Oversimplification of medical insurance advice can be bad for consumers

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September 8, 2014 by Tony Novak

Simple is not always better, especially when it comes to advice about health insurance.

I noticed a new online advice column called “PolicyGenius” that presents its very worthy goal of making medical insurance easy to understand. The column is part of the blog at Huffington Post promotion a commercial health insurance exchange. The strategy of using a blog in an online newspaper to market insurance is potentially viable and useful to consumers and I’ve used it for many years since before the term “blog” was even conceived. Considering the overall reputation of this particular publisher, perhaps this is not the best choice of a platform for consumers to look for well-considered unbiased financial advice for consumers.  The first two columns of this series that I read contained some seriously flawed advice. There was a common thread to the errors. The author is apparently skilled at communicating to the target audience but just not knowledgeable in the details of the products covered. In other words, the column would score high marks for readability but low marks for accuracy and usefulness. In the attempt toward simplicity actually led the author to the wrong conclusion. Spreading these simple but incorrect conclusions in a consumer advice column might well be harmful to consumers. I consider this dangerous enough to warrant this follow-up blog post.

This is a copy of the response I posted to two of the errors in the most recent blog post that happens to mention FloridaBlue HMO. The same concepts would apply to any other health plan.

“Your great article highlights a few of the most common misperceptions that I hear from young people who pose similar questions at the OnlineNavigator.org help desk. While I admire your stated goal of making the subject simple, it is important to recognize the point where over-simplifying would lead a reader to the wrong factual impression. The first common example was the presumed limitation you found with FloridaBlue HMO. It is true that there is no out-of-state network of providers. However, if you took a closer look at your mom’s insurance certificate, you would find that emergency and acute care would still be covered by an out-of-network provider anywhere you might move or travel within the U.S. or, with additional limitations, outside the U.S. See this web page (http://alturl.com/nu3ay) on FloridaBlue that briefly asserts the virtue of their out-of-network coverage available under the HMO. As with all HMOs, care out-of-network costs you more than care from providers within the network. Yet many FloridaBlue members have found that by communicating directly with their out-of-network medical providers they can come to a workable and affordable solution. The key issues that you want to have an understanding with when using an out-of-network provider are: 1) responsibility for medical billing to the insurer (don’t assume out-of-network-providers will do this), 2) timing of payment (recognize that out-of-network claims take longer) and 3) “balance billing” or how much of the bill you are responsible for after insurance processing (I suggest reaching an understanding that the provider will accept the out-of-network payment by the HMO amount as full payment except for the deductible and co-payment that will be your responsibility).  The important point here is to recognize that the majority of cases where a young person under age 26 who fully researches their options would still reasonably conclude that it is still better to remain on a parent’s employer-provided HMO plan even with the limitations posed on out-of-network coverage.

 

Second is the comment about avoiding medical care risks: “Do I just take a lot of vitamins and make sure I look both ways before I cross the street?” It is common to hear young people say “something like “I need coverage just in case I get hit by a car”. Actually the huge majority of medical care triggered by an auto injury or accident is entirely outside the realm of the type of medical insurance you are discussing in this article and would be excluded by FloridaBlue, short term medical insurance or the exchange policies. The point is that we should really not even be discussing or implying in an article about major medical insurance that this has anything to do with coverage for medical care resulting from an auto incident.

A few types of supplemental insurance referred to as “limited indemnity medical insurance” do not contain a subrogation provision or coordination of care provisions so they would pay regardless of the claim coverage by the HMO or auto insurance policy.  These types of polices are popular with young people partly because they are sold my colleges and universities as well as large retail organizations under the term “mini-med” insurance. These policies are not mentioned among the types of coverage that you are considering. I mention this only because so many of the questions I receive from young people focus on this alternative route to coverage while in a situation similar to yours.

So my overall point is that “keeping it simple” is a worthy goal yet the reality is that medical insurance is not simple and in the real world you do need to get involved with the complexities in order to arrive at the right financial planning decisions.”

My conclusion is that medical insurance is not a simple topic. An attempt like this to over-simplify the subject matter without a grasp of the underlying factual issues might make sense from a marketing perspective but will ultimately lead to bad decisions by consumers. We should be concerned by the lack of public knowledge about the details of medical insurance. Adding bloggers to amplify the level misunderstanding will not help.

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