Help is Coming with Deciphering the Fine Print in Insurance Policies   (August 21, 2011)

I suspect that most of us have generally avoided trying to decipher the fine print in insurance policies, and that even fewer of us have had much success in comparing coverage from one insurance policy to another. A recently-unveiled proposal from the Department of Health and Human Service might make it a bit easier, especially for people with diabetes.

To quote from the Centers for Medicare & Medicaid Services website: "Thanks to the Affordable Care Act, every American consumer will receive an important new tool to understand their coverage... starting in March 2012, if you are one of the 180 million Americans with private health insurance, help is on the way to make sure you understand your health insurance."

According to that website, plus news stories in the Washington Post and the Kansas City Star, the proposal will require private insurance companies to provide a standardized summary of costs and benefits. The summary would have to be supplied on demand, as well as being automatically provided before enrollment and before renewal. Insurers would also be required to notify members of changes in terms of coverage at least 60 days before the changes go into effect. Insurance companies have a deadline of March 23, 2012 to submit these real-life policy details.

As a result of the proposed form, applicants for insurance would be able to compare the costs and benefits from one company to another. Needless to say, the insurance industry is howling and complaining that it would be difficult to produce the summaries.

A template of the proposed form is available on-line. On page 5 of the form, there are three "coverage examples" which are designed to show how the plan would cover medical care - and one of the three is for managing diabetes! (The other two are "having a baby" and "treating breast cancer".)

Each plan would have to provide information about their coverage for managing diabetes, broken down into deductibles, co-pays, co-insurance, and limits and exclusions, as well as giving a total amount that the consumer would pay. Pay for what? That's spelled out on the form: it's assuming a total cost of $7,800, divided amongst office visits and procedures ($960), laboratory tests ($300), medical equipment and  supplies ($40), and pharmacy ($6,500). I don't understand what these categories include (for instance, where is the cost for blood glucose strips - clearly it's not in "medical equipment and supplies" which is allocated a measly forty bucks). Also, the form isn't clear that it covers a year (compared to some other arbitrary period such as six months), but I assume it probably does.

But the important point is that the "bottom line" number for diabetes will be available for consumers to compare from one plan's summary to the next. Whether the total cost is about what you expect or way off, it's standardized for each company's form. The instructions point out that you should plan to look at the "You Pay" total, and compare the total from one company to another. The smaller the number, the more coverage the plan provides. The instructions also point out another factor that must be compared is the premium that you would pay: the lower the premium, the more you'll have to pay in out-of-pocket costs.

At this time, what should you do? I'd suggest you contact your local branch of the ADA and/or JDF, and encourage these organizations to support the use of the proposed form, and ask them to clarify whether the costs quoted for diabetes are accurate. Or, if you wish and if you can decipher the requirements, you can make comments yourself during the 60-day period.

And we should all hope that the insurance industry doesn't kill this proposal.

[Editor's Note: The final version of the template is on-line as of March 2012, and shows that the cost of treating diabetes has magically decreased from $7,800 to $4,100. And the cost of having a baby has also miraculously dropped, from $10,000 to $7,540.]