WHAT WENT WRONG WITH HEALTH INSURANCE and what you can do about it

I’m not sure the insurance industry created the slogan “There’s No Free Lunch” (TNFL) but it’s been an integral part of their business model since time immemorial.  You don’t want pre-existing conditions – you want to cover kids till they’re done with college.  No problem, say the insurance companies.

There is no TNFL.  The insurance companies never object to any added coverage because that allows them to charge more premiums and they like the added revenue.  No one ever asks if the coverage and the added premiums are cost effective.

In the mid fifties, health insurance companies didn’t cover birth control, maternity care or childbirth.  A misguided public began clamoring for it and so now it’s a part of ObamaCare.  Remember TNFL, so it’s added to the premium.

Why do I say “misguided”?  As health insurance evolved over the last 50 or 60 years, the public, enabled by the insurance companies, were crying out for more and more first-day coverage.  This was a new misleading philosophy which paid little attention to cost effectiveness and has led to the unfolding disaster of the so-called Affordable Care Act (ACA), which, as predicted, is becoming less affordable and more unmanageable.

If the public had been educated to understand the most cost-effective use of insurance was for catastrophic coverage with high deductibles (major medical insurance), the costs would have been contained and the effects would have been equally as good healthcare.  Maybe even better!

Writing in the NY Times, Columnist Ross Douthat set the stage for a cohesive argument in favor of catastrophic or major medical insurance as a way to control costs without affecting health outcomes.  He said:

“In one of the most famous studies of health insurance, conducted across the 1970s, thousands of participants were divided into five groups, with each receiving a different amount of insurance coverage.  The study, run by the RAND Corporation, tracked the medical care each group sought out, and not surprisingly found that people with more comprehensive coverage tended to make more use of it, visiting the doctor and checking into the hospital more often than people with less generous insurance.

“But the study also tracked the health outcomes of each group, and there the results were more surprising:  With a few modest exceptions, the level of insurance had no significant effect on the participants’ actual wellness.

“But the basic finding—that more expensive health insurance doesn’t necessarily lead to better health—just received a major boost.  The state of Oregon expanded its Medicaid program via lottery a few years ago, and researchers released the latest data on how health outcomes for the new Medicaid users differed from those for the uninsured.  The answer:  They didn’t differ much.  Being on Medicaid helped people avoid huge medical bills, and it reduced depression rates.  But the program’s insurance guarantee seemed to have little or no impact on common medical conditions like hypertension and diabetes.”

The ACA was created by unrealistic academics and political works that it would save thousands of lives, reduce costs and rescue thousands more from healthcare-induced financial bankruptcy.

Unless there are major structural changes to ACA, it will accomplish very little of what was promised and is already causing major economic problems with higher costs and taxes, as well as business cutbacks in employee working hours and benefits.

In addition to the rollout disaster, there are so many things wrong with the Affordable Care Act that we don’t have time or space to itemize it all here.  Let’s just hope the Obama administration can rescue his one real legacy over the next year or two.

Don’t be surprised if the major rescue plan proposal will be to go to a single-payer system which is what they really wanted all along.

We can’t go back to recreate more effective insurance but in the last year or two I have taken a partial step in that direction.  I have a Medigap Plan F-HD that provides all the Medicare coverage with a deductible for this year of $2,110.  That means the insurance company pays nothing until my costs exceed $2,110 in the calendar year.  So far, neither my wife or I have reached the $2,110 deductible.

It’s not the best plan I would devise, but at least it’s a step in the right direction.  The premium for Gabriele and I is under $1,000/year, about $6,000 less per year than the same plan without the deductible.

If you’re relatively healthy, this kind of plan works well for you.  If it begins to not work for you, you can always change plans.

All the money in the world could not save Steve Jobs.  We’re not getting out of this world alive.

Lisa Zamosky, writing in the L.A. Times, quotes a number of healthcare experts on following a 6-step plan if you want to use a high deductible insurance plan.

Step 1:  KNOW YOUR PLAN – know what is covered and what isn’t.  There is a required list of preventative services which are free under the ACA, no matter what the deductible.  The list is available at healthcare.gov.

Step 2:  STAY IN THE NETWORK.  Getting care from your insurance company’s network of doctors, clinics and hospitals will be less expensive.

Step 3:  SIGN UP FOR A HEALTH SAVINGS ACCOUNT.  The HSAs are tax-free investment accounts which can be opened by anyone enrolled in a qualified health insurance plan.  For 2013, an individual can put as much as $3,250 and a family as much as $6,450 in a HSA.  Over 55, you can add another $1,000.  Money can be withdrawn for any health care costs.

Step 4:  SHOP FOR THE BEST PRICE and negotiate.  FairHealthConsumer.org provides some good information for estimating potential costs for medical care in your area.

Step 5:  TAKE RESPONSIBILITY to take better care of yourself and stay in better physical shape—lose weight—quit smoking—cut down the drinking.

Step 6:  BE PREPARED to do some bookkeeping to monitor and validate your deductible costs.

Like it or not, in this day and age you have to be more involved and study all the options you can find to save money and get the coverage you really need.

This post was prepared with assistance from Paul Pendorf, an independent special agent for all Medicare and Rx insurance plans, as well as the state exchange plans and the new Obamacare.  He can be reached at 800-497-7504.


1 Comment

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One response to “WHAT WENT WRONG WITH HEALTH INSURANCE and what you can do about it

  1. Jay Berger

    May your comment “the major rescue plan proposal will be to go to a single-payer system” become the reality. If everyone had this payroll deduction (JUST LIKE SOCIAL SECURITY) no one would be worrying about funding and all the “healthy” ones could stop gambling with their wellness.

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