Choosing individual health insurance, in the best of situations, is HARD!. It involves navigating a complex bureaucracy that attempts to hide through complex jargon key concepts. It involves digging through dozens if not hundreds of choices on the marketplaces or Medicare Advantage/Part D. It involves trying to predict the future for both technological shocks that may be relevant, policy shocks, and personal health status.
Dr. Abigail Barker et al, ** test several personal predictive models. These models are trying to predict how accurate a first year prediction of personal health status is in predicting second year healthcare expenditures. To me, this is an awesome question as we sort of assume that health is mostly continuous and reasonably predictable from the recent pass unless there is a huge but rare shock event.
Self-reported health status (SHS), whereby patients rate their own health, could improve cost-prediction estimates without requiring individuals to share personal health information or know about undiagnosed conditions. We compared the predictive accuracy of several models: (1) SHS only, (2) a “basic” model adding health-related variables, and (3) a “full” model adding measures of healthcare access. The Medical Expenditure Panel Survey was used to predict 2015 health expenditures from 2014 data….
The full model, which added race and socioeconomic variables, as well as access variables, yielded an adjusted R2 of 0.290 and root MSE of 1.507….
This study found that SHS alone was not a strong predictor of medical expenditures on an individual level, despite strong correlations between better health and lower expenditures at the aggregate level.
I found the last sentence to be fascinating and critical. Self reported health status is a pretty decent metric when applied to a large group in the attempt to predict group costs. It is a MEH metric when applied at the individual level. Adding in some clinical factors improved the model fit but even still, it still only explains 29% of the variance (which is not bad… but not great).
Picking insurance is hard and the idea that self reported health status is an easy hook into reliable decision-support tools to improve plan choice is attractive but likely to lead us down a thorn bracketed path.
** Jan-Dec 2021;58:469580211064118. doi: 10.1177/00469580211064118
Spanky
I dunno, I think it’s pretty easy to predict that I’ll live in excellent health until 105, when I’ll be gunned down by an irate husband.
OzarkHillbilly
I just use the “pin the tail on the donkey” method of picking insurance.
Ohio Mom
As my sister the librarian has observed, “Their actuaries are better than your actuary.”
On another note, I see in today’s local paper that the company that has that new, super expensive Alzheimer’s drug has slashed the price in half. I am under the impression that the anticipated wide use of this drug was at least partially responsible for my Part D premium shooting up. So where is all that extra money going to go?
RSA
Wow. I work in a STEM field, and I don’t remember ever seeing an R^2 that low in my research area. I’m thinking you all are trying to solve problems that in some ways are much harder than the kind I’m used to looking at.
Baud
It is, however, easy to predict the political future of the United States for the next 10 to 100 years. The liberal internet taught me that.
WaterGirl
@Baud: I had exactly the same thought when I read the post title, though I of course you said it better than I could have.
Baud
@WaterGirl:
That’s because I speak good.
WaterGirl
@Baud: You be witty, too.
Kristine
I’m getting closer to ‘choose your supplemental Medicare plan’ age, and all this info comes in handy.
Apropos of absolutely nothing, ‘a thorn bracketed path’ would make an excellent story title.
Zelma
My method of picking a Medicare supplement was simple: I asked my cousin who ran a doctor’s office and who did most of the billing which plan to pick. It was as good a method of any.
Anyway
@Baud:
I don’t get so bent out of shape about random internet people “predicting” – I read predict as “high likelihood that this will occur given the priors and current conditions”. That is normal speech for laypeople.
Ohio Mom
@Kristine: We got a very good introduction to Medicare’s options from a volunteer with our state’s SHIP: https://www.shiphelp.org/
We met our volunteer at a branch library and came away understanding the parameters we’d have to work within.
Did we choose wisely (we went with Traditional Medicare and an AARP gap plan), who knows? As I’ve been told, it’s hard to predict the future.
Ohio Mom
@Zelma: After I explained my thought process for choosing Traditional Medicare to a slightly younger friend, she asked one of her sisters who works for pulmonary medicine group what her advice was, and reported back to me that her sister told her to do what I did. It was nice to have independent confirmation, for whatever it was worth.
I remain cautiously optimistic that Traditional Medicare was the right choice for me and Ohio Dad but the kicker for me is Part D.
You choose it by typing your current set of meds and your local pharmacy options into a nifty Medicare site and it tells you what the best deal is.
All well and fine but you can’t possibly know if you are going to need different drugs partway through the year, ones that are not on the formulary of the plan you chose or are terribly expensive on your plan.
You have to wait until the end of the for the new enrollment period to type your new set of meds into the nifty site and then cross your fingers nothing changes again.
Like everything else in American health coverage, it’s at its core a sucker’s game.
