Saving on your small business health insurance can be a
challenge. But there are ways to overcome the financial obstacles and
get the coverage necessary for your business. There are two major
benefits of employer-based coverage. First these plans, although
expensive, usually carry the best all around protection for you and your
employees. Second, providing benefits plays a key role in attracting
and retaining quality employees.

Why is coverage for small businesses so much more than for large corporations?

Health
insurance for small businesses cost so much because of the high quality
coverage concentrated among a small group of people. Every individual
within the group represents a different level of financial risk to an
insurance company, and this risk is added up and spread out among the
group. Large corporations pay considerably less because the risk is
spread to such a large group, where small business owners can see
unreasonably high increases in premiums due to one or two members. Small
businesses also have to insure their employees under state mandates,
which can require the policies to cover some specific health conditions
and treatments. Large corporations’ policies are under federal law,
usually self-insured, and with fewer mandated benefits. The Erisa Act of
1974 officially exempted self-funded insurance policies from state
mandates, lessening the financial burdens of larger firms.

Isn’t the Health Care Reform Bill going to fix this?

This
remains to be seen. There will be benefits for small business owners in
the form of insurance exchanges, pools, tax credits, subsidies etc. But
you can’t rely on a bill that is still in the works, and you can’t wait
for a bill where the policies set forth won’t take effect until about
2013. Additionally, the bill will help you with costs, but still won’t
prevent those costs from continually rising. You, as a business owner,
will need to be fully aware of what you can do to maintain your bottom
line.

What can I do?

First you need to understand the plan options out there. So here they are.

PPO

A
preferred provider option (PPO) is a plan where your insurance provider
uses a network of doctors and specialists. Whoever provides your care
will file the claim with your insurance provider, and you pay the
co-pay.

Who am I allowed to visit?

Your provider will cover
any visit to a doctor or specialist within their network. Any care you
seek outside the network will not be covered. Unlike an HMO, you don’t
have to get your chosen doctor registered or approved by your PPO
provider. To find out which doctors are in your network, simply ask your
doctor’s office or visit your insurance company’s website.

Where Can I Get it?

Most
providers offer it as an option in your plan. Your employees will have
the option to get it when they sign their employment paperwork. They
generally decide on their elections during the open enrollment period,
because altering the plan after this time period won’t be easy.

And Finally, What Does It Cover?

Any
basic office visit, within the network that is, will be covered under
the PPO insurance. There will be the standard co-pay, and dependent upon
your particular plan, other types of care may be covered. The
reimbursement for emergency room visits generally range from sixty to
seventy percent of the total costs. And if it is necessary for you to be
hospitalized, there could be a change in the reimbursement. Visits to
specialists will be covered, but you will need a referral from your
doctor, and the specialist must be within the network.

A PPO is an
expensive, yet flexible option for your small business health
insurance. It provides great coverage though, and you should inquire
with your provider to find out how you can reduce the costs.

HMO (Health Maintenance Organization)

Health
Maintenance Organizations (HMOs) are the most popular small business
health insurance plans. Under an HMO plan you will have to register your
primary care physician, as well as any referred specialists and
physicians. Plan participants are free to choose specialists and medical
groups as long as they are covered under the plan. And because HMOs are
geographically driven, the options may be limited outside of a specific
area.

Health maintenance organizations help to contain employer’s
costs by using a wide variety of prevention methods like wellness
programs, nurse hotlines, physicals, and baby-care to name a few.
Placing a heavy emphasis on prevention cuts costs by stopping
unnecessary visits and medical procedures.

When someone does fall
ill, however, the insurance provider manages care by working with health
care providers to figure out what procedures are necessary. Usually a
patient will be required to have pre-certification for surgical
procedures that aren’t considered essential, or that may be harmful.

HMOs
are less expensive than PPOs, and this preventative approach to health
care theoretically does keep costs down. The downside, however, is that
employees may not pursue help when it is needed for fear of denial. That
aside, it is a popular and affordable plan for your small business
health insurance.

