Cost of health insurance in US

Factual Questions
1

The current near-parity of the US and Australian dollars prompts me to ask a question I have been pondering for a while.

In Oz, we have, of course, Medicare which is a form of nationalised insurance.

But people are encouraged to take out private insurance wherever possible, to keep the pressure off the public system.

I gather that in the US, private insurance is almost always arranged through the workplace, so that it is an incident of your employment that you have private health cover. And if you lose your job, you lose your cover.

Doesn’t work that way here - if you want private insurance you arrange for it yourself. The downside is paying for it yourself (of course you pay for it yourself in the US too - no doubt it gets factored in to your pay). The upside is that you get to pick whichever insurer you want, not just whoever your employer happens to have a contract with.

That background established, my private cover costs me about $115 per week. It is as close to top of the line as I can find - if I go to hospital, I have no co-pay. I still have to pay a significant portion of the bills of the doctors (as opposed to the hospital) though.

How much does it cost an employer for a similar level of cover for a worker in the US? Is it possible to get insurance outside the employment system? (Or is it generally rendered pointless given that to do so would be to get insured twice?) The American system is widely criticised for being too expensive, and the actual premium paid per person for health insurance (by whoever is paying the bill) would be a useful point of comparison.

There may be another point of distinction that distorts the market - payments here get a level of tax deductibility that may not match with the which employers get in the US, and so tax incentives could be price drivers. Are health insurance premiums paid for by employers in the US for the benefit of employees tax deductions to the employer?

2

PS - I should add that the sum of money I quoted above was for my whole family, not just me. The way it works is you pay double for two people or more who are all family members.

3

I am a small business owner with my wife and I as employees.

Because I have a pre-existing condition (since birth), it is not possible to get insurance privately for any amount of money… I was declined by every company licensed in my state. Note that my condition is minor - less than $10K spent on it in the last 4 decades.

Applying as a business is different… one cannot be turned down, but the price can vary… a lot. I was told recently that the price would be $4,700 per month ($700 per person is normal, but my condition made my inclusion affect the rate). Note that the insurance would not cover anything related to my condition for the first year.

So $56,400 per year… (about $1085 per week) it was better for us to leave the USA which we did 8 years ago.

We currently pay $200 per month (total) for better coverage, but it is not valid in the USA.

4

Most private health insurance in the US is provided through employer-sponsored plans. Generally, only full-time employees are eligible for these, so a large proportion of un- or under-insured people are those who have part-time jobs.

In 1985, Congress passed a bill (COBRA 1985), part of which allowed people who lost their jobs to continue their health insurance for some time (I think 18 months.) The insurance company is required to continue coverage as long as the premiums are paid.

However, the former employee has to pay the full premiums to continue the insurance (premiums are shared between the employer and employee while they are working, and are handled through payroll deductions, like income taxes and retirement plans.)

Obviously, if you’re no longer drawing a paycheck and don’t have significant savings, extending your insurance through COBRA can be difficult or impossible. More recently, a new program was set up to subsidize some peoples’ COBRA premiums.

One of the advantages of employer-sponsored plans is that they can negotiate group rates, so they’re cheaper than individual insurance plans. That’s one reason why COBRA is so advantageous – if you lose your job, it would be even more expensive to buy an individual private plan than to continue your coverage from your job. Also, employer-sponsored plans are not allowed to deny coverage for pre-existing conditions (every employee is entitled to the same plan) whereas a private plan may do so.

My current plan costs a little more than that; about $450 US a month. It is also a fairly good plan, and includes dental coverage. Co-pays are $15 for doctor visits, $50 for the ER, and a deductible of $2500 for catastrophic coverage. The plan also includes prescription drug discounts (I don’t recall the details since I don’t take any drugs.)

There is huge variation among employer-sponsored plans, and many employers offer multiple plans at different price points, so I couldn’t give a useful number. One can purchase supplemental insurance and there are companies that specialize in this service. Freelancers and part-time workers can also buy primary insurance individually or through group programs. Some labor unions have supplemental insurance plans as well as hardship plans for out-of-work members of the union.

Yes, corporate income taxes are based on profit, and employer-paid insurance premiums are a business expense.

5

Ah. I’ve just realised part of the problem in comparing US coverage with ours is that here, pretty much all prescription drugs (with some exceptions) are covered by national health, so payment for them is not factored in to our premiums.

However, the other side of the coin is that insurance companies here are effectively forced to take you, pre-existing condition or not, but they have varying delay periods before you’re entitled to claim. An obvious example is that you can’t claim for obstetric cover unless you’ve been in the system for at least 9 months, but all sorts of other pre-existings are treated the same way. It seems to work.

