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The New Healthcare Crisis: When Having Health Insurance Isn't Enough

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Gambling with Healthcare

Mollie Michie-Lepp, 34, a former college swimmer who hits the gym five days a week, never thought she'd be faced with medical debt. She received health insurance through her employer, a small business-management firm; like Jennifer, Mollie assumed she was well covered. Two years ago she got pregnant -- and found herself on the hook for $400 in doctor co-pays and ultrasounds plus another $1,700 because her insurance wouldn't fully pay for her routine delivery. Although Mollie's debt was small compared with some insurance horror stories, it still left its mark. "It took almost two years to pay it off," she says. "I thought I'd covered myself, given the amount deducted every two weeks from my paycheck. Now I realize it's a lot more complicated than that."

Mollie is still rolling the dice with her healthcare. One of her employer's plans has a $1,500 deductible she'd have to reach before her insurance picks up the tab; another has no deductible, but charges $35 co-pays per visit and limits coverage of prescription meds. Mollie opted for the second plan. "At least I know how much I'm paying up front," she says. To save money, she declined her company's offer to set up a Section 125 plan, which takes pretax money out of a monthly paycheck to offset unexpected costs. "I know I'm gambling that I won't get sick," Mollie says. "But I'm healthy, and I take care of myself. I don't want to give money away that I won't use."

It's a risk that leaves her vulnerable. In 2007 some 72 million Americans had ongoing medical debt -- fending off collection agencies or using their savings to cover outstanding payments. Leigh Borland, 46, a Realtor in the Chicago area, knows the horrors of medical debt. In early 2006, she was diagnosed with a rare sarcoma on her colon. Her private insurance plan covered thousands of dollars for surgery, the hospital stay, and follow-up visits to the oncologist. It was only when Leigh went to buy her first month's supply of Gleevec, the pill form of chemotherapy, that she discovered a problem. As she pulled out her wallet to hand over her $25 co-pay, the pharmacist passed her a bill for $2,715.80. Her insurance, she was told, did not cover the medication.

"I went to my car and cried," Leigh says. "I needed this drug. But who on earth can pay $2,700 every month?"

It turned out that Gleevec's manufacturer, Novartis, had a fund providing direct payment assistance for patients -- but only for those with no insurance at all. (It has since begun to cover certain underinsured cases.) Reluctantly, Leigh put the pills on her credit card, knowing she could afford only a month or two despite her doctor's advice that she take it for the foreseeable future. "I thought, Will I have to file for bankruptcy?" she says.

Luckily for Leigh, a social worker she consulted told her about Patient Services Incorporated, a nonprofit charity that helps underinsured Americans pay for medical expenses. The good news: Patient Services offered to cover her nearly $33,000-a-year prescription. The bad news: Her insurance company raised its premium from $3,000 in 2005 to $9,900 in 2008.

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