POS (Point of Service)

A
Point of Service plan is a managed care insurance similar to both an HMO
and a PPO. POS plans require members to pick a primary health care
provider. In order to get reimbursed for out-of-network visits, you will
need to have a referral from the primary provider. If you don’t,
however, your reimbursement for the visit could be substantially less.
Out-of-network visits will also require you to handle the paperwork,
meaning submit the claim to the insurance provider.

POSs provide
more freedom and flexibility than HMOs. But this increased freedom
results in higher premiums. Also, this type of plan can put a strain on
employee finances when non-network visits start to pile up. Assess your
needs and weigh all your options before making a decision.

EPO

An
Exclusive Provider Organization Plan is another network-based managed
care plan. Members of this plan must choose from a health care provider
within the network, but exceptions can be made due to medical
emergencies. Like HMOs, EPOs focus on preventative care and healthy
living. And price wise, they fall between HMOs and PPOs.

The
differences between an EPO and the other two organization plans are
small, but important. While certain HMO and PPO plans offer
reimbursement for out-of-network usage, an EPO does not allow its
members to file a claim for doctor visits out its network. EPO plans are
more restrictive in this respect, but are also able to negotiate lower
fees by guaranteeing health care providers that it’s members will use
in-network doctors. These plans are also negotiated on a
fee-for-services basis, whereas HMOs are on a per-person basis.

HSA (Health Savings Account)

An
HSA is a tax-advantaged account used to pay existing and future medical
expenses. HSAs are used in conjunction with high-deductible health
plans (HDHP), which will make some with pre-existing conditions
ineligible. Also, HSAs must be funded with cash. Communicating the terms
of this account to your employees is important, as a large number of
HSAs are underfunded or improperly funded. The health savings accounts
were signed into the law by George Bush in 2003, and have become an
affordable alternative to a group health plan.

When inquiring
about an HSA, there will be a few things you will want to clarify. While
HSAs generally cover routine medical expenses and copays, some can
provide dental and vision care as well. And since HSAs can be combined
with certain compatible plans, it is important to understand how money
from the account will be allocated. And finally, you will want to know
about cashing out your HSA balance. The amount is taxable and could be
subject to a ten percent excise tax.

HRA (Health Reimbursement Arrangement)

An
HRA is exactly what it sounds like. The employer reimburses the
employee for health care. As an employer, you will usually have the
option to contribute to a reimbursement fund, or to pay fees as they are
incurred. These reimbursements can be deducted from your taxes, and are
tax-free for your employees, saving you both money.

Some
providers empower employers by giving them more options. HRAs, unlike
HSAs, don’t have to be funded with cash money, placing a book keeping
entry on your balance sheet is enough. You can usually control aspects
of your arrangement such as reimbursement limits, whether you or your
employee pays first, and if the previous year’s funds roll over.

HRAs
are becoming a more popular option because of the control it has given
small businesses. Combined with a high deductible health plan (HDHP), an
HRA could be the most cost-effective solution to your small business
health insurance problems. It’s always best to compare these plans to
PPOs, HMOs, and EPOs to know what works best.

Fee for Service (FFS) or Traditional Indemnity

A
fee for service plan is the most flexible small business health
insurance option. You choose your doctor, and your hospital. You can see
a specialist without a referral. This flexibility, however, comes with
more out-of-pocket expenses and higher insurance premiums.

The
typical FFS plan has a deductible ranging anywhere from five to fifteen
hundred dollars. After this amount is reached, the provider will pick up
eighty percent of your medical bills, and require you to pay the
remaining twenty percent. Because of the rising costs of health care,
and the potential for a small number of doctor’s visits to cost
thousands, these plans can become incredibly expensive.

Flexible Spending Account (FSA)

A
flexible spending account is a savings account to be used for medical
expenses, and is funded by pre-tax dollars. Using pre-tax dollars means
that your employees will actually show that they have less income, and
will therefore have less taxes withheld. As an employer, you set the
limit on contributions to the account per year. In addition to the
employee contribution, you can also credit the account, or fund it
completely from your general assets.

