How Much Health Coverage Do You Have?

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As my family learned the hard way when my brother developed kidney disease, you may not know until you really need that coverage. And all too often, the answer is — not enough.

The fact is, it’s hard to be an informed consumer when you are buying a product as complicated as health insurance. As Georgetown University’s Karen Pollitz and a team of researchers discovered recently, even policies that look alike can offer very different coverage. They studied two policies in California, for instance, and found that someone undergoing a typical course of breast cancer treatment would end up spending under $4000 with one plan and more $38,000 with the other –- even though the two policies had offered similar deductibles, co-payments, and out-of-pocket limits. They summed up the problem this way:

Knowing whether insurance provides adequate coverage can be a challenge. Health insurance policies are complex products, highly variable in their design, and key information about how coverage works is not always disclosed during marketing. Further, health insurance promises protection against future, unknown events. Consumers who are healthy today can find it difficult to anticipate future medical problems and costs and harder still to evaluate how insurance might cover those needs.

The protection health insurance offers today is highly dependent on the policy purchased. An insured person who becomes seriously ill might have to pay thousands, or tens of thousands, of dollars out-of-pocket for needed care. For many consumers that range represents the difference between health security and financial catastrophe. Consumers compare the prices of health insurance policies, but cannot always reliably tell if they are comparing like products. The affordability of health insurance premiums cannot be considered independently of the adequacy of coverage health insurance provides. At a minimum, the difference in protection health insurance offers should be readily available for all to see.

It turns out there are three people on Capitol Hill who agree. Senator Jay Rockefeller (D-W.Va.) and Congresswomen Rosa DeLauro (D-Conn.) and Allyson Schwartz (D-Pa.) plan to introduce a bill today that they are calling The Informed Consumer Choices in Health Care Act of 2009. Among its provisions is a requirement that insurance policies provide an explanation of the coverage they offer, similar to the nutrition label you now see on a packaged food. Something that looks like this, explaining how the policy would work under a variety of scenarios for various diseases and conditions like heart attacks and cancer.

Though it wouldn’t be able to provide an answer for every contingency, that kind of labeling makes a lot of sense to me. And who knows? Giving consumers the information they need to do better comparison shopping might even given the insurance companies an incentive to start offering better policies.

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