Is your health insurance really helping you?
Healthcare and health insurance are not the same thing. Healthcare can make and keep you well. Health insurance cannot. That’s an important distinction.
Health insurance is not, of course, unimportant. It is not the enemy. Health insurance is, however, complicit in the ever increasing cost of healthcare. It is not the only culprit. Unnecessary procedures being performed, the overall rise of chronic illness (asthma, heart disease, diabetes) and obesity in this country, and the lack of visibility and communication among healthcare providers also contribute heavily. But health insurance companies share in the blame.
This stands to reason. Health insurance companies are middle men. Their revenue model requires them to collect more money than their cost of reimbursing medical expenses. On top of medical expense reimbursement, they have significant administrative costs to cover. Many of the largest insurance companies are also for-profit entities, meaning they exist to make a profit.
Additionally, the interaction between healthcare providers and insurance companies – or billing – is excruciatingly complex and requires massive administrative effort on both sides of the equation. All of that administration is expensive. The reported numbers are not highly consistent but as much as 30% of every dollar paid on a medical bill in the individual marketplace goes to administrative cost. It has also been reported that for each patient seen by a primary care physician, about 13 minutes of administrative coding and billing for reimbursement is required. An average primary care physician sees about 25 patients per day to make the economics of their practices work. That means roughly 5.5 hours per day must be spent on administrative stuff alone. That’s expensive.
This complexity of reimbursement not only increases administrative costs but also reduces the ability to determine and communicate the cost of medical services. This lack of visibility limits a patient’s potential to be a good consumer and decide which services are better values or even worth doing. Most of us who have families can remember getting a medical bill and thinking, “if I had known it cost that much, I would not have agreed to do it!”
So, what can you do about it?
For starters, begin to think differently about health insurance. Begin to think more like a consumer. For example, liken health insurance coverage to automobile insurance. You purchase car insurance to cover extensive damage – things that happen that would cost you more out of pocket than you can afford or are willing to pay. Think about how much auto insurance would cost if you filed a claim for every ding, tire rotation, or oil change. Why should health insurance be any different? Purchase health insurance for hospitalizations and major medical expenses – not for allergies, the flu, or your annual physical.
Stepping away from a comprehensive plan and opting for a major medical plan can save you a lot of money. If you haven’t already been pushed to a high deductible health insurance plan, consider major medical plans if you have some savings to manage paying for minor medical issues. Many practices, labs, and diagnostic services providers will provide very attractive rates for cash-based payment if the payment is prior to service. By you paying up front, they save the administrative costs of billing you and the insurance company.
Another step you can take is to combine common sense health insurance decisions with good preventive care and a physician who aligns with your financial and health goals. Research direct primary care physicians in your area! They typically charge a monthly cash price to cover a wide range of medical services along with helping you improve your health and prevent major medical costs.
It is not easy. But by being an engaged healthcare consumer, you can take control of your healthcare and see your overall costs decrease.
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