Health Insurance Reform: How to Find a Cheaper Plan

Last Updated Oct 13, 2010 11:00 AM EDT



Health insurance changes are rolling forward — despite lawsuits, opposition in Congress, and one House candidate's attempt to equate the bill with a slavery law. A couple of changes have taken effect in recent weeks that make it easier to buy insurance. In addition to the much noted new rules — adult children can stay on your plan until age 26 and insurance plans can't dump you for getting sick — a government Web site has quietly added lots of information that allows you to comparison shop for insurance plans.

In the past, shopping for health insurance has been a lot like buying a mattress — every vendor changes the product just enough that you can’t compare one to the other. (For our advice on getting the best deal, see How to Shop for Health Insurance.) Now, HealthCare.gov has posted the prices and benefits of 4,400 plans for individuals and families. The site has gotten high marks from consumer advocates, among them Nancy Metcalf of Consumer Reports, who noted that consumers can easily see important details — for example, whether the deductible counts toward the out-of-pocket limit. The site also publicizes new — and previously unpublished — figures on how often applicants are turned down or charged extra because of their health. HealthCare.gov has been online since July, but only added prices this month.

Say a non-smoking, healthy 49-year old male in Ann Arbor, Michigan searched for the plan with the tightest cap on out-of-pocket costs. Healthcare.gov lists a HumanaOne plan with a $1,500 deductible. Cost: $401 a month. But the site also makes it clear there’s no guarantee he’ll get in on the deal: It shows that 20 percent were charged a higher monthly tab, and 32 percent were refused the plan — data the public has never before been able to see.

“American consumers have been kept in the dark about how insurance companies do business,” said Jessica Santillo, a spokeswoman for Health and Human Services. The Obama administration hopes that by publicizing this information, the site will make the market for individual insurance more competitive and ultimately produce better deals, or higher acceptance rates, as companies push for better numbers to attract customers.

Improve Your Odds

As of now, however, premiums are already up. The administration and some independent groups estimate that the new rules will push premiums up by 1 to 2 percent over the long run, while getting more people better coverage. At the same time, some 20 states are suing to overturn provisions of the law, arguing that it places too big a burden on states or that it’s unconstitutional to fine people for not buying insurance.

So how many people are turned down for insurance? Those figures are squishy, but it could be nearly 70 percent for some plans. The numbers, which come directly from insurers and aggregate data by state, may be inflated because they include cases of people who might be accepted pending medical tests as well as those offered different policies. On the other hand, the figures don’t account for “field underwriting,” when less-than-ideal shoppers are steered away from applying by health insurance brokers or agents, who in many states help people choose plans.

Some experts even say that shoppers shouldn’t pay much attention to the percentages when comparing plans. “They’re meaningless for consumers,” said Bill Foudy, a Los Angeles agent who headed the Association of Health Insurance Advisors last year. Foudy says that carriers make underwriting decisions by medical condition, so statewide numbers are misleading. One carrier might be more inclined to accept an applicant with high blood pressure. Another might let you get away with extra pounds. Companies change their strategy frequently, “depending on how badly they need the premiums,” said Warren Ward, a financial planner in Columbus, Indiana, who buys insurance for clients.

It seems likely, though, that shoppers would be inclined to apply for plans that offer better odds of giving them the stated prices. If you have health problems that might disqualify you from some plans, it might help to seek advice, especially if you would like to keep a lid on the number of applications you have to fill out. One free source is eHealthInsurance, a commercial site with agents available by phone who don’t work on commission. It can’t hurt to ask if they have thoughts on how insurers might regard your circumstances.

Other recent health insurance changes:

  • Consumer-friendly protections. As of September 23, insurers can’t drop sick customers unless the company proves they committed fraud when they applied. All children must be accepted, and you can enroll your adult children (up to the age of 26) in your family policy — though it’s sometimes cheaper to insure healthy young people separately. There are no limits on lifetime coverage, and your plan must cover preventive medicine — such as annual checkups, mammograms, and immunizations — for free.
  • Medicare under health reform. The next wave of change will apply to seniors. In 2011, Medicare patients get half-off on brand name drugs and a 7 percent discount for generics they take during the “donut-hole” gap in coverage. Preventive services such as a checkup or a colorectal cancer screening test will be free. Medicare’s yearly enrollment season begins on November 15, as usual. But the “open enrollment” period when you can still make changes after January 1 has been cut short by six weeks. The new law also freezes the current threshold at which higher costs click in — $85,000 for individuals and $170,000 for married couples — delinking it from inflation.

Another change to come: more information on HealthCare.gov, which may eventually include performance measures for plans. For current ratings unrelated to the government effort, see the data on HMOs that Consumer Reports recently unveiled.

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  • Temma Ehrenfeld

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