Thursday, November 19, 2009

Health insurance: we're defeated by a complexity attack

It's time again to play spin the insurance wheel.

This year my employer is offering only a "HRA" (Consumer directed) plan. What we used to call a "medical savings account plan". My employer self-insures, so presumably this saves them money.

So we tried to figure out what plan makes sense. My wife and I are both physicians. I'm a wee bit of a computer geek. We have, between us, at least 35 years of post-secondary education.

The enemy has hundreds of analysts and extensive simulations. They can throw up pages of unreadable and meaningless computer generated descriptions.

It's really no contest. The best we can do is run the provided simulations through optimal, average, and disastrous scenarios and assume that the strange seeming results are accurate. The simulations, of course, don't ask about tax brackets, and they mix pre-tax dollars (our premiums) with post-tax dollars (out-of-pocket expenses).

We can offset the post-tax dollars by gambling on Flex dollars -- but then we run the risk of sending the Flex money back to yet another gambling corporation (and probably, eventually, to my employer).

In the end we'll probably pick the middle option and go light on the Flex.

This, like mobile phone services, is a complexity attack. I'm guessing if I worked this one through I'd put it in the large class of emergent frauds - an echo of the crash of '08.

We must, as a nation, figure out a way to beat this stuff back.

Update: EL has been working with pencil, and it now looks like
  • The graphical portion of the simulation is probably wrong.
  • Disregarding the graphical part, and parsing out rollover of the "HRA" part, and factoring in various combination of pre-tax and post-tax contributions and Flex guesses the plans are more similar than the appear -- but the numbers may be wrong
  • The numbers in one resource are quite different from the simulation/web site numbers. They don't add up. On the other hand, one of the simulation numbers is probably wrong.
See also:
Update 5/28/10: Our sense of doom was well justified. Midway through the year we found that mental health payments were not handled in the MSA-like plan. They're handled through a separate, traditional, indemnity plan. Since these payments constitute our major healthcare expense, our entire analysis was rendered moot. Needless to say, in all of our review neither my wife nor I saw this in the materials we were given.

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