Over the past 50-plus years,
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There has been a lot of talk, and more recently, new regulation, directed at transparency and making it all easier. Yet no amount of talk, and certainly no amount of regulation, will make existing health insurance plans easier and better for the average American or for small businesses. The only way the experience in healthcare will improve is to fundamentally change how we navigate and
Then versus now
Forty years ago, health plans were exceptionally simple. People with health insurance had very low deductibles and premiums were a small percentage of total income. Modern technology was in its infancy and little data was available.
Over the years, a few key developments made health insurance plans increasingly complex:
- Health insurance companies started to develop provider capabilities in-house or purchase primary and speciality care services. UnitedHealth Group, an insurer, currently employs the most physicians in the country. Kaiser has developed a model where they are both the insurer and the provider. They pay themselves for the healthcare they provide.
- Healthcare networks were developed between insurers and providers so they could agree on access and pricing. Today, some insurers and providers negotiate for an entire year on prices that are fixed for a period of time, in some cases as long as three years. The same provider will do this with many different insurance companies, negotiating different prices with each insurer. The result is a complicated list of widely variable prices that change sporadically.
- Creative financial structures were added to the design of the health plan. For most of the plans we use today, there are three different ways to pay out of pocket for care: deductibles, copays and coinsurance: three separate tools to have you share in the cost. When finding care today, you need to figure out how much is left on your deductible, what your copay is, and how much money you owe from the coinsurance to determine the amount of cash you're paying with your visit. The math is near impossible to do on our own. If this was not enough, the industry created Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). These are financial accounts that are designed to help pay for out of pocket expenses. The intent is to provide tax efficient ways to pay for whatever cash expense you owe, but few people fully understand how and when to utilize each account.
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The reality of today’s healthcare options
The healthcare industry has developed into a complicated mix of providers and insurance companies, and networks have transformed into a complex list of prices. Meanwhile, health insurers have manipulated the design of the plan in an attempt to lower premiums and help people cover out of pocket expenses and instead created an impossible math equation and a sea of acronyms. Taken together, today's most prevalent health plans are too complex for members to understand. Transparency, which has become an official buzzword of the healthcare industry, is meaningless.
For many of us, convenience reigns supreme when choosing where to get care. However, in certain pockets of the country, especially among large companies, change is happening. Networks and health insurance plans are being redesigned using technology to make information more accessible. These plans can seamlessly tell you how much you need to spend out of your checking account to get care. They spend more for preventive and behavioral health while lowering total cost, and relentlessly help their members avoid the (few) providers that are not delivering positive outcomes to patients.
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At the end of the day, this is what a health insurance plan should do. The average American will spend over $7,500 and the average family of four will spend over $22,000 this year on health insurance before taking into account out of pocket expenses. We don’t ask for much in exchange. We must start asking for more.
