Placing Odds on Your Health (and Its Cost) – NYTimes.com

2014

Recently I wrote about the known, but unknown fact the people who select a health plan are frequently going to self-fund all of their health care expenses in a year. This is true today because deductibles of $2000 or more are standard fare. Employers (and now the government) seek to hide the direct cost of health insurance reflected in premiums and thus opt to shift upfront costs to individuals. For most this is not a bad deal overall, but for some it can be a financial hardship and it certainly and unfairly creates a negative perception of insurance. Americans simply do not view health insurance as true insurance.

What is the chance that you will rack up big health care bills in 2014?

For the typical American adult under 65 who does not have health insurance, the total of all health care bills would be $2,700. That’s according to calculations by Milliman, an actuarial firm.

The obvious problem is that you can’t know in advance if your costs for the year will be typical. If you are unfortunate enough to have a costly medical problem, you could end up with far higher bills. Milliman calculated that 5 percent of the population will incur bills, absent insurance, exceeding $47,300.

Milliman estimated what patients will be billed without insurance, not what is paid to providers. According to Milliman, uninsured patients, who don’t have the benefit of insurance negotiators, are billed about 30 percent more than insured patients. The Affordable Care Act requires individuals to purchase insurance, but at what coverage level? If half of Americans without insurance will be billed less than $2,700, as Milliman projects, a healthy person, might do better under a plan with lower premiums but with high deductibles. (They can generally run as high as $5,000 for an individual and $10,000 for a couple.)

Of course, Milliman doesn’t know whether you are likely to become sick and to be among the top 5 percent or even the top 20 percent (who are billed more than $13,300). When choosing insurance, consumers need to consider their personal situations — and their stomach for risk.

via Placing Odds on Your Health (and Its Cost) – NYTimes.com.