Budgeting for Health Insurance Using Decisive

Decisive -- How to Make Better Choices in Life and Work by Chip and Dan Heath

Our health claims experience is looking pretty bleak right now. If we stay on this trend, we could be facing a 28% increase in 2014. That kind of news serves as a tripwire even if it wasn't deliberately set. Yes, I just finished reading the Heath brothers new book, Decisive. If you haven't read it, it's well worth your time. And, if you're wondering what a tripwire is, David Lee Roth explains it best, but in short, a tripwire ensures you are aware it's time to make a decision, that you don't miss a chance to choose because you've been lulled into autopilot.

Another concept introduced in Decisive is bookending. Bookending helps us stretch our sense of what the future might bring, considering many possibilities both good and bad. So, if I look at our situation optimistically, I'd say we might get away with a 15% increase.

Health insurers are warning employers they may face sharp increases next year. The Wall Street Journal covered this in an article in March -- Health Insurers Warn on Premiums. UHC is telling clients to plan for 3.8% just to cover new taxes and fees mandated by the ACA which include:

• PCORI, the Patient-Centered Outcomes Research Institute fee aka comparative effectiveness fee ($2 PMPY in 2013 indexed to medical inflation in subsequent years) 
• Insurance carrier fee
• Transitional Reinsurance Fee ($63 PMPY) 
• Some plan design changes for 2014 like no pre-existing conditions, coverage of clinical trials, no limits on essential health benefits. 

UHC is suggesting groups in Maryland plan as follows. (This is a little different than what UHC is advising nationally according to this post.) The dynamics in the DC area tend to be a little different than the rest of the country. Employers provide richer benefits in our area and people have easy access to care. 

• +125% for individual 
• +25-50% for small group 
• +15-25% for large group

That makes 15% on the optimistic end and 28% on the other. Not pretty or sustainable either way. So, we'll be engaging our executive team to explore options. I mind mapped this process to guide us. Ultimately, that's the big lesson in Decisive -- you need a deliberate process to make good decisions.