Dizzying array of options in Obamacare can lead to expensive mistakes

Introduction

With fewer than 30 shopping days left before Obamacare open enrollment ends on March 31, if you want to get coverage through the health insurance marketplace and avoid having to pay a penalty, you should log on sooner rather than later.

Although most of the problems with HealthCare.gov have been resolved, signing up for coverage that’s best for you might take more time than you expect because of the often confusing assortment of plans to choose from. This definitely is not something you want to wait until the last minute to do.

Lawmakers who wrote the Affordable Care Act fell for the health insurance industry’s insistence that Americans want “choice and competition.” Having worked in that industry for two decades, I know the real reason insurers and their allies kept reciting the “choice and competition” mantra was to scare lawmakers away from even daring to give serious thought to a single-payer health care system.

And I also know that insurers benefit from the marketplace confusion that “choice and competition” can create. I can assure you that some insurers are counting on you becoming overwhelmed by all the choices and picking a plan that might appear at first glance to be a bargain. But beware: if you’re not careful and pick a plan without really kicking the tires, you very possibly will be buying something that could wind up costing you much more than you ever imagined if you get sick or injured.

That happened to my friend Donna Smith, who as executive director of the Health Care for All Colorado Foundation, knows more about health insurance than most of us. She spent quite a bit of time last fall on the Colorado exchange trying to figure out which plan would offer the best value for her and her husband. If she had to do it over again, she would have taken the additional step of calling the insurance companies directly after reviewing the plans they were offering on the exchange, just to be certain of what her out-of-pocket obligations would be if she had to be hospitalized during the year.

A cancer survivor, Donna knew there would be a chance she might get sick again and need expensive care. It never occurred to her, though, that picking a gold or platinum level plan with a higher premium would likely have been better deal than the silver Kaiser Permanente plan she opted for and that seemed to be more affordable.

To make shopping for coverage even more challenging, Kaiser and most other insurers offer several silver plans on the Colorado exchange, so Donna had to spend time trying to figure out which silver plan would be the best deal.

Donna told me the she took the time to compare the monthly premiums, co-pays and annual deductibles of each of the silver plans before making her decision. “I felt that the one I chose offered the most coverage I could afford with my premium buying dollar,” she said.

Sure enough, within days after the plan went into effect on January 1, Donna got sick and was hospitalized for a week.

To her shock, she later found out some limitations of her coverage that made her overall financial responsibility much higher.

For one thing, she discovered that hospitalization under her plan required a co-insurance payment of 30 percent. She didn’t realize while shopping on the exchange that some other silver plans charged only 20 percent co-insurance for inpatient hospital stays.

She also found out that some services she needed, such as the anesthesia for a biopsy that was performed while she was in the hospital, were not covered under her plan at all.

“That $400 bill is my responsibility. So after this one illness and hospitalization, we end up several thousand dollars in debt,” she said.

“In retrospect,” she added, “I needed to ask much more detailed questions about the coverage. I definitely should have gone beyond talking just to the very gracious and helpful navigator. I believe now that I would have done better with one of the gold Kaiser plans that might have cost another $150-$200 per month but saved me from these higher costs of getting sick.”

Donna says she feels “embarrassed and foolish” that she didn’t go the extra step of asking those detailed questions of a Kaiser customer service person before signing up for her coverage.

Nevertheless, she says she’s grateful for the Affordable Care Act because even though she is paying more for her care than she expected, she’s not on the hook as much as she would have been before the law was passed. For one thing, the law caps her out-of-pocket spending this year at $6,350. And her Kaiser plan is still saving her money over the Aetna plan she had last year.

Donna is just as much an advocate for a single-payer system as she ever was, but she believes the Affordable Care Act was a step in the right direction. But her experience is all the proof you need that too much choice in health care can increase the chances that you’ll make expensive mistakes when signing up for coverage.