Thanks for the answers.

6

Hubby and I are self-employed, so we pay our own insurance. Currently, it’s about $430/month, and we have a deductible of about $4K, so that’s a grand total of around $9K/year for the two of us. So far, they’ve been very good - they’ve paid for stuff that I had no expectation of being covered. So on that score, I’m happy.

I’m not happy for the following reasons:

  • past experience has shown that the premiums go up a LOT every year. When I got the policy, 3 years ago, the premiums were around $270/month. So in the 3 years I’ve had it, it’s gone up about 60%. I have no reason to believe that this will not continue until the monthly premium is absurd.

  • I’ve developed a health condition that is serious but manageable. I’m in great health. I’m also uninsurable now. I’m lucky I had coverage when I got this condition (they are not allowed to cancel me now that I have it), but I effectively have to hope that 1) I can continue to afford it and 2) I continue to be happy with it because I can’t change it.

I’m hoping a bare minimum of health care reform will go through, one that will make it illegal for insurers to refuse coverage because of pre-existing conditions and also not jack the rates because of it. So far, all the health care bills I’ve seen include these two provisions.

7

I live in Canada where we have provincial health insurance. All provinces are required by federal law to provide it and the federal govt subsidizes it. The various provincial plans vary in details, but in the end are similar. I don’t know if it is still the case, but when the plan started forty years ago, doctors in Ontario were permitted to add 10% to the provincial payment. That has never been allowed in Quebec. The plans do not include drugs. My employer added a complementary health care plan that (until I hit 65) paid about 80% of prescription costs, paid the difference between a ward and a semi-private room in a hospital and also paid 80% of such things are occupational therapy. You could also get OT in a hospital for free but the waits were six months or a year, which is highly unsatisfactory. This complementary insurance now costs about $1600 a year to me and the same to my former employer. I have joined the provincial drug plan which now costs me about $700/year (varies with income, max $1000).

One thing to note is that in the US your employer’s contribution to a health plan is with before-tax dollars, while a private plan is paid with after-tax dollars. One of the various proposals is to start to tax those employer plans, at least in part. The unions are heatedly opposed and I don’t think that will make the final cut. In fact, if Mass. elects a Republican tomorrow, the entire bill is likely dead.

8

It’s not that simple. If you are self-employed, insurance premiums are entirely deductible. If you get a high-deductible plan and you get a health savings account, any medical expenses you purchase with the HSA are tax-deductible.

I believe that HSAs are also tax deductible for non-self-employed people in some situations, but I’m not 100% sure of that.

9

Any money that goes into your HSA account is tax-deductible, whether you put the money in or your employer does.

It’s not just the money that is spent that is tax-deductible, either. You can put up to $3050/year in the account (for a single person, more for family) and it’s all tax deductible whether you spend it or not. Unlike an FSA (flexible spending account), your money can build up year after year. With an FSA, you start with $0 every year.

10

Insurance costs do vary a great deal in the US, but employer-based group plans to cover a working adult are in the neighborhood of $5000/ year. That cost is split between employer and employee based on how the employer chooses to handle that. An economist will tell you it doesn’t matter much how much of the premium is paid by whom, since in the long run wages will account for it.

Private coverage is always somewhat more expensive because it’s not a group rate. However, the real problem with the cost of US health insurance is how the private insurance market treats people who are bad risks due to preexisting conditions. They can be uninsurable, or face extremely high premiums that have them bearing the full cost of their condition.

I assume when you say there is a 9-month wait for OB coverage, that pregnant women have the alternative of public medicare. In the US, very low income, low asset women would have Medicaid, but your average working family that didn’t have employer healthcare would have to pay out of pocket.

Another way people compare healthcare costs between countries is % of GDP spent on healthcare, which has the US spending almost twice as much as the UK, Canada, Australia.

11

This isn’t quite accurate. Since health care is a provincial responsibility, the feds can’t require the provinces to offer medicare. Rather, the federal government can offer to contribute large sums to the provincial health care system, provided the province meets the requirements set out in the Canada Health Act. If a province declines to take the money, they can structure their medicare system as they please. Of course, the value of the federal money injection means that all the provinces have agreed to the deal.

12

My company pays 100% of full time employees health insurance. It costs us slightly over $5000 per year per employee. Family coverage is optional and that is paid 100% by the employee. Unfortunately because the plan must take all of the employees and families regardless of health condition, the premiums to families are extremely high. It would cost me over $700 additional per month to cover my two children but I was able to purchase a private policy for each of them for 20% of that with Blue Shield for similar benefits. If they had any serious health problems I would have no choice but to pay the $700 per month because they wouldn’t be able to get a private affordable policy for less than that if at all.

