This guest post was authored by Reed Brandon.
The nation’s migration toward high deductible insurance plans is forcing a transition in medical care – one focused on meeting the needs of America’s consumer class.
Stories everywhere are reporting that millions of Americans are under insured and can’t afford out of pocket medical expenses and therefore are foregoing needed medical care. There are now a reported 31 million Americans on high deductible plans. The state of Minnesota just announced it is transitioning all state employees to these plans starting next year. Regardless of whether Obamacare stays or goes, high deductible plans are the new health insurance reality and millions more will fall into the growing class of underinsured citizens.
At our most basic, surface level this is true, and if consumers simply stayed at home complaining about lack of care, it would persist. However, American consumers are resourceful, and are demanding (for the first time ever) transparency, consumer choice and competitive pricing from healthcare providers. Patients with high deductible plans are searching for better terms as it relates to out-of-pocket costs. This demand is being met by both pioneering hospitals and new companies designed to provide low-cost care alternatives and real transparency.
Consumers can now purchase medical care at reduced prices through MDsave. MDsave has rolled back medical pricing at levels last seen 25 years ago, creating the world’s first online healthcare marketplace. Pricing is transparent and consumers can search and compare pricing across multiple providers in their hometowns.
The pricing is bundled with all related services included, so there are no surprises in the form of a bill from an anesthesiologist showing up three months later – No smoke and mirrors here.
Hospitals and doctors haven’t all of a sudden gone crazy and decided to work for less. The secret lies within the perceived problem. Up until now, patient care was managed by and paid through insurance. Patients had no say in the pricing and just paid their share when the bill arrived months later, no questions asked. What most people don’t know is that the expense of billing and collecting in addition to dealing with insurance companies can account for 50% of a medical bill. By eliminating these additional expenses, patients can now shop for discounted care.
Paying out-of-pocket as required by high deductible insurance circumvents all of this add on expense when patients use a service like MDsave. Patients are just simply paying for the medical care, which at it’s core has not changed all that much over the last 20 years. Doctors still make the same amount they always make without taking on the collection risk. Therefore, all of the medical field’s best providers are available and patients can still submit the expenses to insurance and have it count toward their deductible.
Cutting out all of the added expenses combined with patients getting twice the amount of care before insurance responsibility kicks in has the power to radically change the insurance landscape. If high deductible premiums are less then other plans (and they are), with out of pocket expenses reduced by more than half, patients could (should) save thousands of dollars a year on their healthcare.
No need to pay $900/month for no deductible insurance if $400/ month and a $80 MDsave visit voucher will do. On average, that makes $10,800 a year vs. $4,880. And if a patient has a medical event and needs to pay a $2,000.00 deductible, annual expense rises to $6,880, which is still $4,000 less. The upside for insurance companies is that patients are getting twice as much care before deductibles are met, which means fewer claims.
Ultimately, this can become good for the consumer as fewer claims yields greater margins. Greater margins can mean the ability to be more competitive and increase market share. Imagine a world where health insurance companies are competing for your business, like car insurance and cell phone companies. Per the industry standard, insurance companies would drop premiums and deductibles to compete for business with this newly created medical consumer class. All the while, patients are saving thousands, the number of underinsured citizens diminishes and doctors and providers are making more than ever.
So, if left to consumerism and market forces, high deductible plans may just be the answer Americans have been searching for when it comes to reducing the total cost of medical care.