Let’s talk about health care – Part One: Why health insurance sucks when you’re living life laid off

By Mariam Williams

I was taught in a personal finance class in my senior year of college that most Americans use health insurance the wrong way.  I learned in the class that it should be for truly catastrophic events, not for covering the basics.  Seeing a doctor for your annual physical is health care, but health insurance is for the medical equivalent of a tornado turning your home into a pile of matchsticks.

The former you should be able to pay for out of your liquidity fund (six months of income saved up) or out of a health savings account, something you get with a high-deductible health insurance plan.  The latter you can’t pay for no matter how much you make or how much you save.  But because you have an emergency fund and an HSA, you should be able to pay a deductible of up to about $3000 to $5000 dollars with the latter option. So you get a high-deductible plan with a low monthly premium, pay your basic costs out of pocket, and use your insurance for a true emergency.

For instance, an annual pap smear and the lab fees for the results might cost a woman about $75 and $300, respectively, out of pocket with such a plan.  That seems crazy compared to the $35 office visit and zero-dollar lab fee in the insurance plans most Americans choose, but reasonable when you consider a woman would have paid about $600 total in premiums over 12 months verses $1200 to $1500 in premiums over the same amount of time with a more traditional insurance plan.  If the results of the pap are normal, she may not have to spend another dime the rest of the year.  If they reveal she has cervical cancer, she pays her monthly premium and a $4000 deductible, much of it from the money she has in savings, while her insurance company pays the remaining hundreds of thousands of dollars for her treatment.  (Assuming they don’t drop her when she gets sick.)

You save a lot of money each month, but there are two main problems with these plans: 1. They don’t cover pre-existing conditions, not before you meet the deductible, not after.  2. When you don’t have any savings or liquidity—like when you’re unemployed for example—these types of plans can keep you from seeking out the preventive care that may save you money in the long run and save your life.

I bring this up because it’s the kind of plan I’m on right now, and because it’s the kind of plan I’ve been kind of hoping a public option in health care reform would allow me to dismiss some time in the next five years.

I’ve stayed away from this debate for a long time, feeling like there was enough confusion out there without me adding my two cents to the milieu and feeling like I’m just complaining without offering any real solutions.  Now that the White House is backing off of its endorsement of a public option, and my congressman (hooray John Yarmuth!)  has pledged not to sign a bill that doesn’t have the public option, it feels more appropriate to voice my concerns, to say what I would like to see, even if I still don’t have any real solutions.

Am I concerned that the government might not be able to run its own major health insurance system efficiently?  Absolutely.  I’m currently in a government system that assists millions of people.  I’m on emergency unemployment compensation, and I’ve been frustrated with the errors, the long appeals process, the need to have special inside connections to reach someone over the phone, the length of time I have to wait at the unemployment office to get my questions answered when the special connection is out of the office, and with the fact that an unemployment insurance appeals court decided the state does indeed owe me money from October and November 2008 that I still haven’t seen. Employees in the unemployment office have told me they run into new situations they have no clue how to handle every single day.  And yet, if I didn’t have EUC, I wouldn’t have anything at all.  No way to pay rent and keep the lights on.  No way to buy food.  No way to pay my monthly health insurance premium.

One other benefit: all the flaws in EUC motivate me to keep job hunting and find something better, just as private health insurance companies – big, bureaucratic systems with long phone hold times, long appeals processes, and at least as many claim denials as state unemployment offices – will theoretically be motivated to be better if competing with a public option.

To read the remaining concerns, click here.

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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