Major Medical Cost Comparison
Insurance Commissioner Reveals Shocking Truth That Americans are Paying Thousands Of Dollars Too Much For Their Health Insurance & What You Can Do About It
• Would you like to learn what Insurance Companies “Don’t” want you to know?
We Call It Insurance, but That's Not Healthy (By Lawrence H. Mirel - Commissioner of Insurance and Securities, Washington, D.C.)
• “The current system for paying the costs of health care is seriously flawed, because insurance is the wrong model -at least for part of the system.” • “The general definition of an "insurable event" -- from traffic accidents to tornadoes -- is something that:” • First: is very unlikely to happen; • Second: will come without warning; and • Third: is not something the person who is insured ever wants to happen. (Excerpts From a Washington Post Article – 2001)
We Call it Insurance,…(Continued) • That definition applies to such catastrophic health events as serious illness or injury. But it “does not” apply to routine health maintenance. • Yet the current system for the payment of health care tries to cover both those needs, for catastrophic insurance and regular health care, in one system. This effort contains a built-in contradiction. The insurance system works best when the fewest people use it (i.e. make claims); the health care system works best when the most people use it (i.e. get checkups and tests and vaccinations). The goals are incompatible!
Two Different Tiers Of HealthCare • To begin with, we must recognize that we are dealing with two different tiers of health-care needs and must cover those needs with two separate tiers of payment. •
One tier is catastrophic illness -- and for that tier, insurance is the answer
• The second tier comprises health maintenance and routine medical procedures. For this tier, insurance is not the answer. Instead, I see other options: One is for people to pay these costs out of pocket, the way we now pay for many other routine needs, such as car and home maintenance.
Cost Analysis Major Medical (Blue Cross, Blue Shield Of Texas) www.bcbstx.com John and Mary (Ages 51/48) - April 2011 (Houston, TX)
PPO Select Choice (Comprehensive Coverage) $1,000 Deductible (80/20 Co-insurance) __________________
$970.00 Per Month
Cost Analysis Year by Year (Comprehensive Coverage - $970 per month) $970 x 6 months premiums = $5,820 $25 co-pay to the Doctor, would have cost us $5,820 + $25 1 year Of Premiums = $11,640.00 10 years = $116,400 to $150,000 (with yearly rate increases) 20 years = $300,000 to $400,000 (with yearly rate increases)
Catastrophic Coverage Blue Cross Blue Shield of Texas Hospitalization Only Insurance Plan $10,000 Deductible (with Co-Ins) Monthly payments (For John and Mary)
$325.00 a Month
10 Year Cost Comparison with a $40,000 Hospital Bill • Option A- Comprehensive Health Insurance • 10 years Premiums + $1,000 Deductible + $3,000 Co-ins for a $40,000 Hospital Bill =
Same 10 Year Cost Comparison Hi-Deductible Plan
• Option B - $10,000 Deductible Plan (Hospitalization) • 10 years Premiums ($40,000)+ $10,000 Deductible + $3,000 Co-ins and the same $40,000 Hospital Bill =
Section 125 Cafeteria Plans Here, an employer-based system could be useful, but not a system that tries to insure routine health care. Instead, employers and employees might be asked to put money into individual “Flexible Savings Accounts“ and/or “Health Re-imbursement Arrangements” for employees.
AWIS Including Hospital Patient Advocacy
• Option C AWIS and Catastrophic Insurance Add a “Section 125” FSA and/or HRA to offset the deductible for Employees
Conclusion • Same $40,000 Hospital Bill • Over a Ten Year Time Frame with premiums Which would you prefer? • Option A---- $154,000 Total Cost • Option B---- $53,000 Total Cost • Option C---- AWIS & PAC and Option B
Sensible Options • Use Catastrophic Hi-Deductible Major Insurance Plans for the Big Medical Bills • Use AWIS with plans around $119-$219 a month (for an entire Family) for the small Medical bills, (Doctor visits, Blood or lab work, Prescription meds, X-rays, MRI’s, Cat Scans, Dental Services, Eye-Glasses, etc..)
Example: AWIS Plan Cost $119-$219 a month for a Family: $10,000 Accident, $10,000 Critical Illness, and more • Catastrophic Insurance and an Awis plan would save you anywhere from $250 to $700 a month. • If put aside into a monthly savings account, it could grow from $100,000 to over $200,000 over a 10 - 20 year time frame. • Do you want the Insurance company to keep this, or would you rather keep it in your bank account?
Requirements for a Proposal 1. A company census of all employees, age, single, married, children, for a group quote on a Hi-Deductible Major Medical Insurance Plan within 3-5 business days. 2. An AWIS Plan will be added to help offset the insurance deductible. 3. (Optional)- Set up a Section 125 plan. This can be a FSA, HRA or both.
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