Spanky
@Ohio Mom: Yeah, Part D is a crap shoot when you are not currently on any drugs, but I’m happy to have that situation.
Like a wise man once said, it’s hard to predict your future.
lowtechcyclist
This reminds me, weren’t we supposed to get a public option added to the ACA this year? Or was that going to be part of BBB before Manchin sliced and diced it, and then cut out its heart and stomped on it?
WV Blondie
I’ve been very fortunate so far (she knocks vigorously on wood!) to enjoy pretty robust health – I’m 66 and on just one medication, for high blood pressure, and it’s a generic so quite cheap. Trying to decide among the many, many, many Medicare option plans was exceptionally difficult because of it. Who knows what my future holds?
I finally opted for a Medicare supplemental plan that (a) has no additional premium, (b) caps out-of-pocket hospital costs at an amount I think I can handle, (c) includes a prescription plan, since physicians today seem to depend on drug treatments for a wide range of conditions in the elderly, and (d) is offered by the single largest health insurer in the state, so I don’t have to worry very much about going the dreaded “out of network” route.
Was it the best plan I could have chosen? Who knows? It appeared to be, for the amount of energy and research I was prepared to invest.
OzarkHillbilly
Nah, it’s easy: We’re all gonna die.
Ohio Mom
@WV Blondie: That sounds like an Advantage Plan, not a Supemental plan, which is what people on Traditional Medicare buy.
That’s because in the Traditional option, there is no cap on the total of the 20% co-pay. It’s 20% without end; the Supplemental plan insures against never getting off that hook.
Like everything else, Advantage plans can be a good option, depending on a multitude of variables.
Omnes Omnibus
@OzarkHillbilly: You can’t prove that.
OzarkHillbilly
@Omnes Omnibus: I don’t have to.
Jim
I started Medicare 15 years ago, when Advantage plans were few and far between. I was able to afford the top Supplement plan available and have been happy I made the choice I did. It obviously costs more up front, but since it covers just about everything, I’ve paid almost nothing beyond the premiums (<$100 total for the 15 years), despite surgeries, etc. This removes a bunch of the “predicting the future” problem. I don’t know what I’d do if I had to make a decision on alternatives these days — it’s definitely complicated. And for those not yet on Medicare, even more so.
Jim
@Ohio Mom: Yup. The Medicare Advantage plans sound attractive, but the devil’s in the fine print. For example, the ads never tell you how limited the network may be, or the co-pays and other add-ons that will drive up your cost. As you say, it can be very complicated. I’ve stuck with my “predictable” Supplement for 15 years. Higher entry fee — I’m fortunate in being able to pay it — but much less uncertainty about potential future costs.
Another Scott
@Zelma: That’s probably the best method possible, given all the variables.
Unfortunately, like the rest of the US economy, it’s subject to year-to-year changes outside of your control (bean counters decide to jack up premiums or cut coverage; MotUs buying out the insurance company and drastically changing the coverage or dropping it entirely; etc.). That’s one of the great advantages of a public system – there’s no danger of Blackstone or Buffett or Gates deciding they want the company…
Thanks.
Cheers,
Scott.
(“Who has a few more years to go before he has to immerse himself in this stuff.”)
raven
Our university system gives us a stipend and we have to by one component through the AON retiree exchange. We have a counseling on aging gentleman (retired stats prof) who advises folks and he steered us away from the Advantage and to the “G” plans. I paid zero for my back surgery and PT after.
Ohio Mom
@Jim: One advantage you have that we Medicare newbies do not is that you were able to buy a Supplemental plan that covers Part B deductibles. I forget what Letter plans those are, you are grandfathered in but after a certain year, nobody new has been allowed to sign up for them.
Those Plan B deductibles can add up!
I realized a while back that what had long made reaching Medicare age so tantalizing to me was the promise of no pre-existing conditions exclusions.
Well, that is now the law of the land for everyone, and it turns out that in certain circumstances, pre-existing conditions can put limits on Medicare coverage (mainly if you have acquired an expensive condition and want to switch from an Advantage plan to Traditional; Part B underwriters may not want you).
It turns out that Medicare can be an expensive maze. A much better goal and rallying cry would be “Traditional Medicaid for All!” but there is such a resistance to “poor people” programs.
bemused senior
I chose kaiser medicare advantage and have been extremely happy with it. My cancer diagnosis came after I picked it. Love my kaiser doctors and nurses (after 3 hospital stays, including one in the ICU.)
Uncle Cosmo
Not that anyone would dare publish and expect anyone else to take seriously. An R^2 of 0.290 means that the regression model fails to account for over 70% of the scatter in the observed values.
