not good for someone who can't afford the deductibles," she said. "If they have a catastrophic event, they'll have trouble paying their share."

Jonathan Oberlander, a health policy professor at the University of North Carolina, said the plans may reflect the best attempt by smaller employers to provide some level of coverage. But, he said, they are also a way for large companies to pass on more costs to employees.

Calling these plans consumer-driven "sort of connotes that it's good for consumers," he said. "But it's just less coverage."

• • •

Tampa lawyer Chris Doran is shopping for a plan that works for him, his wife and their three children. It isn't easy. His small firm has found its most affordable option to be one with a $3,000 deductible.

To cover the entire family, Doran's portion of the premiums will be roughly $12,000 a year, substantially lower than the preferred provider organization (PPO) option.

Once he reaches $3,000 in costs, the plan kicks in 80 percent of charges.

Though he has a good income, Doran has skipped some health screenings because he knew he'd have other costs, including $300 a month for prescription drugs.

Back in February, Doran went to see Lubin, who suggested he get a sleep study to determine if he has sleep apnea, a potentially serious condition.

"It was expensive," Doran said. And he wasn't close to his deductible at that point. So he decided to scrap the idea. "I'm just throwing the dice like everybody else," he said.

He decided it would be cheaper to try a new mattress. It seems to be helping.

Jodie Tillman can be reached at or (813) 226-3374.

By the numbers

5-9% Average that premiums are expected to rise in 2013.

$16,000 Cost of the average family health insurance plan purchased through an employer in 2012.

$5,615 Average cost of policies for individual employees in 2012.

What about

health care reform?

If you are tempted to thank or blame the federal health care act for what's happening with your insurance, experts say you're probably off base. The big impact of the health care law is at least another year away; the increase in premiums and movement toward so-called consumer-driven plans are mostly due to rising health care costs.

But there are a couple of new provisions coming up that are tied to the health care overhaul:

• Starting Jan. 1, employees must limit pretax contributions to flexible spending accounts to $2,500 per year, half the current limit. These are tax-deferred accounts that are separate from the health savings accounts incorporated in many consumer-driven plans.

By shielding less money from tax liability, the new limit generates additional revenue to implement the health care law, said Alwyn Cassil, director of public affairs for the nonpartisan Center for Studying Health System Change, based in Washington.

In addition, she said, the use-it-or-lose-it accounts (they do not allow you to roll unused funds to the following year) typically have been more popular with the more affluent, who can afford to set aside the money. "It's probably not a very progressive tax provision," she said.

• As of this month, insurers are required to give consumers easy-to-read summaries of benefits and coverage that should make it a little easier to pick a plan. The fact sheets must detail such items as deductibles, out-of-pocket limits and copayments for each plan, allowing consumers to compare between insurers.

Health insurance choices become complicated amid rising costs 10/21/12 [Last modified: Sunday, October 21, 2012 9:49pm]
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