Most Americans Do Not Understand Health Insurance
A simple statement that most Americans do not understand health insurance
nor the plans that they purchase.
Thought I would provide the necessary information so when you do buy health insurance you are an informed consumer. Health insurance is made up of several different terminologies that needs to be understood.
HMO – Health Maintenance Organization
HMO-A health maintenance organization which offers medical coverage with the catch that you need a referral to see a specialist. The reason is quite simple and economic in nature. The insurance companies pay the Internist, or General Physician less than they pay a specialist. So the Primary Doctor is required to make medical decisions that perhaps could be better handled by a specialist. That means that the insurance company doesn’t have to pay higher charges to the specialists thus saving a significant amount of money. The copays and maximum out of pocket is less with the HMO than other type plans because the insurance company is controlling their costs.
PPO – Preferred Provider Organization
PPO-Preferred Provider Organization is the meaning of PPO but what it really means is that the patient or user can see any doctor in their network, whether locally or nationally without a referral. Usually all the cost aspects of these PPO’s are higher in these plans because of the freedom to choose who and when you see them. Unfortunately, these PPOs are no longer available in individual insurance coverage and have been replaced by the EPO.
EPO – Elite Provider Organization
EPO-Elite Provider Organization has replaced the PPO in individual coverage (PPOs are still available in group coverage). The EPO is basically the same as the PPO but you cannot go out of state unless urgent or emergency while the PPO still allows for nationwide coverage without a reason other than you
want to see a particular doctor. You still don’t need a referral to see a specialist but only in the local area. Going to a doctor or facility outside of your area will not paid unless it is urgent or emergency.
The basic premise for these changes is because all insurance companies now have to take all clients regardless of their health issues. Prior to Obamacare (The Affordable Healthcare Act) anyone who had a serious illness or disease could not get insurance because they couldn’t pass the exam or questions about specific medical conditions. I have Rheumatoid Arthritis and prior to Obamacare I needed to have group coverage, or I would not be insured.
While Obamacare allowed anyone with any condition to obtain health insurance the cost of that insurance has increased significantly.
Prior to Obamacare a male under 30 could get insurance for under $80 per month. That plan was a $1000 deductible and a $3000 maximum out of pocket. Meaning that the most you could pay in a calendar year is $4000.
Similar coverage today costs $450 per month. Not only has the monthly premiums increased while the benefits have decreased. Meaning the $1000 deductible and $4000 maximum out of pocket has been replaced by an $8000 deductible and maximum out of pocket. That means you pay the contracted rates for services until you reach the maximum out of pocket and then the insurance pays anything over those amounts. You are really paying for all medical services including prescription medications until you spend the maximum out of pocket. You will only reach that if hospitalized for something serious or you’ve had cancer or other illness requiring significant costs. Not what insurance was prior to Obamacare. While I believe all Americans should have access to insurance, the cost has surpassed any
inflation with no end in site regarding cost for coverage.
Both the monthly premiums and plan deductibles and maximums have increased significantly, and most people cannot afford it.
Looking at the medication side of the equation it is less expensive in most cases to pay cash for the drugs rather than use your insurance due to the above-mentioned situations. Using services like Singlecare.com, GoodRX.com and here in NV Nevadadrugcard.com costs less than your insurance. You should consider the cost of brand-named drugs as many newer ones have a high cost associated thud the insurance should be less expensive.
As a licensed insurance broker specializing in both individual and Medicare I see everyday the cost of the higher monthly premiums have on everyone and it is not a good situation for those with medium and low incomes. They don’t have a choice so getting the lowest monthly premium means their insurance deductible and maximum out of pocket are very high and in most cases, they will never reach it.
The insurance is just protection if something catastrophic happens health wise that you have a known maximum you have to spend, and the rest is covered by insurance. I call it protection against loss of your assets but in reality there are many suffering from large medical bills with no ability to pay those fees. If something happens medically and the bill exceeds their maximum out of pocket most Americans simply cannot afford it, thus the rise in medical bankruptcies.
This is a sad situation in America, but we must live with it or find ways around it to meet the specific medical needs of the insured.
Suggest taking the highest deductible and maximum out of pocket with the lowest monthly premium and risk a serious illness than pay a major portion of your income for insurance you may never need.
These are the facts relating to health insurance here in America and while we have the best doctors and facilities in the world we are behind the curve when it comes to health insurance. I am not suggesting socialized medicine because I simply do not believe in it but am suggesting that the leaders in the medical field and insurance companies need to meet and come up with a better alternative then currently available. Otherwise, insurance premiums will continue to increase while medical services decrease.
I hope this information is useful and it anyone has questions, please contact me via phone or email and I will respond quickly.
Also take a look at Medicare 2023 Information.
The Barend Agency Inc.
Len Barend, Broker