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Understanding Health Insurance 101

Health benefit claim formI’ll always remember my first day on the job at Blue Cross and Blue Shield of Iowa (now Wellmark BC/BS) in 1984. A relatively newly-minted college graduate, I was asked a fundamental question about health insurance – “What is a deductible?”

I’m somewhat ashamed to share with you that I was clueless. Until my employment at an insurance company, why would I even care what a deductible was? That day in 1984, I quickly learned about deductibles and other cost-sharing tools commonly found in health plans.

According to a 2013 article in the Journal of Health Economics, almost nine out of 10 Americans (86 percent), could not define all of the following terms on a multiple choice questionnaire:

  • Deductible
  • Copayment
  • Coinsurance
  • Out-of-pocket maximum

This is both important, and frankly, troubling. Here’s why…

In 2006, approximately one in 10 American employees had a health insurance deductible of $1,000 or more for single coverage. Today, almost half do. During this same year in Iowa, the average single deductible for an employer-sponsored health plan was $776. According to our 2015 Iowa Employer Benefits Study©, this average mushroomed by 114 percent to $1,662. The increase is quite simple: as health costs continue northward, so, too, will the premiums that employers and employees pay. To keep the premiums ‘reasonable,’ employers continue to shift cost-sharing arrangements – deductibles, copayments, coinsurance & out-of-pocket maximums – to employees and their family members.

Making informed decisions about purchasing healthcare is paramount in the post-Affordable Care Act (ACA) era. Teaching employees (and their family members) the A,B,C’s of their health plans is critical when choosing high-value care at affordable prices. This so-called ‘healthcare consumerism’ is supposed to push the mainstream delivery system into a more efficient, patient-centric ‘system’ of care. The building blocks to get there require Americans to fully understand what they must pay for the care they seek – and understand the terms in which they are asked to pay (e.g. deductibles, etc).

One key premise of the ACA was to have more Americans covered by some form of health insurance, whether it be through employers, Medicare, Medicaid or through individual plans, subsidized through marketplaces, such as a state or federally-qualified exchange. By doing so, Americans would seek care prudently and not access care through more expensive hospital emergency rooms.

Yet, a new report from the U.S. Centers for Disease Control and Prevention (CDC) shows that the number of emergency room visits continue to increase, with one in five Americans taking at least one annual trip to the hospital ER for urgent care purposes. In 2015 alone, about 131 million Americans visited emergency rooms, with 29 percent having private insurance, 25 percent with Medicaid or Children’s Health Insurance Program policies, 18 percent had Medicare and 14 percent had no insurance.

Employers – Consider a Simple Health Terminology Pretest

Test QuizEmployers can do their part by educating their employees on terms and provisions offered through their health coverage policies. To begin, learn whether employees understand the four key payment concepts of health coverage (deductibles, copayments, coinsurance and out-of-pocket maximums). This can be done by simply surveying the workforce with a simple pretest.*

  1. Do you know what a Deductible is? (Yes or No)
  2. Which of the following best describes a Deductible?
    a. An amount deducted from your paycheck to pay for your insurance premium.
    b. The amount deducted (covered) out of your total yearly-medical expenses.
    c. The amount you pay before your insurance company pays benefits.
    d. The amount you pay before your health expenses are covered in full.
    e. I’m not sure.

Curious about additional questions to ask employees? I highly recommend reviewing the Journal of Health Economics article, “Consumers’ misunderstanding of health insurance.” By surveying your employees, perhaps you can follow-up with them via email or handouts and define each healthcare term, providing examples of how they are used within your particular health plan. Later, you may wish to perform a post test to determine improvement in comprehension of these particular terms. Something to consider…

Much like Orwell’s ‘1984,’ my education about deductibles came and went. How about you? It’s never too late to bring others up to speed on health insurance concepts.

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*Loewenstein, G., et al. Consumers’ misunderstanding of health insurance. Journal of Health Economics 32 (2013) 850-862.

The ‘Quintet’ of Healthy Living

Multi-TaskingQuick, try to name a few famous quintets (things that come in five.) Are you done? Quite possibly, you may have included the following: Olympic rings, Great Lakes, vowels (most of the time), points on a star, toes, The Jackson 5, The Dave Clark Five, among many others.

Now try to list five (relatively easy) things that you can do to remain healthy and prevent debilitating diseases.

