Ken and Maureen Blake have two children, with ages of 6 years and 5 months. Their younger child, Don, was born with a congenital heart defect that will require several major surgeries in the next few years to correct fully. Ken is employed as a salesperson for a major pharmaceutical firm, and Maureen is a stay-at-home mother. Ken’s employer offers employees a choice between two health benefit plans:
• An indemnity plan that allows the Blakes to choose health services from a wide range of doctors and hospitals. The plan pays 80 percent of all medical costs, and the Blakes are responsible for the other 20 percent. There’s a deductible of $500 per person. Ken’s employer will pay 100 percent of the cost of this plan for Ken, but the Blakes will be responsible for paying $380 a month to cover Maureen and the children under this plan.
• A group HMO. If the Blakes choose this plan, the company still pays 100 percent of the plan’s cost for Ken, but insurance for Maureen and the children will cost $295 a month. They’ll also have to make a $20 co-payment for any doctor’s office visits and prescription drugs. They will be restricted to using the HMO’s doctors and hospital for medical services. Which plan would you recommend that the Blakes choose? Why? What other health coverage options should the Blakes consider?