30 July 2014

When The Fat Lady Sings, It's About Health Insurance

If you are a New Yorker, or an opera aficionado, or a follower of all things union, you probably know that the Metropolitan Opera is on the cusp of a possible lockout: "The contracts for 15 unions at the Met expire on Thursday night."

But here's the little thing in this big sad story that gobsmacks me:

The Met sent its workers a memo last week saying that in the event of a lockout, unionized workers covered by the Met would lose their health insurance, and that paying for insurance under the federal Cobra law would cost $1,255 a month for individuals and $2,793 a month for families.

What the hell kind of fancy pants insurance costs $1,255 for an individual? That's $15,060 a year.

The insurance we have in my office is a "bronze" plan with a fairly high deductible and an out-of-pocket maximum of $6,250. The trade-off for the high deductible and out-of-pocket, is a fairly low premium, of $434.98 per month, which comes to $5,219.76 each year. If you add the annual premium to the out-of-pocket limit, you get a total of $11,469.76 per year. That's $3500 less a year than the Met is paying for individuals. And if I'm healthy and don't go to the doctor beyond my annual physical (which is covered outside of the deductible), I'm not going to invoke any of that OOP - so my overall cost is only the cost of the premium.

Some months ago, I was helping a friend of a friend navigate through the NYS health insurance exchange. What I realized then is that the relationship between premiums and out-of-pocket limits was such that if you are in a situation where you need to use all of the insurance, you're going to pay about the same amount of money no matter what "metal level" plan you pick - that the annual premium plus the out-of-pocket maximum was almost the same for any of the plans. By choosing a bronze plan, you'll have a lower monthly cost but you could have cost spikes through the year as you actually incur medical expenses. Choosing the platinum plan bumps up your monthly fixed costs, but mitigates any later incurred expenses.

You know how your utility company offers "budget billing", where they estimate your annual electric bill and divide it by twelve so you pay the same amount every month? There's more chance associated with a month to month electric bill: OMG I had to run the A/C 24/7 in July and ouch! The platinum plans are sort of like your electric companies budget billing, the bronze plan is like taking your chances and knowing that the A/C is going to run up your summer electric bill.

And here's what's crazy: if you're employed, you don't have any choice! You can get lucky and work for an employer like the Met, where the employer is probably picking up a big chunk of that $15,060 each year and the employees are probably paying next to nothing for their actually incurred health expenses. Or you can work for an office like mine - where the office pays 100% of our premium and we're on our own after that. But really, why should it be employer based? Health insurance ought to be severed from employment.

Why should you have to pay for insurance with post-tax dollars if you work for yourself or for a small company that doesn’t offer insurance, but with pre-tax dollars if you work for a larger company? Why should your employer’s preferences — including, as they do now, their preferences on what kind of birth control you should use — be more important than your own? And why should your insurance have to change if you get a new job?

What are we going to do to make that happen?


Jody said...

Don't quote me, I could be wrong, but I believe that almost ALL employee insurance costs this much. The difference is that while we are employed, our employers pay a significant chunk of the costs (they get huge tax breaks for doing this) and when you leave your job, specifically when you go to a COBRA, you are now paying the entire cost yourself.

We ran into this for the two months when Spouse changed jobs. His old job ended in July, his new one started in September. So we had COBRA for two months.

One of the benefits of the ACA was that it allowed the self-employed and those who lost their jobs to go to a Healthcare Market plan instead of onto COBRA. The costs are usually quite a bit lower. But if you're only going to be out of work for a few months (or your employer is being an A-Hole and not paying their share of your costs during a strike), then COBRA lets you stay with your existing plan until things get more settled.

Jenn @ Juggling Life said...

That definitely doesn't seem high to me for a state like New York. Insurance is expensive and more so if your employer doesn't kick in.