A couple weeks ago I walked the streets of Lincoln, Nebraska, talking to men and women about whether they thought Washington was listening to their economic concerns. Jeff Melichar manages his family’s Phillips 66 gas station on the city’s main street, and one of his big financial problems happens to be health insurance. The more we talked, the more I realized what a jam he could be in down the road because of a loophole in the health reform law, which has received almost no press coverage or public discussion: If you have health insurance from your employer, you may have to keep it whether or not it’s adequate or affordable. Buying less expensive or better coverage from one of the state “exchanges” or shopping services will be off limits. So despite all that talk about consumer choice, for many like the Melichars, there may be no choice.
Melichar’s wife is eligible for health insurance from the optical company where she works. But the family waited until this fall to enroll when the firm offered coverage they finally could afford. Their premium is $550 a month, the deductible is $3000 and there is no separate deductible for drugs. Melichar also said that the new policy requires lower co-pays and offers more coverage for specialists’ care. It is better than what they had.
Before, Melichar, his wife, and two kids were covered by Golden Rule, a company now part of UnitedHealthcare that had once specialized in selling individual policies to very healthy people. The family used to pay $485 a month for coverage with a $5000 deductible.
Melichar called the policy “an obscene amount of money for coverage that is basically only useful if I have a catastrophic illness.” Twice they had to increase the deductible to keep premiums affordable. The policy also had a separate $250 per year pharmacy deductible, which meant high out-of-pocket expenses when the kids needed antibiotics. A similar policy they had before Golden Rule also had limited coverage. It did not pay for the ear tubes his son had needed, leaving the family to pay a $12,000 hospital bill—tough to swing on an annual income of about $45,000. They paid about $7000 before the hospital wrote off the rest.
The family is okay for now. But what happens when the employer’s share of the costs starts to creep up as it inevitably will, and the company gets new coverage that might help its bottom line but not Melichar’s? Newer coverages are designed to make consumers pay much more. Instead of $20 and $30 co-pays, employers are choosing plans that make workers pay a percentage of the cost of the care—in other words, higher coinsurance. Thirty percent or more of a large bill could bite, and the Melichars might be back in the same fix they were with Golden Rule.
After more health reform takes effect in 2014, they may not be able to leave their employer plan or be eligible for tax credits to purchase more affordable insurance, which they will be required to have. The health care reform law and the rules implementing it say that people whose employers offer health insurance are expected to take it unless it is unaffordable according to government’s standards. Only if the premiums exceed 9.5 percent of the family’s gross income can the family shop for different insurance. According to the Kaiser Family Foundation, some four million people will find themselves in a tough situation.
Melichar’s wife works for a small firm with only ten employees. The new health law allows small employers to offer policies with deductibles of $4000 for families and $2000 for individuals, and policies can pay as little as sixty percent of someone’s medical costs. If the optical company moves in this direction, the Melichars will be crossing their fingers hoping no one gets sick. Thousands of others share their insurance predicament.
Trudy Lieberman’s bio can be read here.
*This blog post was originally published at Prepared Patient Forum: What It Takes Blog*