Health Insurance in the USMon, 2nd Nov '15, 9:40 am::

Now that the health insurance open enrollment period has officially started, it is time for me to decide how sick my son and I plan on being between January 1st and December 31st of 2016.

If I decide that we will not fall sick, get injured, or use any emergency medical care, then I will go with cheapest insurance plan where I can have a Health-Savings-Account. For us here in Tampa Bay Florida, the cost is $400/month and we have to bear 100% of all medical costs up to $12900/year before insurance pays anything. This means if we both get really sick, even though we decided well in advance not to, we will pay a total of $17700 for the year for the insurance plan and out-of-pocket medical costs.

If I decide that one or both of us will fall moderately sick and have to see our doctors a few times but still not get in an accident, require an operation, or be rushed to the Emergency Room, then I will buy a Silver Plan that costs about $500/month and we only have to pay $30 to see our primary doctors and $75 to see most specialists. If we decide to change our mind in the future and get into an unscheduled accident or choose to get a major surgery without planning in advance, we will pay a total of $17200 for the year for the insurance plan and out-of-pocket medical costs.

If I decide that one or both of us will fall severely ill, get in an accident, require an operation, or be frequently rushed to the Emergency Room, then I will buy a Gold Plan that costs about $585/month and we only have to pay $10 to see our primary doctors and $40 to see most specialists. When we finally get into our scheduled accident or elect for major surgery, we will pay a total of $17000 for the year for the insurance plan and out-of-pocket medical costs.

The beauty of the health insurance market is that it doesn't matter how correctly I decide my future health conditions, the worst case condition is about the same for almost all the plans - between $15000 and $20000 per year for a 35 year old male and his 9 month old son. That is, if both my son and I are in a major accident or we get sick for a prolonged time and require hospitalization, we will pay about the same amount regardless of the insurance plan I pick.

Deciding the best case is what health insurance is all about. If I correctly decide that we will not have to go to the hospital all year and we stick to our decision no matter what, we only pay the low monthly cost of $400 and can squirrel away over $6000 into a Health-Savings-Account, which we can use in a later year when we decide to get sick or be injured. Too bad, only the lower cost plans enable you to save into a Health-Savings-Account. If I incorrectly decide that we will get a little sick and see an ENT or two a few times but instead we remain perfectly healthy throughout the year, then I just wasted $100/month in extra insurance that I didn't use and cannot get back.

You might have read all of the above and wondered why I keep using the word 'decide' instead of 'guess' or 'predict'. That is because I use guess and predict to denote market risk, where you can gain or lose depending on how the future turns out, for example the stock market or even elections. You can make educated guesses and predict the outcome. But I feel very dirty trying to bet on the health of my infant son. Of the thousands of spreadsheets I have made in my life, the only one that made me feel sick to my core is the one in which I had four different rows of his predicted health, the best-suited insurance plans, and the corresponding premiums.

By definition, a health insurance market with competing insurance agencies requires me to take a gamble on our future health. But from my son's point of view, I am not gambling. I am deciding. I am deciding whether I should pay higher monthly insurance premium or not. If I do, we don't have to wonder if his fever is high enough to go to doctor - we can just go if he feels warm enough because it only costs us $10 to see the pediatrician. But if I decide to opt for a low premium plan, then going to the doctor costs $125 every time and we don't want to do that unless it is a real medical issue.

There is now a financial incentive for everyone to diagnose themselves. The more you want to diagnose yourself, the lower the cost of your health insurance plan will be, especially since the worst-case is about the same for all the plans. So yes, I am 'deciding' if we plan on being healthy or not next year. The cheaper plans that don't cover anything until you first pay over $12000 in medical costs, require you to self-diagnose everything and work well for healthy people who won't need to go to doctors. The expensive plans make doctors visits cheaper so you rarely have to second guess yourself and work well for people who have health issues. What I am deciding now is which group I want to belong to next year. Once I have that answer, then I have to make sure my doctor, my son's doctor, and most of the specialists we have seen (e.g. ENT) accept the specific plan from the selected insurance company.

And that my friends is why it takes me a month to decide.

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