“Skin-in-the-Game” insurance is when the insured has to “share the risk” (or financially participate) in their health care claim. You’re probably thinking, “Isn’t that why I pay a monthly premium? So the insurance will pay my claims?”
It used to be that way, but not anymore. Deductibles are the most common way that insured people “share the risk.” The insured must pay the deductible before the insurance pays a dime. At one time, a $150 health insurance deductible was not unusual. But these days, $4,000, $5,000, even $10,000 deductibles are commonplace, even with Obamacare. In fact, average health insurance deductibles have doubled over the past 5 years and continue to rise.
Besides deductibles, today’s health insurance policies include a couple of additional cost-sharing mechanisms that increase the patient’s costs when they need care. These are called “co-pays” and “coinsurance.” Happily, these costs are subject to an out-of-pocket maximum, as long as the care is covered and in-network. After that out-of-pocket maximum is reached, health insurance covers 100% of covered, in-network care.
For the patient, the situation can be very complicated. For one thing, it’s not always obvious what’s covered, or who’s “in-network.” In addition, everybody in the country seems to have a different health insurance plan, with different doctors and different deductibles, co-pays, coinsurance and maximum out-of-pocket expenses.
Even the definitions vary! It used to be that in most plans, co-pays didn’t count toward the maximum out-of-pocket. Now they often do, but read your policy! Obamacare partially addressed the problem by standardizing definitions for many policies, but there are exceptions (e.g. grandfathered and self-insured plans).
In any event, out-of-pocket maximums can be surprisingly high. For example, health insurance policies purchased in 2015 on the Covered California exchange are allowed to have out-of-pocket maximums up to $6,600 for individuals and $13,200 for families. (Again, you have to check to see what applies to your situation. Here’s a calculator: http://www.coveredca.com/shopandcompare/2015/#calculator)
And out-of-pocket maximums are in addition to premiums, so families hoping to save on their costs with low premium plans can get blindsided by high out-of-pocket maximums if they end up needing healthcare.
High out-of-pocket expenses are a real threat to people who need care but also need to keep up with their housing costs, utilities, food and so on. (That is, everybody!)
So, what’s behind this “skin-in-the-game” idea, anyway? It sure sounds like a moral judgment on people who need medical care. It implies “You’re using too much healthcare and you ought to have some skin in the game!”
It hardly seems fair since people aren’t to blame if they’re born with diabetes, get hit by a drunk driver, or are blindsided by cancer. Of course, if people can afford it, they can buy a more expensive insurance policy with lower deductibles, etc.
In reality, it’s people earning the least who end up with the worst insurance policies and face the greatest financial risk. Medical bills are the #1 cause of bankruptcies in the United States, and in the majority of cases, the patients had health insurance!
Last year I heard an insurance navigator for Covered California speaking at a church about which kind of insurance plans the church members should select. She said, “Think how much healthcare you’re using now. If you don’t go to the doctor that often, get a cheaper plan – get a Bronze or a Silver.” I was stunned at such bad advice.
Who can predict the care they might need in advance? Who can predict that this year – or next – their child might need unexpected surgery? Buying a less expensive plan is taking a chance. But on the other hand, even if you knew something bad was right around the corner, you still might not be able to buy that dream insurance policy with the right doctor network, the right hospital at the right cost.
So, what do people do? They start saving money where they can, cutting back on doctor visits, cutting their pills in half and scrimping on their care. They’re required by law to have health insurance so they have to pay the premiums, but if they don’t go to the doctor, they don’t have to pay those high deductibles, co-pays, etc.
This is fantastic if you’re a health insurance company! People pay premiums every month for insurance but don’t use it. Welcome to the world of “skin-in-the-game” health insurance where the only health that matters is a healthy bottom line!
There’s a better way. Imagine if health care were easy to get, easy to use, and available to everyone at an affordable price – a public service, not a corporate industry. Imagine health care where you – not the shareholders – come first.
Learn more:
http://www.usatoday.com/story/news/2015/02/01/consumers-still-struggling-with-medical-debt/22587749/
http://www.cnbc.com/2015/05/20/high-deductibles-put-big-strain-on-underinsured.html
http://obamacarefacts.com/health-insurance/out-of-pocket-maximum/
