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January/February 2004 Living Now
Health Insurance: Realistic Solutions

by Daniel Keys

The Health insurance industry is like a patient with malaria– burning hot, followed by periods of chilling cold. Some elements of coverage are finally getting better, while at the same time, others are getting worse.

For example: The health insurance industry utilizing the traditional medical system is finally opening up to include alternative and preventive techniques for treating and maintaining good health. Many of the largest insurance carriers are allowing chiropractors, homeopaths, naturopaths, acupuncturists, and others skilled in healing arts to be included in benefit policies. Yet, just as these services are becoming available to policyholders, the cost of the premium is skyrocketing beyond the reach of those people most inclined to use those services.

It is estimated that the total number of uninsured people in the United States is over 40 million. Most families face health insurance premiums that constitute their first or second largest monthly expense. Historically, health insurance premiums were equivalent to a car payment, now they’re a house payment. For example, in Oregon, for a family of four with the oldest parent age 36, individual plan health insurance can cost anywhere from $480.00 to $850.00 a month. In the United States, average premiums cost nearly $8,000 per year. However, 73% of insured people use less than $500 in allowable expenses each year and 90% less than $1,000 each year*. Yes, insurance is staggeringly expensive…if you can get it.

Many plans will not cover pre-existing conditions. Other carriers will underwrite you if they are confident that you will probably never make a claim beyond your deductible while you are on their plan.

Many people in the US are working for companies solely for inclusion in the companies’ group medical plans. Even so, over half the small businesses in America do not offer health benefits to their employees and larger companies are utilizing temporary and part time workers to reduce their health care costs. Those who trade their waking hours in exchange for health care for themselves and their families are being squeezed out of the equation.

If ever something needed immediate care, it is the health insurance industry. It’s time for a hard look and some straight talk.

If you are like most people reading this, you are concerned with taking care of yourself. You avoid foods and habits that are harmful and destructive, and you embrace lifestyle choices that promote good health and long lives full of vitality. Still, bad things can happen to good people. That is where insurance plays a role: to pay for the things you can’t afford to pay for.

Unfortunately, health insurance has not been sold as such. If you bought automobile insurance the way most people buy health insurance, you would have a policy to cover windshield wiper replacement, oil changes, oil filters, tire balance and rotation, battery replacement, etc. How high would automobile premiums be? Nevertheless, this is how health insurance is sold.

There is a new health care philosophy. Using new organizations formed to address these imbalances, a new two-pronged approach has developed to cover health care needs without bankrupting the policyholder.

Many savvy individuals have taken the first step toward this new philosophy. They have insured their families with major medical insurance plans that have high deductibles (usually $2500 to $5000). These types of policies are usually 1/4 to 1/2 the cost of a standard health policy. This covers any unforeseen major illnesses or accidents that can take weeks or months of medical care to recover. However all medical expenses up to the deductible must come out of pocket. Therefore, when a member of their family goes to the doctor for a cold, twisted ankle or even to the hospital for a few stitches (procedures that will likely not meet the insurance deductible) they pay the full bill out of their premium savings.

Until recently, this could have served as a major drawback to a solution for lowering costs. But now, non-insurance medical savings programs, such as Care Entrée, address the front-end costs of health insurance, using PPO access. Traditionally, insurance companies have contracts with PPOs (Preferred Provider Organization) who negotiate with doctors and hospitals to receive discounted rates for their services.

It basically works this way: 1) The customer sends insurance companies a premium each month for health insurance. 2) A percentage of that premium is given to the PPO. 3) In exchange for the fee, the PPO provides a discounted Fee Schedule to the insurance company. Doctors, hospitals, and other health providers agree to the reduced rates to receive more patients and the guarantee of payment. 4) The insurance company in turn uses this Fee Schedule to reduce the amount of the claims they must pay to the provider. Using this schedule an insurance company can save up to 90% off the retail price of services.

Until recently, only large insurance companies had access to PPOs. But as groups of individuals have attained critical mass under the aegis of administrating organizations, PPOs will offer the same contract to responsible medical savings programs. For a very low monthly fee, individuals and families can become members of organizations like Care Entrée, and use the same medical providers as the insurance carriers use, at the same discounted rate that the insurers receive.

So now, an individual or a family can have a low-cost, high deductible insurance policy to cover catastrophic illness or accident. Suppose they need a doctor office visit for the flu or children’s shots. With a medical savings program they can receive the service at a drastically reduced rate (frequently just the equivalent of a co-pay), and that fee can be applied toward the deductible of the major medical policy.

A combination approach to health care coverage such as this can save that family of four in the vicinity of $300 a month - $3,600 a year, without sacrificing quality of care. Just as the problem is more clearly being recognized, solutions and answers are being formulated. The insurance industry may be ailing, but medical health coverage is alive and well.

James Miller is a medical insurance consultant and alternative health care advocate in Portland, Oregon.
He can be reached at 503 516 1540 or jamesmiller@bigplanet.com
Daniel Keys is an alternative health care advocate and business consultant in Portland, Oregon.
He can be reached at 503-473-3404 or danielkeys@bigplanet.com

* Memphis Business Journal 4/4/03