1. increase the number of people on their panel
2. decrease the spending on healthcare costs
With the Democrats taking the house in the midterm elections of 2018, the healthcare stocks went up by 4-5% the next day just because of the possibility that some government mandated scheme will increase the number of people who will end up on the rolls of insurance companies by expanding coverage.
Healthcare is a non-partisan problem and you better believe that insurance companies are going to make money regardless of who is in power...Democratic policies will increase the number of people on insurance rolls, and Republican policies will deregulate the market allowing insurance companies to cut their costs by denying coverage or providing products that cost a lot but deliver nothing...it’s a win-win situation no matter who is in power.
So how do health insurers take your money? They basically do this three ways:
- Insurance premiums: These are up front monies that are taken just for having the privilege to carry your insurance card. The cost for this benefit has been steadily rising every year reaching $7,000 for individual and $19,000 for family plans in 2018. You may think that your employer is paying most of it, so what do you care...well you should because this is part of the reason why your wages aren’t going up--we will discuss this more in a later blog.
- Copays: These are fractional costs per visit that you pay at the time of the visit. This can vary from $10-$100 for primary care visits, $500+ for ER visits, etc. If you are to ask a healthcare office--what if you just pay “cash” for your visit so the practice doesn’t have to bill the visit and get their payment at the time of service--you know like how all other businesses operate by being paid for services at the time of service, you will be surprised to learn that at times the cost of the service can be less than your copay. So next time, ask your healthcare provider--”how much for the visit if I save you the hassle of having to bill my visit to the insurance company?”
- Deductibles are the black hole of health insurance, nobody knows what you are going to have to pay for any service before you obtain it, including the insurance company!! Try it-- next time you have a medical visit, call your insurance company, and if/when you get to one of their “customer” representatives, ask that person, “what should I expect to pay for my upcoming medical visit?” Almost guaranteed will be a series of qualified responses of it depends on this and that...none of which are in your control. Simply put, deductibles are money that you have to pay out of pocket until you reach your maximum. Average deductible in 2018 for individuals ranged from $4,000 to $7,000, and $8,000 to $15,000 for family plans. This means that you have to spend this much money on top of the premium before your health insurer will pay for your care. Now understand this--you will never reach your maximum unless you have an unfortunate incident that gets you admitted to the hospital (NOT just an ER visit), or if you unfortunately need treatment for expensive therapies like cancer treatment.
So now you know--you sink $7k to $19k into a premium just so you are given the illusion of being covered by “insurance” but when you go to use this insurance, you will realize that you are still responsible for visit cost at the time of your service AND you will be responsible for your deductible.
Here is a simple example--let’s say your child needs to visit an urgent care; you already bought a policy for $19,000. Then you pay $50 for the urgent care visit, and then you find out that the urgent care billed the visit for $300 but since you are lucky and have health insurance, your insurance company got you a “contract” price of $120...but since you already paid $50, now you only owe $70 because your family hasn’t spent $15,000 already on healthcare costs. Now if you had just asked the urgent care at the time of visit--”how much for the visit if you pay “cash” at the time of service?” The most likely answer will be between $70-$100 depending on your market.
In our next blog, we will look at why the insurance companies operate the way they do...are they just sadistic or constrained by the realities of our healthcare market...as usual the truth lies somewhere in the middle, though perhaps closer to the sadistic range :)