An FSA, especially if combined with an HDHP, can significantly reduce the costs of small business health insurance.

You
should be forewarned, money from FSA accounts cannot be rolled over.
They are, however, available to use for two years and two and half
months after the benefit year. A terminated employee won’t be able to
use leftover funds, unless there is a positive remaining balance and
COBRA is elected.

Small business health insurance providers have
made significant improvements in their services to simplify the
administration of your plan. With HRAs, FSAs, and HSAs, your employees
can use debit cards for medical transactions. Be sure to research this
thoroughly. You will want to be sure your debit card plan is IRS
compliant, and that you can use a large number of pharmacies. You should
also pick a plan that can verify eligibility on the spot. Talk with
your agent about linking transit, parking fees, and prescriptions to the
same card. When picking the debit card options, please be sure to
clarify the details of the substantion process. This is IMPORTANT! With
other plans, the provider may assign someone to manage your plan. Or you
may have to hire someone. Still, you should be able to login to your
account and print insurance cards, important papers etc.

The next
thing you can do is thoroughly assess your needs. Being that every
member of your small business plays a key role in its success, it is
vital that their needs are met. And understanding these needs is crucial
to finding the right plan. Find out about chronic illnesses, and
additional information related to past health issues. Know what your
employees think about health insurance, and get them involved in the
process.

Hiring an agent or a broker

Finding
and understanding small business health insurance can be a daunting
task. While some choose to go it alone, others need some professional
assistance. You need to understand the difference between an agent and a
broker, and how you can get the most from either of them.

A broker

Brokers
function independently and usually work for several different
companies. Since they have a variety of resources, they can usually
provide more options and a better overall view of the marketplace.
Brokers will assist you by evaluating the costs and designs of plans
from your local major carriers. The cost isn’t everything, you want to
get the coverage that you need.

Ask the broker how he or she is
getting paid for their services. They should readily divulge that
information. Some brokers may charge you a flat free. Some receive a fee
from an employer, while others receive a commission from the insurance
provider. Any commissions could be reflected in your premiums, but not
to the point that you should worry.

An agent

Agents
typically provide services for one company. They have a closer
relationship to the insurance company than a broker would, giving them
more leverage to make alterations to your plan. In some cases they can
offer a particular plan for less than a broker, and may have access to
additional services like worker’s compensation. To find out what
different providers have to offer, talk to more than one agent. It may
be time-consuming, but it could bring you closer to the most
cost-effective solution for your small business health insurance.

One
of the common options presented by agents is the employee-elect option.
This is an arrangement where employees pick the plan they prefer. Those
who don’t need as much coverage won’t be forced to pay so much, and
those who do need it can get it without increasing the financial burden
of the company as a whole.

How to Save On Your Small Business Health Insurance Plan

What’s
important to remember is that there really is no inexpensive solution
to health care. Even if your initial premiums are reasonably low, they
could rise significantly at your next renewal. So saving money on small
business health insurance is about doing a combination of things
simultaneously to get good rates, and to then maintain those rates.. And
it will require a consistent effort from you, your employees, and your
insurance provider.

First, you can save yourself money by reading the fine print.
You need to know exactly what your plan does and DOESN’T cover. There
are also state mandated coverages. For example, in states like Illinois,
your insurance must cover mammograms. Also, understanding the ins and
outs of your plan will give you and your employees a better idea of how
to deal with your insurance.

Next, you should shave unnecessary benefits.
After reading all about your plan, you will find coverage for things
you may not need. Eliminating these benefits can significantly drop
monthly small business health insurance premiums. For example,
eliminating coverage for brand name medications can reduce costs by more
than 25 percent.

Wellness program have worked wonders for small businesses.
A wellness program is any program designed to promote healthy living
within the organization. Weight loss competitions benefit every
participant. Add a financial incentive for further motivation. Stock the
work fridge with water, and leave literature about healthy living lying
around. Search the internet for calorie counting charts. Raising
awareness entice workers to make positive changes. Active, exercising,
diet-conscious employees have stronger immune systems, more vitality,
and more productive workplaces. They also don’t deal with as many health
issues. Fewer doctor visits and hospitilizations will help maintain
lower annual premiums, because it will prove to your insurance provider
that your business is a low financial risk.

