Health: Where To Get Help In A Constantly Changing System

By Michael Lemonick

Theresa Arnerich, 54, couldn't afford to pay for private medical insurance after her divorce, so for years she went without. Finally, in 1997, Arnerich took a part-time sales job in Los Angeles, mostly for the health coverage. "I have an EPO," she says. "I don't know what that stands for--exclusive provider something. Whatever. They tell me it is one step above an HMO." She could have chosen a PPO--she doesn't know what that means either--but it cost more. On the other hand, her trusted gynecologist isn't in the plan, so she pays his $125 fee out of her own pocket instead of finding a new one who will accept a $10 co-pay.

For Mike Dickson of Columbus, Ga., choosing a medical plan for his family was a lot easier. Mike and his wife Jennifer, who worked for a financial-services company, had what he calls a "top-notch benefits department," with experts to help answer questions. Even so, Mike and Jennifer had to decide which features of the different plans they cared most about. They chose an HMO because of its comprehensive basic benefits and its maternity coverage.

Then their daughter Carty, 3, came down with a rare form of cancer. They were pleased with the treatment Carty got through the HMO, but because cancer care is expensive and the plan limits the lifetime benefit to only $2 million per person, Mike says he "can see a time when we're going to be running out." Still, they will continue the same coverage. Supplemental insurance was an option, but it's too late now that Carty has a "pre-existing condition."

Two decades ago, companies provided one-size-fits-all health insurance. It had a deductible, co-insurance and an out-of-pocket maximum. But with medical costs skyrocketing, that system became far too costly for employers to maintain. Says Drew Altman, president of the Kaiser Family Foundation, an independent philanthropy that studies health-care issues: "The country made a de facto decision to go with a market-driven health [care] system based on competition and choice." Some folks were most interested in low cost; others wanted to see any doctor, go to any hospital or take any test they felt necessary. And some preferred something in between.

The market responded, and now, says Ken Jacobsen, a vice president at the Segal Co., a consulting firm with headquarters in New York City, "we've got complicating options at almost every level of health care." The newest options provide more choice, but they burden the consumer with more decisions. On today's health-care menu:

--CAFETERIA SYSTEMS: An employer gives each worker a dollar amount to spend on a menu of benefits, including health care. The employees then face a smorgasbord of coverage--and if they choose more expensive health care, they must pay any costs above the employer's contribution.

--DEFINED CONTRIBUTION: In DC plans, the newest option, the employer makes a down payment toward the worker's annual health-care costs, typically the first $2,000. The employee pays the next $2,000. Anything above that is covered by insurance that the employer pays for. Because the deductible is so high, that insurance--sometimes called catastrophic coverage--is relatively inexpensive. The hope is that individuals will shop more prudently when their own dollars are at stake. Anything below $2,000 left at the end of the year is often added to the next year's fund.

--PREFERRED PROVIDER ORGANIZATION: This is a hybrid of managed care, as delivered through an HMO, and the old-fashioned fee-for-service plan. In a PPO, you can go to any doctor you want. But out-of-pocket costs are much higher if you go outside the plan's network of providers.

--POINT OF SERVICE: Similar to a PPO, a POS plan is frequently run by an HMO but has less restrictive rules--another response to the consumer backlash against HMOs. The difference is that if your doctor refers you to a specialist outside its network of providers, the POS will pick up most, if not all, of the charges.

--EXCLUSIVE PROVIDER ORGANIZATION: Like old-school HMOs, EPOs require subscribers to see doctors in network, but laws that apply to HMOs may not pertain to them. This means that EPOs, which are usually put in place by penny-pinching employers and use gatekeepers to authorize anything beyond primary care, may not be obliged to cover certain medical conditions.

--HEALTH MAINTENANCE ORGANIZATION: In an HMO, you have to stay in network for your care to be covered. To boost profits, some HMOs push doctors into taking more patients than they can handle--so doctors tend to quit, harming continuity of care.

--FEE FOR SERVICE: This old-fashioned coverage lets you choose your medical provider, then reimburses part of the cost--after a deductible. But it may not cover some kinds of preventive care, including regular checkups.

--CONCIERGE PRACTICES: If you long for the old days of personalized care and don't worry about the cost, this is for you. These plans are offered by doctors, not insurers. For an annual fee of several thousand dollars, you get extra service--home visits, immediate access and even a doctor to accompany you to the specialist--that is not covered by insurance.

Not everyone faces choices. Companies with fewer than 500 employees--which covers about half of all U.S. workers--usually offer only one plan. Some 16 million Americans work at firms with fewer than 50 employees that offer no health insurance at all. But for those with a choice, the decisions can be bewildering. Many employers reshuffle plans every year, forcing people to choose again. And if you leave for another job, the confusion starts all over. Even after you've settled on a medical plan, you have to choose a doctor--another complicated exercise--and a drug plan, a dental plan and a vision-care plan.

The antidote to this confusion is clear, reliable information. A good source, regardless of your age, is the A.A.R.P. aarp.org/hcchoices/options/pick.html) It has plenty of basic guidance. Another clearinghouse, the National Committee for Quality Assurance www.healthchoices.org/) helps you find and evaluate the best managed-care plans in your area. The National Health Law Program nhelp.org/pubs/FS/managedcarefacts.shtml is also helpful. If possible, consult someone in your workplace who has experience with its health-care choices and whose situation is similar to yours. But remember that whatever decisions you make today will have to be made again, as the nation's health-insurance system keeps evolving.

--Reported by Anne Berryman/Atlanta; Unmesh Kher/New York and Margot Roosevelt/Los Angeles

With reporting by Anne Berryman/Atlanta; Unmesh Kher/New York and Margot Roosevelt/Los Angeles