13

My employer and I each pay $264 per month to cover myself and Celtling. there is another $1,400 or so in deductibles, and $20-60 “co-pay” each time we go to the doctor. It was the same at my last job, but the COBRA coverage cost $1,200 per month. I haven’t figured out yet how they get away with that.

For prescriptions it’s $20 generic, and $100 brand-name, or 20% of the cost, whichever is higher. This means if you’re not careful, you can pay a $20 co-pay for a 12 antibiotic. At some pharmacies, the lower-cost antibiotics are free, as the paperwork involved in making you pay is more expensive than simply giving it away. (and yet these places sell .20 packs of chewing gum. ??)

When I was doing contract work and had no employer plan available, the cheapest I found was $700 per month to cover only myself. This would have covered only catastrophic illness (i.e. if you go to the emergency room.)

It’s a broken industry, and desperately needs regulation, or straight competition. I’d like to see foreign firms get into the picture and offer reasonable plans.

14

My insurance is provided by a very large UK firm, $200 for my wife and I together, valid everywhere in the world except the USA. US law does not allow them to cover us in the US. My being uninsurable in the US is the reason we moved overseas 8 years ago. It’d be nice to be able to live in my own country again. :frowning:

15

T. R. Reid published a book recently, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, which summarizes several models of healthcare around the world.

On NPR, he was asked about the these models and said :

*"Turns out we have them all right here in the United States. If you’re a Native American or a veteran, you live in Britain. They get government health care and government hospitals from government doctors and they never get a bill.

If you’re an employed person sharing your health insurance premium with your employer, you live in Germany. That’s the Bismarck model that was invented in Germany and used in many countries.

If you’re a senior and you buy Medicare insurance from the government and go to private doctors, you live in Canada. That’s the Canadian model. As a matter of fact, the Canadian health care system is called Medicare, and when Lyndon Johnson provided it for our seniors in 1965 he borrowed both the model and the name from Canada.

And if you’re one of the tens of millions of Americans who can’t get health insurance, well, you live in Malawi or Madagascar or Mali or something, because if you can pay for health insurance you get it, or maybe you can line up at the free hospital sometime."*

16

Do seniors have to pay premiums for Medicare in the U.S.? If so, that’s not necessarily the Canadian model, since on this point there isn’t a single Canadian version. In some provinces, the health system does have a premium (I think Ontario does this), but in other provinces, there are no premiums - it’s just paid for out of general tax revenue.

17

Yes, there are premiums. US Medicare is broken into several parts - A, B, C & D - each with their own rules and costs. Since I am not yet old enough, Wikipedia has a better explanation than I could give.

The newest is Part D, drug coverage. This was enacted by the last set of ‘congress critters’ (I miss Pogo) in 2006 - and IMHO, is a mess for many reasons. One of the most puzzling features is that by law, Medicare drug prices cannot be negotiated with the pharmaceutical companies. This means that a Medicare dispensed drug can be more expensive than the same drug dispensed by the Veterans Administration health service - which is allowed to negotiate prices… Add to that the fact that Part D is administered by insurance companies and there are many, many policies - each covering different sets of drugs. :confused:

18

Guess I am living in Africa then.

19

Mine costs $75 a week for me and my son, apparently my employer pays some (half?) of the cost. They will not cover a spouse (some new law says they don’t have to).

I have a $20 - $40 co pay and a co pay on meds depending what they are. I also have a $500 deductible per person - since I usually use less than $500 in health care a year this means even though I pay ~$4000 a year for “insurance” I still pay for all my own health care :mad:

20

Somehow I don’t think my situation was what was intended in the title of the thread, but I will play along.

We have family coverage; $12.00 office/procedure co-pays, $3.00 prescription co-pays (ETA: $9.00 co-pay on non-formulary drugs). I don’t know the exact details of hospital coverage but I had to have a pretty major surgery last year, was admitted through the ER and had more than a week of a hospital stay, 2 days of which were spent in the ICU and my portion of the hospital bill after insurance was around $60.00.

For this insurance (that covers my husband, me and 4 dependents) we pay a little over $400 per year. The premiums are deducted on a quarterly basis ( a little over $100/quarter) from my husband’s military retirement pay. (Tricare- no cost to us when he was active duty, and minimum cost as a benefit of retirement.)

Since it is a federal program, I guess it is quite different than having private insurance or employer subsidized insurance.