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Reviewed By Louise Chang, MD
June 12, 2007 - If you're thinking about having kids, exercise the axiom "buyer beware" before signing on to high-deductible health insurance.
That's the advice coming from several experts on the heels of a study showing that young families can face staggering out-of-pocket costs with the increasingly popular plans.
A study released Tuesday shows that most so-called "consumer-directed" health plans do not cover maternity costs. That's a big difference from the employer-sponsored health plans that cover about 60% of all Americans.
Even plans that do cover some maternity costs may not cover all expenses if pregnancy complications arise. That can leave young families on the hook for thousands -- sometimes tens of thousands -- of dollars.
"This is something most people are just not aware of," says Alina Salganicoff, director of women's health policy at the Henry J. Kaiser Family Foundation, which commissioned the report.
The typical uncomplicated pregnancy runs about $14,000 in total cost.
The study analyzed 12 popular consumer-directed plans and looked at how much spending in the form of deductibles, co-payments, and uncovered services a patient might have to pay.
Assuming an uncomplicated pregnancy ending in a vaginal birth, patients would pay between $1,455 and $7,884 out-of-pocket, depending on how generous the consumer-directed plan.
But a complicated birth requiring a cesarean section, early labor, or a newborn stay in a neonatal intensive care can balloon out-of-pocket costs to $8,800 for the most generous plan and a staggering $21,200 for the least generous.
"Families could be liable for $15,000, $20,000, $22,000 for the cost of care," warns Karen Pollitz, a Georgetown University researcher who co-authored the study.
As many as 4.5 million Americans are now using consumer-directed plans for their coverage. The plans' lower premiums and wide choices offer an attractive alternative, especially to people who can't afford other forms of coverage. Employers like the plans because they can contribute a set amount of cash into a tax-free account without being on the hook for rising health costs.
One tradeoff is the plans' high deductibles, sometimes reaching $5,000 or higher per year for individuals and $10,000 for families. Because few of the plans cover maternity services unless customers buy special riders, those deductibles can be easily reached, experts say.
Young families could even find themselves paying their annual deductible twice if their pregnancy spans two calendar years. For a nine-month pregnancy, the odds are good that will happen, Pollitz says.
Health insurers promote consumer-directed plans as a good alternative to expensive group coverage. Tom Wilder, vice president of America's Health Insurance Plans (AHIP), an industry lobbying group, says the lower up-front offered by the plans give many Americans access to coverage they otherwise couldn't afford.
One industry study shows that premiums for some consumer-directed plans are nearly 40% lower than other employer-sponsored group coverage. "That's less of a cost that you're going to have coming out of your pay check," Wilder says.
The Fine Print
But Mila Kofman, the study's other author, warns insurance shoppers that figuring out which costs are covered and which are not can be exceedingly difficult.
"The summaries of the policies [examined by researchers] did not accurately reflect what was covered and what was not covered," she says. As for reading the entire policy, "they're not written in English," Kofman says of the legal language.
Experts Tuesday recommended young families considering consumer-directed plans to ask marketers a lot of detailed questions about what maternity costs -- if any -- are covered.
"If you're going to go there, you need to go there with your eyes open and realize you could be spending a lot," Salganicoff says.
SOURCES: "Maternity Care and Consumer-Driven Health Plans" Henry J. Kaiser Family Foundation, June 12, 2007. Alina Salganicoff, vice president, Kaiser Foundation. Karen Pollitz, Georgetown University Health Policy Institute. Mila Kofman Georgetown University Health Policy Institute. Tom Wilder, vice president for private market regulation, America's Health Insurance Plans.
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