Picking up Nickels

Thursday, September 20, 2012

My final health insurance premium increase update

I've been concerned about the large annual price hikes for my basic HMO plan for more than a decade now, and have been documenting my plight since I first mentioned it here in August 2006. Year after year, I watched my monthly premium increase from a car payment to a mortgage payment even as I downgraded my plan four times since 2001 to attempt to keep premium increases to a minimum. However, that trend suddenly changed last year as my renewal packet arrived with a modest 2.1% price increase without having to downgrade to a plan with larger co-pays/deductibles. While I was quite pleased with that development, I considered it to be an anomaly that would almost certainly reverse course in 2012. As luck would have it my 2012 renewal packet offered a 0.4% increase, a mere $6 increase per month! In short, after watching my health insurance premiums increase about 143% between 2001 - 2010 while downgrading coverage four times, my premiums have increased less than 3% percent since then! I'm not completely certain about the cause of these reasonable price increases, but a disturbing trend I observed during the first decade of this century seems to have been turned on its head during the past two years. If nothing else, I wonder if the increased scrutiny that the Federal health care reform legislation has placed on cost containment is starting to bear fruit. If so, this continuing trend would be a major boon to American businesses of all sizes along with Federal, state, and local governments with large healthcare costs.

As always, I think a graphical example of this trend helps emphasizes my point far better than my clumsily written prose:

With that being said, I will not be taking Blue Cross Blue Shield up on this offer. Last month Mrs. Frugalson returned to the workforce after finishing graduate school and she has access to employer-provided healthcare benefits that are far better than anything that I have been able to afford over the past decade. These benefits include employer-subsidized dental insurance (which we haven't had since Bill Clinton was President) and a HMO plan with far more generous co-pays and deductibles that I have not been able to provide us as a self-employed person. I'll never forget seeing the jaw drop the receptionist at my physical therapist's office gave me when she realized I had a $40 co-pay for each physical therapy session followed up by "It's awful how they can do that!".

To illustrate the differences in coverage between my existing HMO plan and my wife's new plan, let's compare the out of pocket cost difference between the two plans for the journey that was my surgery and recovery from a ruptured tendon in my arm earlier this year:

Untitled Document

  Current HMO New HMO
Emergency Room Visit 150 75
Surgeon Office Visit Co-pays (3x) 120 45
Day Surgery Co-pay 250 0
MRI Co-pay 75 0
Physical Therapy Co-pays (9x) 360 135

Total Out of Pocket Cost $855 $255

In short, in addition to costing a fraction of the monthly premium I would have been paying, this new insurance plan would have saved me an additional $600 on the costs of the treatment for my arm injury alone plus I will no longer have to pay for 100% of the dental care for my family out of pocket. As long as Mrs. Frugalson and I continue to keep our jobs, we should see some major relief from one of the largest monthly expenditures that we make for our family. :D


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