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Healthcare Part I: Is health insurance a misnomer?

By: Dr. Dale J. Buchberger

According to the Merriam-Webster’s dictionary the definition of insurance is: a means of guaranteeing protection. The key to the definition is the word guarantee. If you have had to utilize your health benefits lately you know that the company providing the policy will use terms like, “while we have approved the service, this does NOT guarantee payment”. Clearly the insurance industry no longer fits the definition of insurance and therefore should rename the entire industry. While it is common for the public sector to use terms like health insurance there really is no such thing as health insurance any longer by classic definition. What we have is a “product” that is confused with “health insurance”. You or your employer, have purchased a product that guarantees NOTHING! The company gives you a list of services it may cover with a participating provider. However all of the services are subject to scrutiny, micro-management and the opinion of one of their hired “case managers”.

Not all but most health reimbursement products carry with them a co-payment or a co-insurance. If a given service is reimbursed at a rate of $55 and you have a co-payment of $40 this means that the company providing the product only pays out $15. It doesn’t take a rocket scientist to figure out that the subscriber is paying twice and the product provider is making out like a bandit. Not only do they get you to pay your premiums but they get you to pay the majority of the contracted fee as well. In short the health product industry is failing to provide the product that you thought you were buying.

This is a simplified explanation, but it is an accurate representation of the current state of third party reimbursement products. It also has an exponential effect on the economy. For instance, if supermarket costs go up because operational costs increase due to rising gas prices, escalating employee benefits, etc. they can pass the costs on to the consumer. When the operational costs of a healthcare facility go up there is no place to pass the additional costs to. If third party reimbursements go down, there is no mechanism to pass the increased operating costs on to the consumer. The only way healthcare providers can adjust to the rising operational costs is to see more people in the same time and that translates to less time per patient and a reduction in the quality of the care provided. Ultimately, this approach is more costly as problems don’t get identified the first time.

But wait the insurance or product providers keep raising the premiums of their products and paying out less while passing the costs onto the consumer. This is how their CEO’s get the multimillion-dollar bonuses each year and we get the bill in the form of a 15-20% increase in premiums each year. What does our government do about it? Talk. That’s right all they do is, talk, talk, talk; nothing gets done, nothing changes, we continue to struggle and pay the bills. If you want to fix the economy fix the third party reimbursement system. The rest will take care of itself.

What does this mean to you as a patient? To borrow a line from the retailer Sy Syms, “An educated consumer is our best customer”. The general public needs to get educated about the products they are buying or the products they are provided by their employer. It is common to hear the phrase, “but I have great insurance”. This is a miss conception on the part of the patient because the situation usually involves little or no cost on the patient’s part. In this situation the patient has the benefit provided to them. There is little or no co-payment. They rarely see a bill. What they fail to see are the pennies of reimbursement to the provider and the astronomical cost to their employer. Many people reading this article would say that I am taking this position because I am a healthcare provider and of course I want to make more money. What they may not look at is that I am also a patient and health product consumer. My family members are patients in the health system as well. I have the perspective from both sides of the fence.

I have done my share of complaining and complaining without offering a solution is a waste of time and energy. So, next month I will offer solutions. Solutions our elected officials have ignored by sending me their stock form letters. Solutions, that cost $900 billion dollars less than President Obama’s plan. The key to improving the healthcare system and it’s reimbursement can be found in one word, efficiency. Next month we will see how efficiency is the key to fixing healthcare.