How much would it cost the average person to get a health care policy that's as good as Medicaid?

October 16, 2009 10:48 AM

How much would it cost the average person to get a health care policy that's as good as Medicaid?

I'm curious if anyone out there has any information on how much it would cost the average person to get a health care policy that's as good as Medicaid.

I know this is a complex question with lots of variables-- including how you define "good"-- so for the sake of the example, let's say we're talking about a self-employed single female in her thirties in excellent health with no kids who lives in New York looking to buy the same kind of coverage her low-income counterpart could expect from federal and state programs. Or maybe you know more about what it would cost a married couple with one income, insurance through work, and two kids living somewhere in the heartland. However you want to figure it, I think it's fascinating public policy issue worth talking about. All comments welcome!

posted by aquafortis to health & fitness (7 comments total)

This is pretty chatfilterish, but one thing you left off as a consideration is the fact that health insurance is only as good as the providers who accept it. In many states, Medicaid reimbursement is so low (and paperwork/reimbursement delays/etc. so onerous) that few doctors accept patients enrolled in the program. You can't really compare apples to oranges with this one.
posted by availablelight at 11:22 AM on October 16

First of all, I don't think there is any good way to answer this question as stated, there are too many variables. However, you can check out Blue Cross rates for various plans here. It's actually for CT, but the prices range from $100/month to $350 so you can get an idea of the spread. It is difficult to find specific rates that aren't behind a personal information barrier or cookies, but this page lists a few different plans depending on deductible. I filled out a few instant quote sites with bogus information that corresponds to the demographics you describe, and received quotes in the same range, so $250 might be a good lowball guess for non-employer subsidized insurance. How this actually compares to Medicaid I have no idea. One big difference between group plans and individual is that the rates you get are going to depend on personal factors such as preexisting conditions, also the precise coverage offered by Medicaid in your state might differ from others, and whether or not you are in a managed care plan through Medicaid. Really, you would really be better off asking this question to a professional insurance agent in the New York area.
posted by sophist at 11:37 AM on October 16

Here is a chart with Medicaid services and their co-pays, for New York*. A number of categories have "fee for service" listed rather than a co-pay. As availablelight points out, finding a provider can be extremely difficult, especially if you're not in a urban area.

As for finding a comparable open-market insurance plan, I think there may be too many variables. Do you want a high-deductible low-premium plan? How large or small is the provider list? What drugs are included on its formulary? Is there a separate rider for maternity care? Is there a cap on whatever out-of-pocket costs you're liable for? Etc.

And don't forget: if you're buying insurance on the open market, one cost you'll be paying is profit for the shareholders. Medicaid's primary purpose, for all its imperfections, is to provide healthcare to people who can't afford it, not to make a profit for its shareholders.

* Usual disclaimer: I work for the place that produces this chart, but I don't have anything to do with the policy or writing side of things.
posted by rtha at 11:54 AM on October 16

Actually, it's less complicated then you think; many actuaries measure the generosity of other public and private insurance plans against Medicaid, which has mandated benefits that are quite a bit more comprehensive than anything that you could purchase in the private market for any amount of money. While it varies a bit from state to state (particularly around things like durable medical equipment, and mental health or substance abuse treatment for adults), Medicaid usually covers anything "medically necessary", a much broader standard than commercial health insurance companies, which tend to cover rehabilitative or curative treatments only. It's even more generous for kids, through the Early and Periodic Screening and Diagnostic Treatment (EPSDT) program.

One of the reasons why Medicaid has such a comprehensive benefit package is because it is the safety net for disabled children and adults, who may have health care needs that wouldn't be met under commercial insurance. For instance, many insurance companies don't cover hearing aids because they aren't used to rehabilitate or cure deafness; they are used to maintain functionality--and those sorts of services aren't typically covered by any insurance. The same reasoning is behind the counter-intuitive stuff you sometimes hear, like insurance companies paying for Viagra (which cures a medical condition, ED) but not covering birth control pills (which are not curative or rehabilitative). Things like round-the-clock nursing care, durable medical equipment, and nursing homes are quite likely covered by Medicaid, and are much more rarely (or never) covered by commercial insurance.

That doesn't necessarily mean that a self-employed single female in her thirties with excellent health would be better off in Medicaid. Quite the opposite, actually--the benefit package is comprehensive, particularly for services most likely to be used by the elderly or disabled, but reimbursement rates are so low that it would be quite a struggle to find providers willing to take you. There is no way for private insurers to get those sorts of rates from providers--in fact, many hospitals consider even taking Medicaid patients to be part of their charity care, because rates are so low that they lose significant money on each admission--so again, this is something you can't really price in the commercial market.
posted by iminurmefi at 12:07 PM on October 16

Just realized I didn't give you an actual number, which is maybe what you're looking for. With all the caveats above, about how you wouldn't actually be able to buy a Medicaid policy because commercial insurance just doesn't work that way, here's some numbers:

The average cost of medical care for a Medicaid beneficiary in New York in 2006 was $7,927, which works out to about $810 per month. Of course, that includes people who are only eligible for limited benefits like family planning, but we'll ignore that for now and just say it's a low estimate. That's in 2006 dollars, and medical care costs have inflated by 12% between 2006 and 2009 (according to BLS), so we get to $910 in medical costs in 2009. The level of premiums is always going to be some direct function of the underlying medical costs; taking the best-case scenario (something like Medicare, with extremely low overhead, that doesn't take into account the costs of things like collecting premiums) you need to add on about 5% more to account for administrative costs, which brings us to $955 per month.

So, if you were dumped into an insurance pool with all the other Medicaid beneficiaries in New York, and guaranteed the same benefit package (and the same provider payment rates, which probably couldn't actually ever occur), you're looking at nearly a thousand dollars per month in premiums.
posted by iminurmefi at 12:44 PM on October 16

If you're trying to see how much it would cost to provide Medicaid, it doesn't seem useful to include the costs of the elderly and the disabled, which per your link are far higher than that of an average Medicaid adult. Exclude them and it drops to $300 per month.

Also, NY is the second only to DC in Medicaid costs. Some of the states pay half of what NY does.
posted by smackfu at 2:30 PM on October 16

smackfu, I thought about basing medical costs on just moms & kids, but decided that it was more realistic to base premiums on over per capita Medicaid costs, not for a specific subpopulation within Medicaid. My reasoning was that on a really simplified level, insurance premiums (in the commercial market) are based on two things:

1. The benefit package, and

2. The risk pool you're sitting in

In my mind at least, you can't really divorce the Medicaid benefit package from the population receiving it if you want to talk about how much would it cost to get a comparable policy in the private market. The argument that "hey, I'm more like the cheap people in Medicaid population" seems about as relevant as saying that one is a young healthy person in an office full of 50-year-olds: you end up subsidizing your coworkers anyway, because your insurance company is not going to lower the premiums for just you. That's how insurance works, and the more comprehensive your benefit package the more likely it is that the people motivated to sign up are the ones that would actually use those really nice benefits.

I suppose it's different if you're talking about the individual nongroup market as it operates in most states, where the risk pool is "anyone the insurance company feels like selling a policy too," but in New York specifically there is community rating, so your excellent health status would be similarly useless in bringing down your premium.

I can't believe I actually spent that much time thinking about it, but there you go.
posted by iminurmefi at 3:02 PM on October 16