Open Enrollment Prep: Health assessment

We talked a little bit about the mechanics of open enrollment last week.  This week, we’ll talk about the most important thing a person can do before open enrollment in order to make the decisions space a whole lot smaller and a whole lot easier to manage.  And that is to make a best guess at your probable health status for the next year and then mix that guess with your ability and willingness to take on risk.

Open enrollment is a crude way of combating adverse selection.  It forces people who are currently healthy to get into the risk pool so that they can cross subsidize the sick out of fear that they’ll join the sickly.  This means the system can be gamed to your local advantage.

An honest self assessment of your current health and highly probable future health status is needed.  Sometimes this is easy.  If you are diabetic and have HIV, you know that your medical expenses for next year will be reasonably high.  If you are like my sister in law and currently three months pregnant, you know that you are going to need an inpatient stay of at least two days sometime next spring.  If you are a recreational BASE jumper, you know your hobby has a tendency to produce very painful splats.  If you’re me, I know my son has asthma with a $1,000/year control medication and a $500/year acute crisis medication and a decent chance of at least one ER visit plus I know that my daughter is a daredevil with absolutely no fear (which as a dad, this is usually a very good thing) and I can feel my knees are telling me that I am no longer twenty three.

And then there is John Cole who knows his animals are trying to kill him while making it appear like he was done in by a freak mopping accident.

These are the easy cases in descending cost order.  More complicated cases where people are working off inklings and intuitions have to come into play as well.  If you know that your body is telling you that you are starting to slow down, it is time to listen, if you know that you’ve had a few years to know the receptionist at the doctor’s office by first name and she’s on your Christmas card list and gossip phone tree now, it is time to realize that you’re starting to get more sickly.

At the same time, you’ve just completed your seventeenth trialtholon and your PCP has accused you of drinking unicorn blood.  Or you are twenty five and know that there is no pregnancy risk in the next year.

And then there is everyone in between.

People who know or strongly suspect that they are going to use a lot of services in the upcoming year should try to get the highest actuarial value coverage possible that they can afford.  People who strongly suspect that they’ll be healthy as a horse who has never seen a glue factory should think about getting lower actuarial value coverage limited by their ability to actually pay the deductible/out of pocket maximum if they are either hit by a bus or given a nasty and expensive diagnosis.

These decisions should be tempered by network.  A person might think paying an extra $500 in deductible and $36 more per month to insurer that their specialist who has been treating them for the past ten years is still in-network.  It might be a trade-off that is worth considering, but the first line of thought, all else being equal is that people who are sick or believe that they will be sick in the upcoming contract year should seek the highest actuarial value coverage that they can afford.