America's Best Health Plans
Deciding on health coverage isn't getting easier-or cheaper
When Betty Noel was diagnosed with endometrial cancer last year, her husband, Larry, figured most of the costs would be paid by healthcare coverage from his job managing the garden shop at a Kmart in Lynchburg, Va. But when he got a $13,270 bill for the first month of Betty's radiation therapy, he found out differently. K Care Value Plan, his health insurer, informed him that the maximum coverage for outpatient services was $1,200 a year. Larry and Betty would be responsible for coming up with the rest. "We were shocked," says Larry, 59, who was paying about $300 a month for coverage. "I pay more than that just in premiums every year."
The Noels' experience is hardly unique. As healthcare costs have continued to climb-premiums rose 7.7 percent this year-employers have been shifting more of them onto workers' shoulders. The $5 copay has gone the way of the nickel candy bar. These days you can expect to shell out $20 or more every time you visit the doctor and pony up 20 to 30 percent coinsurance for some drugs and services. Annual deductibles of $1,000 or more are becoming more common.
At the same time, benefits are shrinking. "Definitely, we are seeing a trend toward lower benefits across the board," says Beth Darnley, chief program officer for the Patient Advocate Foundation, a nonprofit based in Newport News, Va., that helps people resolve health coverage problems. In the Noels' case, the foundation contacted Kmart. Within a few months the company revised its insurance to cover up to $500,000 annually for inpatient and outpatient care combined. (Kmart declined to comment.)
Out of pocket. That was good news, but it didn't solve all of the Noels'problems. Larry still had to withdraw $5,000 from his 401(k) retirement plan and take $4,000 out of their savings to cover the 20 percent coinsurance they owed for Betty's cancer care. He says, "Sometimes I wonder-what if I get to the point where I can't afford this anymore?"
It's a question many people are asking themselves. Healthcare ranked as the No. 1 concern, outpolling war and terrorism, among those responding to the annual health confidence survey released last week by the Employee Benefit Research Institute. Six in 10 respondents rated the American health system "fair" or "poor," and more than half said they are not satisfied with the cost of healthcare. In studies, people consistently give the healthcare system high marks for quality, and the rankings assembled here and on the Web by U.S.News in partnership with the National Committee for Quality Assurance, managed care's primary accrediting body, showcase the top performers in this important area. But people are worried about expenses, and as healthcare costs continue to shift to individuals, anxiety and dissatisfaction mount.
The buzzword for this cost-shifting is "consumerism." The latest hot concept to capture the imagination of health plans, employers, politicians, and policy wonks, consumerism hands the healthcare reins to individuals, giving them more responsibility for making decisions about their medical care-and a bigger financial stake in paying for it. The most high-profile way that consumerism has entered the mainstream is through health savings accounts (HSAs)-tax-advantaged financial accounts, attached to high-deductible health plans, that people can use to cover their medical bills and save for future medical costs. In addition, health plans are offering members a growing array of "consumer driven" tools that aim to help those in any kind of health plan evaluate healthcare prices, pick doctors and hospitals that are both cost effective and high in quality, get appropriate screenings and tests, and otherwise manage their health. Employers, meanwhile, are steering workers toward cheaper drugs, medical services, and providers by offering lower copayments and other incentives for certain choices.
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