Price tends to play a significant role in any transaction. Whether buying a television set or a bicycle, we tend to evaluate what features the product offers at a set price point. There are so many factors to consider when it comes to the cost of insurance.
That price point for a thrifty person may not match the one for a whimsical buyer. But, in most cases, people make rational decisions based on the dollars they plan to shell out for a product and balance that spend with the satisfaction they will receive from buying that item.
Though insurance usually does not provide the satisfaction, at the point of sale, that a new bicycle or television will, we know that it may provide substantial benefits to us in the future.
We buy insurance to protect us from the unknown. Insurance, in its most basic definition, is a transfer of risk.
We transfer an unknown event or circumstance from our person to another party for a fee and we go to bed knowing that we have eliminated one more possible adverse action from harming us. This is logical and, in many cases, good for our health and well-being.
Auto insurance, liability coverage, and other true insurance products are easy to procure. You assess your risk and secure a premium. If you drive into trees daily, you are not going to buy a high deductible policy for your automobile.
Obviously, if you drive into trees on a regular basis, you may want to stop driving all together and your premiums will reflect that since you will be an adverse risk. It is rational and simple to understand.
The same can be said for individual health insurance policies. They are rated on a demographic basis. If you are a 27-year-old male, you will get a great rate (great is in the eye of the beholder by the way). You are invincible, on a whole, your age group has very few chronic conditions, and you will not seek care on a regular basis. The carrier knows this and will rate you based on that age pool.
Once you hit, 45, all those years of being invincible and spending money on “fun” items rather than caring for yourself, will catch up to you and your premiums, based on that pool, will be higher. Once again, simple. There is no way to really “game” the system if you want the satisfaction that comes with having some form of insurance against the unknown, such as a catastrophic illness.
So far, I have discussed insurance products. This is stuff you already know and if you are still reading this, you are probably asking “why did I just waste a minute of my time reading about what I, the smart, logical consumer, already knows?”.
Well then ask yourself one question intelligent consumer. Why are you buying group health care like it’s an insurance product?
Is group healthcare truly an insurance product?
Is the carrier you use an insurance carrier?
Do you know why you pay the premium you do?
Does the premium give you satisfaction in that you feel you pay the right price for what you offered in return?
Do you buy this “product” at the time you want with complete control on how it is delivered?
If so, then pat yourself on the back and stop reading. I will only be wasting more of your valuable time and I am impressed. You have accomplished something that most people cannot.
However, simply put, as you are aware, since you stopped buying group health like insurance at some time before reading this, it is simple if you take the time to understand how it all works.
If you didn’t feel that you have a good grasp on the questions I just asked, don’t feel bad. You have been trained by your broker and carrier to not ask questions and just pay. As Jeff Nichols, the director, said, you just shelled out money.
The problem is why shell out money for something and not really understand what is truly cost you and if it really works (satisfaction)?
So, now that you are still with me, you are obviously looking for answers. Let’s focus on a few items first that will set us on the right path.
Now, mind you, my goal, as President and Founder of this company, is to have you gain enough interest in this topic to reach out to me. Yes, that is also part of the cost. Information isn’t free.
I’m not in the business of educating other advisors or doing work for free. But, let’s make sure you have enough info from me that it aligns with you starting the process of contacting me and that the outcome provides you with satisfaction.
First and Foremost, on a group chassis (forget individual plans for this discussion), the carrier is not an insurance carrier. Carriers are simply network managers and claims payers. We need them to secure the most efficient cost when we access care and to protect our members/employees from balance billing.
We also want to make sure that when our employees access care, the provider is paid properly.
Second, since they are simply network managers and claims payers, why do we let them dictate the plan designs and price we pay? Why do they push these Consumer Driven High Deductible plan on us through our brokers and tell us they will let us shell out less money?
Let me simplify this, yes there is insurance in the plan but that is for the catastrophic claims or “unknown” that we want to transfer risk to. Ok, yes there are “known” conditions like orphan drugs that are pretty easy to forecast a spend on over 12 months (see our blog from my partner on orphan drugs), but for simplicity, let’s assume a heart attack, car accident , etc. doesn’t happen every 6 months to a person (forget my example of crashing into trees from earlier please).
Thus, there are insurance components in any plan, BUT, the key here is the carrier in most cases is off loading that risk in a significant manner to a third party (just as you would) and then just rebilling it to you.
Third key piece, if the carrier is rebilling the insurance component, what happens if their partner loses on your group because the unknown was a sizable cost to that third party? Do you have enough information to know what the premium was that was paid and if those claims will continue?
The answer is probably no. But, shouldn’t you know all these items? You know every feature on that TV or bicycle you were buying, and you balanced those features based on the price.
Fourth, and foremost, you do not have enough information when buying group insurance to know the features and have those features match a price that you want to pay.
I can go into Consumerism and why it will never work and just creates more issues for an employer especially when the price or cost is set by the carrier.
I can tell you why having your Prescription drug coverage and other products bundled with the medical carrier also is just plain bad for you as a buyer. But, the focus is costs here. The point is shouldn’t you know all the costs and align them to what you want to pay? Well, you can.
In the end, we can show you exactly how to procure a benefit plan with the carrier you want, the plan design you want, and at the cost you want. In the end, when you shell out the money, you know what you are paying for and have control.
If you don’t call us, you will continue to buy your group health plan like you do car insurance.
Brokers and carriers will convince you that I am wrong, and you should stay the path. My only response is trust the person you trust and hopefully the real cost matches what you pay.