According to the Centers for Disease Control and Prevention (CDC), these five healthy behaviors are the best assurances at preventing heart disease, cancer and other chronic diseases:

  1. No smoking – Smoking is the main cause of preventable illness and leading cause of death in the U.S.
  2. Regular exercise – Allowing employees to engage in brief bouts of physical activity or lunch breaks to socialize with co-workers can have meaningful stress-reduction benefits.
  3. Drinking alcohol in moderation, or not at all – Enough said on this behavior.
  4. Maintaining a healthy weight – Over 60 percent of Americans are overweight or obese, primarily due to consuming too few fruits and vegetables and too many carbs, added sugars and refined grains. Also, lack of physical activity impacts weight.
  5. Receiving at least seven hours of sleep per day/night – Between 50-to-70 million Americans suffer from sleep deprivation, leading to increased rates of chronic diseases and cancer, increased mortality and reduced quality of life.

I know what you might be thinking. “This sounds so easy and most Americans are doing this. Tell me something I don’t already know!”

OK, I will.

Did you know that only 6.3 percent of the U.S. adult population report engaging ALL five optimal health-related behaviors? Yes, this information comes from a recent CDC study using 2013 data. Here’s the breakdown for each of the five healthy behaviors among U.S. adults:

Apparently, Americans find it difficult to multi-task when it comes to engaging in healthy behaviors. As a male, I would venture to guess that most of the 6.3 percent responders from this particular study were most likely females. My personal observation is that males, in general, are not inclined to multi-task.

Interestingly, engaging in four or five healthy behaviors was most prevalent in the Pacific and Rocky Mountain states. The least prevalent were in the southern states and along the Ohio River. The authors of this valuable study conclude that “Collaborative efforts in health care systems, communities, work sites, and schools can promote all 5 behaviors and produce population-wide changes, especially among the socioeconomically disadvantaged.”

A good idea would be to start with the ‘easiest’ behavior and begin mastering it before moving to another behavior. Incremental improvement is more realistic for many of us. As for this writer, chewing gum, texting and humming a tune at the same time can be challenging at any given moment. But the five behaviors listed above seem to be doable – especially for those of us who have impairments while multi-tasking minute-by-minute!

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What do 1,100 Jumbo Jets and Preventable Medical Errors have in Common?

How about a quick quiz?

Trivia Question #1: How many passengers fit in a typical jumbo jet?

Answer: Generally between 350 and 450, so let’s say an average of 400 passengers.

Trivia Question #2: How many premature deaths occur in U.S. hospitals each year, associated with preventable medical errors?

Answer: According to a recent article in the Journal of Patient Safety, enough to fill 1,100 jumbo jets each year – which equates to approximately 440,000 passengers. This is not a typo. The article is titled, “A New, Evidence-based Estimate of Patient Harms Associated with Hospital Care.”

If remotely accurate, this statistic is both disturbing and entirely unacceptable!

Using the 2010 census, the population of five counties in the greater Des Moines metropolitan area (Polk, Dallas, Warren, Madison, and Guthrie) was 569,633 people. If this article is correct, the entire population of the Des Moines metro area would be gone in 15.5 months due to preventable hospital errors. This would quickly demand our collective attention, don’t you think? Why hasn’t this been reported by the media? It finally has — in this article, “To Make Hospitals Less deadly, A Dose of Data.”

If the Centers for Disease Control (CDC) were to include preventable medical errors in hospitals as a category, the conclusions found in this article would make it the third leading cause of death in the United States. Based on 2010 data, the CDC’s top five leading causes of death were:

  • Heart Disease – 597,689
  • Cancer – 574,743
  • Preventable Medical Errors Associated with Hospital Care – ~440,000
  • Chronic lower respiratory diseases – 138,080
  • Stroke (cerebrovascular diseases) – 129,476
  • Accidents (unintentional injuries) – 120,859

In 2000, the Institute of Medicine (IOM) published a seminal book, “To Err is Human.” This book revealed that as many as 98,000 people die every year due to medical errors. At the time, this number appeared to be bold – so bold that it was attacked by some. Now in 2013, another report suggests the IOM number is less than one-quarter of the true estimated casualties found in our nation’s hospitals.

I presume these medical errors occur regardless of having insurance coverage or not. Health insurance is certainly important for all Americans, but having it does not guarantee receiving safe care.

Without a doubt, Americans can agree that safe and efficient health care delivery is sorely needed. Having just one jumbo jet fall from the sky is entirely unacceptable.

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