Weighing options again

It turns out the health insurance agent I talked to earlier this week probably was mistaken.  It seems that, as of January 1, 2015, no one will legally be able to sell me high-deductible affordable coverage, with or without medical underwriting, "on" or "off" the exchange.  It's all gone after this next year.

So to recap:   For over a decade we've had a high-deductible policy ($10K per person/$15K for the two) with Blue Cross.  It's very good PPO coverage, decent network, covers all the usual stuff, but a high deductible.  By law, it must be replaced with a deductible that's $3,750 lower per person ($2,500 for the two) but costs $4,800 more a year, and offers no new benefits of any conceivable use to us now or ever.  We have to decide whether to pay the extra $4,800 a year, or go without insurance for the first time in our lives.

We don't "insure" for medical costs that are reasonably likely in an ordinary year; we "budget" for those.  Insurance is for very unlikely harmful developments.  We rely on insurance in case (1) we have a medical problem that would make our lives unendurable or kill us, (2) that can be cured, and (3) that would cost enough to blow our live savings.  All three of conditions (1)-(3) have to happen before the insurance will make a difference to our life savings.  If the medical problem isn't that serious and we can't pay for it, we'll do without. If the medical problem is serious but can't be treated effectively, we'll do without.  If the medical problem is serious and can be treated and wouldn't obliterate our live savings, we'll pay for it ourselves.

The policies offered on the exchange on a subsidized basis (the only way to avoid the huge price hike) are all HMOs.  If my information is correct, they're the worst possible sort of "closed network" HMO; you're covered in the network, but outside the network, you don't just get a lower co-insurance rate, you get zero.  This is a sign of the deteriorating insurance climate, where squeezing down the network is the last option available for cost control.   In contrast, in our PPO, if we go out of network, we suffer only a partial loss of benefits, and there's still a cap on total out-of-pocket expense, though higher than the in-network cap.   If we stay in network, the doctors who have accepted Blue Cross are prohibited from charging us more than the Blue Cross rate, so the entire bill either counts against our deductible or is paid at the usual co-insurance rate.  If we go out of network, the doctor charges what he charges, not Blue Cross's fantasy of what he should charge; we're responsible for 100% of the "excess" price, and only the fictitious price counts against our deductible or is paid at our co-insurance rate.  But even then, we get a certain amount of help with catastrophic bills, and it is possible to put an upper limit on how much destruction can be visited on our life savings by a medical catastrophe.

A closed-network policy HMO would do us almost no good at all.  We want coverage only if there is a very serious problem, and that is the last time we'll be willing to settle for a Tier-4 doctor in the next county.  Our life savings would be nearly at as much risk with such a policy as if we were going bare.   So our decision, which we'll face in late 2014 when our current policy is destroyed by the ACA once and for all, is (1) go bare or (2) pay $4,800 a year more (minimum) for a PPO plan with a decent network of doctors and hospitals.  What makes the choice even more difficult is that Blue Cross reportedly is going to lose doctors and hospitals even from its PPO networks, though probably not as many as they'll lose from their HMO networks.

Going bare would mean saving about $11K every year.  That's enough to build up a pretty impressive warchest against the possibility of an expensive disease.  And we have to consider, now, that we're taking a gamble only on horrible medical bills for a maximum of one year, depending on what month the disaster lands in.   After that, we can just sign back up for insurance for the following year.  (And who knows?  Medicare may actually survive long enough to kick in in 7-9 years.)  The IRS penalty for going bare would be negligible and uncollectible anyway.  Crazy, but going bare seems like the rational choice.