YOUR MONEY
Health Plan Most People Should Buy, but Don’t
Americans make costly mistakes because the options are so complicated. Here’s what to do. ::
BY AMITABH CHANDRA E
very fall, during the open enrollment period, over 100 million families can choose a health plan.
Anyone who receives health
insurance through their employer, Medicare, Veterans Aff airs, the exchanges — including members of Congress, CEOs, teachers — is invited to participate in this national ritual. The decision, which has enormous
implications for our health and fi nances, is horrendously complex. And we are universally terrible at it. People choose plans that don’t
fi t their situation based on bad assumptions and predictions, or they don’t choose at all, blindly staying with what they have done in the past. No matter what the mistake, they
end up paying a lot more than they should, potentially costing themselves thousands of unnecessary dollars a year. In the end, in fact, for most
people one simple type of plan makes the most sense, with some important caveats.
74 NEWSMAX MAXLIFE | AUGUST 2023
WHY DO WE MAKE MISTAKES? It isn’t entirely our fault that we make unwise choices. Health insurers don’t make it easy to fi gure out what they are off ering us, whether it’s the breadth of coverage — what hospitals, physicians, and treatments they cover — or the quality of those hospitals and doctors. What’s more, open enrollment
materials are punctuated with misleading expressions that suggest value, such as “platinum plan” and “enhanced benefi ts,” which nudge us to pick more expensive options than we need. Plan materials are littered with
jargon like actuarial value, specialty tiers, coinsurance, out-of-pocket maximums, as well as a word salad of acronyms — HMO, PPO, POS, PDP, and HSA. Then there are the subtleties
we’re supposed to understand. For instance, oral medicines for cancer or multiple sclerosis are covered by a prescription drug plan, but infused medicines for the same diseases are
covered by a medical benefi t. Most doctors, other than the ones
treating multiple sclerosis or that particular cancer, wouldn’t know the distinction. How would we?
GO WITH THE FLOW All of this complexity and obfuscation leads to the fi rst basic mistake many of us make when choosing a plan: We don’t actually choose one. When faced with open enrollment,
many of us succumb to inertia and keep the plan we already have. Inertia costs us money because
there is often a more generous plan that is also cheaper than the one we’re in. One study estimates that employees are paying 40% more for their premiums as a result of inertia. (This amounts to $2,400 a year for a family.) The other big mistake we make
is that we’re simply not good at predicting what we need. To choose the right plan, we need to forecast what our healthcare needs will be for the following year. This is relatively easy for persistent
healthcare needs, like medicines for chronic diseases such as hypertension, and one-off events like
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