For millions of Americans with private sector employment, the end of the year brings about an annual ritual. No, it is not the dread of being this year’s “tacky gift” recipient at the company holiday party. It is something that has the potential to affect our lives deeply throughout the upcoming year: Open Enrollment.
For many, it goes something like so: employee learns company’s Open Enrollment period starts and ends soon, and there is an open question session on Tuesday from 3 to 5 p.m. However, most employees skip this; we are very busy, and Enid from Finance will monopolize the discussion anyway. At the core is a ponderously uncomfortable question: what health challenges will you and your family face in the next 365 days? We now have amassed scientific evidence that humans are poor at risk assessment. Concerning health insurance, even when we attempt to review the information objectively, what we get is too incomplete and obtuse to relate to our unique circumstances. Open Enrollment is not an enjoyable process.
And so, my family of four chose a High Deductible Insurance Plan (HDIP) last year. Like a conventional health plan, in an HDIP, the employee pays all health expenses directly until the deductible is met. Instead of a typical deductible of, say $1,000, the deductible for an HDIP is much more. But as I weighed my plan options, the HDIP per paycheck cost was slightly lower for both employer and employee, and the plan had a Health Savings Account (HSA): pre-tax deductions for medical expenses. The HDIP came with an additional incentive: the company contributed half of the deductible cost to the HSA on our behalf. This sounded great—cash flow was a challenge, as I was not employed at the time. More money in my husband’s check? The company giving us a medical stipend? We reasoned this should work out in our favor.
What I didn’t play out were the mechanics: our HSA balance on January 1, 2016, was $0. The company’s contribution was 1/26th of the total amount every 2 weeks. But our medical expenses began immediately in January, and there is no such thing as a small medical bill. As an additional nuance, by partially self insuring in the HDIP, the insurance provider had little incentive to negotiate down the fees we paid. I made one more estimation that turned out wrong as well. I thought we’d reach the deductible halfway through the year. Instead, we met it in September.
What ensued was shell gaming our medical bills for the better part of the year. Economists propose HDIPs will keep medical costs down on the assumption that people behave rationally, leverage price transparency, and go with the cheapest options. In reality, as Daniel Kahneman and more recently Douglas Hough have shown, health decisions are rarely rational in the classic economist view. Our HDIP came without price comparison tools, and in the immediacy of care needs, I didn’t spend time trying to chase down quotes.
Despite our rough induction into the world of the HDIP, we have re-enrolled for 2016 with our expectations level set. The HDIP has a place in the health insurance market; its presence will drive a deeper discussion of medical costs, fair compensation, and mitigate health risks in the long term. It will morph to a better form, to understand timing and extent of bills. For now, however, health insurers and employers alike would be well served to attach warning labels: This health plan may be hazardous to your [financial] health.
Tasha van Es has more than 15 years’ experience in technology development and management in diverse industries. She is at Boston-based startup Bjönd Inc, where she is working on the company’s flagship product BjöndHealth, which streamlines and personalizes health care workflow. She holds an M.S. in Health Communication from Boston University and a B.A. from Wesleyan University. She has experience with hardware and software devices, many operating systems, full stack software development, cloud computing, and network security. She is passionate about digital health and creating a better health experience for patients and clinicians alike. She participates in several Boston area technology groups and served as a mentor for project teams for a recent MIT Hacking Medicine Hackathon event. She lives in Pepperell, Massachusetts, on a small farm with her husband and children. They enjoy growing their own fruit and vegetables, raising animals, and brewing craft style beer. Tasha can be reached via firstname.lastname@example.org.