There are waaaaaay too many people out there with a smattering of statistical training who simply do not understand that results that are statistically significant are not necessarily meaningful in the sense that they have important implications for actions that should (or should not) be taken. This is particularly the case in logistic regression-based models that trade in log-odds ratios: An odds ratio can be reported (and hawked) as statistically significant even when the lower limit of the confidence interval represents a 1% (or even less) increase or decrease in the number of people affected. I recall a book on epidemiological statistics whose author said that if a log odds ratio wasn’t at least 2 he threw it out as effectively meaningless. And I say “hawked” advisedly: Researchers are fond of taking those 0.5% or even 0.05% lower CIs, multiplying them by a population in the millions or tens of millions, and then bellowing that “thousands” or “tens of thousands” of people will die or be sickened…when often the “significant” effect disappears when other researchers take more factors into account.
Nora Lenderbee
I’m 59, hoping to retire early, looking for ACA insurance, and I’m overwhelmed by the profusion of options and their–opacity. The California ACA tool gives results like “Silver Plan X’s monthly premium will be $772 after the unspecified cost saving that you may be eligible for.” OK, so what does it cost if I’m not eligible for any subsidies? And what subsidy would I be eligible for? The tools give wildly different answers. My current insurance (through work) doesn’t write ACA plans in California, or I would start with that as the default. It’s frustrating. I have above-average intelligence, I’m educated, I even do my own taxes–but this stuff has me going in circles.
Almost Retired
@Nora Lenderbee: Me too. I’m exactly your age, also in California, and in the same position. We get our insurance through my wife, who is retiring in July. I just started doing the research on post-COBRA insurance, and the result I consistently come up with is “emigrate.”
Ohio Mom
@bemused senior: Kaiser has a good reputation so you are lucky. No Kaiser around here.
Kristine
@Ohio Mom: Thanks for the info. Medicare + an AARP gap plan was what a friend went with.
So far, I take one drug–Synthroid–at a heavily subsidized price. No clue what will happen once my company cuts me loose at 65 (I have subsidized retiree insurance through them).
Brit in Chicago
@Almost Retired: But where will take you, and give you the medical insurance that you have not been paying for while working? (Not only a rhetorical question: I sometimes think of emigrating myself.) The UK (still) gives all residents access to the NHS, I’m pretty sure, but I don’t know how hard it is to become a resident. Canada is quite fussy about whom they will let in, partly for this reason: if you’re not young enough to spend enough years paying in to their system, they don’t want to have to give you medical care in your old age.
(NHS = National Health Service, aka National Elf Service: it is nearly Christmas, after all….)
Ruckus
@Brit in Chicago:
Most countries resist geezer emigration. Partially for the reason you give, unless you have some pretty good ties to the country or a lot to offer. Some nice places are not so restrictive, some are very much so. And sometimes it depends on where you are coming from. It seems to be rather expensive for many.
WeimarGerman
@RSA: re: adjusted R^2 of 0.29.
This is not bad in this field. Keep in mind how many people are completely unaware of a creeping chronic disease like diabetes where their RX and maybe ER visits will increase; people who next year receive their initial cancer diagnosis; and all the accidents that no model will explain.
This is why individual prediction is so much harder than population level trends. There is no law of large numbers to support the individual level predicted value.
Mart
@Nora Lenderbee: For us the ACA was about free if income on 1040 was around 45k. More income and the subsidies fade away.
Gretchen
All the plans my son saw were $6-8000 deductible. Not affordable if he got really sick.
Procopius
@lowtechcyclist: Manchin is just the front, the Judas goat, so to speak. He provides cover for a dozen or more right wing Democrats who won’t have to actually vote against the BBB. I’ve forgotten their names (was one of them Gottheimer?), and won’t look them up, but there were nine or ten who were publicly involved with gutting the program. Remember it started out as a $650 billion program (dishonestly characterized as $6.5 trillion). They cut it down to $3.5 trillion, and then faded out of sight. Then Manchin, whose seat is safe and may not even run again in 2024, took over. After all, it only takes one, and as long as he votes “no” they don’t have to, although they might if he can’t be relied on. I still want to see a vote forced. Make the [expletive deleted] go on the record.
Betsy
Isn’t the whole idea of insurance about risk management and isn’t the whole idea of risk management about managing what you can’t predict? The whole idea that an individual purchaser ought to be able to guess what level of insurance they’re going to need is just so full of baloney! It’s a contradiction in terms! It’s illogical by definition!
Betsy
@Nora Lenderbee: There are some ways to avoid the dreaded “subsidy cliff.” Not many. Mostly you have to hide your income in retirement savings. Your AGI is lowered accordingly. So for example if I made $60,000 this year, which I will not, but just for the sake of discussion – I can stash oh I don’t know $30,000 away in retirement savings and end up with an AGI low enough to get a decent subsidy.