The Schrug

I thought things were complicated last year when I had to renew my small business’s health insurance plan. Back then, I was choosing between 25 different plans offered by the same insurer: Harvard Pilgrim HealthCare. (I could have gone with other insurers as well, but I’d been happy to that point with Harvard and had to limit my options somehow.) After some analysis and some guesswork, I chose a plan costing $360 a month. It had a $2,000 annual deductible, a $4,000 annual out-of-pocket maximum, and no coinsurance.

I was just notified that the 2010-2011 rate for this same plan was going up to $410 a month – a 14% increase. I wasn’t thrilled about that, of course, given that the overall annual rate of inflation these days is close to zero. But I figured it was better than the 39% increase facing some folks this year. So I was going to put my head down and pay the bills.

Then I got a letter from Commonwealth Health Insurance Connector Authority. This is the kind of government-organized exchange that is one of the core components of the President’s health care plan. It was created as part of Massachusetts’ universal health care system.

The letter told me about Business Express, a new way for small businesses like mine to purchase insurance for employees. (Before this, we had to shop directly with insurers or – as I did — join an organization like the Small Business Service Bureau.) I went to the Business Express web site, answered three or four basic questions about my business, and then got taken to this grid:

What’s on this grid? A choice between 35 private health insurance plans. That’s right. That’s how a health insurance exchange works. You go to a government-run web site and you get to choose between several competing private plans with a wide range of costs and benefits.

I noticed that the prices for the Tufts plans started a lot lower than the prices for the plans offered by my current insurer, Harvard Pilgrim. So I checked out some of the details of the Tufts plan options. The one for $280 a month has a $2,000 annual deductible, a $5,000 out-of-pocket maximum, and no co-insurance.  Co-pays for things like doctors visits, prescription drugs, and emergency room services might be a bit different, but essentially it’s the same plan as I have now … for 20% less than I pay now and 32% less than next year’s rate for my current plan.

Let me repeat that … because of my state’s version of the “government takeover of healthcare” I will be saving $1,600 in health care premiums next year. Same doctor (I checked – he’s on the plan.) Same drugs. Same hospitals. Even if I end up getting sick and paying the difference between the out-of-pocket cost maximums, I still come out $600 ahead. I’ll also save the $85 a year it cost me to join the Small Business Service Bureau.

Hmm, you say … maybe I’m getting screwed. Maybe there is fine print somewhere that I haven’t noticed and the Tufts plan excludes coverage for some things I’ll end up needing. I suppose that’s possible, but at least I have the assurance that every plan offered through the connector meets the State’s Minimum Creditable Coverage standards.

Oh, and if I hadn’t been a small business owner … if I’d just been some poor schmuck on his own trying to get coverage … I could buy the same plan for $307 a month. And if my income were less than $32,496 as an individual I’d be eligible for subsidized insurance through the Commonwealth Care program.

Ah, but what this chart doesn’t show is the hidden costs of all the new government mandates and regulations, right? How much would I have been paying if all this health care reform had never been put in place? Well, in 2008 I was paying $486 a month (albeit for a plan with a much smaller deductible and out-of-pocket maximum, but also for one that had no prescription drug coverage at all). So the idea that more government action in the health care market inevitably leads to higher premiums is simply a canard.

OK, you Obamacare opponents … tell me which part of this you don’t like.