Exchange Watch: Missing in Montana

While it was good to see the AP’s statehouse reporter do a story this week on the release of rates that will be posted on the Montana healthcare insurance exchange, his piece fell short of helping Montanans understand the insurance policies they must choose from, beginning in October. It’s too bad, too, since the AP is likely the biggest source of information about Obamacare for the state’s residents.

Montana’s insurance commissioner, Monica Lindeen, released some long-awaited pricing details for the exchange this week, and provided what is becoming a fairly standard spiel from state insurance officials–that she was “pleasantly surprised by these prices.” And the AP’s reporter, Matt Gouras, wrote what is becoming the standard story, featuring the relatively low premiums for young single people, the ones insurance companies want to get into their risk pools because they are in good health and won’t generate a lot of costly claims.

But Gouras goofed. He told readers that a 30-year-old could buy plans costing between $200 and $300 a month. That’s true, as far as it goes, and quite a bargain as insurance premiums go. Such prices may well entice young men in particular to sign up. But the report failed to tell a more complete story and misled readers about a crucial point in buying insurance that could end up costing them big bucks if they get sick. Gouras reported “rates vary with various copays and deductibles.” Well, yes, but there’s more to the story, as we’ve been pointing out. His problem: confusing copays with coinsurance–two very different animals. And in so doing he left coinsurance out of the story. Yet coinsurance is becoming a major factor in calculating what you get when you buy insurance. High coinsurance could lead to a nasty surprise when the bills arrive.

To review: A copay is a fixed amount a person pays for a service, such as $75 for a visit to a specialist or an urgent care clinic. Copays used to be the cost-sharing method of choice, and patients got used to paying what were often nominal amounts for services. Times have changed. In the last year or so insurers have switched to coinsurance, which is a percentage of a bill that the patient must pay. Coinsurance results in much higher out-of-pocket costs. For example, if a policy calls for a $75 copay on a $500 outpatient procedure, the patient would simply pay $75. If it calls for a 30 percent coinsurance for a that procedure, the patient would pay $150. Confusing these two terms is a common mistake that patients–and reporters–make, but it’s dangerous because it misleads people into thinking their policy covers more than it does, and this can result in nasty–and–expensive surprises.

Helen Darling, who heads the National Business Group on Health, told The Hill two years ago that the shift from copays to coinsurance is “a more subtle way to increase what the consumer pays.” She predicted that eventually, only governments and unions will offer insurance with copays.

Policies offered on the exchanges show Darling’s prediction was precient. In Montana, Gouras reported that the bronze plan from Blue Cross Blue Shield “has copays of 30 percent and a deductible of $3,750” while a more expensive gold plan “has copays of 20 percent and a deductible of $500.” He got the terms copy and coinsurance wrong. The tables on the insurance department website note that the bronze plan, a PPO, which is a loose kind of managed care, has coinsurance of “30%” and the gold PPO has coinsurance of 20 percent.

It’s not so much that the AP got the terms wrong, but that the reporter did not provide insight into coinsurance, a major component of a policyholders ultimate cost for coverage, and a reader needs that vital information to know what he or she is buying. Nor did he note that $3,750 is a high deductible; it means the insured person will pay the first $3,750 of his or her medical bills, from in-network providers (and more from out-of-network, as we will see).

The insurance department tables also contained other important warnings for consumers that reporters covering this stuff would do well to discuss in their stories. It said the listed rates did not include subsidies, which Gouras did note. That’s important, and it means means qualified people will end up effectively paying even less. But the rates also did not include premiums for dental coverage, which we’ve pointed out is an underreported story line, or surcharges for smoking. Both can result in higher premiums for some families.

But a black box warning on rates for the Montana exchange contained the real caveat:

The cost sharing in this summary applies to ‘in network” services only. Out- of network services have higher cost sharing. Please see the policy language. Be sure to review plan details to know what applies to deductibles, exact copays and insurance for particular services, out-of-network coverage, excluded benefits, formularies, provider networks, etc.

In other words, the coinsurance amounts simply listed on the department’s website don’t tell the whole story. Is it the same for out-of-network services? Are the deductibles higher? And if the provider networks are narrow, as they will be for many low-cost policies, some people will likely visit a doctor or hospital outside the network–which could be very costly. So you see there’s more to the low premium story coming from the exchanges than most journalists have reported on.

At best such stories are incomplete. At worse, they are misleading. It would be great to see the AP do a full explainer.

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