Increasing your co-pay and deductible can go a long way towards cutting costs.
For instance, raising co-pays by just ten dollars has saved companies
as much as thirteen percent on their premiums. A higher deductible will
significantly reduce your monthly premium. To lessen the financial
burden of high-deductible health plans (HDHPs), combine them with an
HSA. Combinations like these have saved both business owners and
employees bundles of cash.

Check into getting a nurse hotline.
A nurse hotline is a toll free, 24-hour-a-day, seven-day-a-week
service. Employees can get medical advice from qualified, registered
nurses. This method has deterred a large number of people from emergency
visits, and it can also be used for preventative care as well. Insurers
like Nationwide have them, or you may have to purchase from a
third-party provider.

Increase the size of your group to reduce your monthly small business health insurance premiums.
In a survey by America’s Health Insurance Plans, small businesses who
employed ten people or less paid forty three more dollars on average
than businesses with twenty six to fifty employees. Check around with
other businesses owners, or fellow members of business organizations.
Some states also have small business groups and pools for this purpose.
Check with your state Chamber of Commerce and Department of Insurance.

Beware of heavily discounted plans.
First, there are numerous scammers trying to get your money. They
promise low rates, and usually cover little to nothing at all. The
internet is notorious for swindlers trying to hustle you out of a buck.
If you are going with a company you aren’t familiar with, please do your
research. On another note, even reputable companies present problems.
In an attempt to gain market share, Blue Cross offered small businesses
discounted rates in 2008. For 2009, some of these same businesses were
set to see increases of as much as 47% in their premiums. As the costs
of medical care increases, the costs are shifted from the insurer to the
insured, and discount plans become overpriced plans quickly.

Shop around.
As mentioned before, talking to different agents will expose you to the
best that insurance providers have to offer. Ask other small business
owners about their providers. You can use trusted online resources like
Netquote and Ehealthinsurance to shop around instantly. These services
also let you compare plans side by side, and allow you to purchase your
plan online. Even after you get your initial plan, it’s good to annually
reevaluate your coverage. This will keep you on the up-and-up about
what the market is offering. Keeping costs down is an ongoing effort,
especially with rates and plans changing all the time from company to
company.

Share some of the costs with your employees.
Raising employee contributions isn’t a popular option, but it may be
one of the only ways to absorb costs and maintain small business health
insurance coverage. Communicate with your employees about how to keep
costs down, and remind them that their increase is your increase as
well.

The sad truth is that, no matter how many cost-cutting
methods you apply, your insurance premiums are expected to continually
rise. In addition to this, you can’t prevent every health problem with
exercise and higher co-pays.

The Health Care Reform Bill won’t
kick in until about 2013, so waiting on its benefits won’t do you any
good. There is definitely a need for change, because the current system
discourages competition and growth. With smaller businesses functioning
as the backbone of this ailing economy, company medical insurance must BE affordable, and STAY affordable.

The post Small Business Health Insurance – An Employer’s Guide to Getting Small Business Health Insurance appeared first on New Health and Fitness.

America spent 17.3% of its gross domestic product on health care
in 2009 (1). If you break that down on an individual level, we spend
$7,129 per person each year on health care…more than any other country
in the world (2). With 17 cents of every dollar Americans spent keeping
our country healthy, it’s no wonder the government is determined to
reform the system. Despite the overwhelming attention health care is
getting in the media, we know very little about where that money comes
from or how it makes its way into the system (and rightfully so…the
way we pay for health care is insanely complex, to say the least). This
convoluted system is the unfortunate result of a series of programs that
attempt to control spending layered on top of one another. What follows
is a systematic attempt to peel away those layers, helping you become
an informed health care consumer and an incontrovertible debater when
discussing “Health Care Reform.”

Who’s paying the bill?

The
“bill payers” fall into three distinct buckets: individuals paying
out-of-pocket, private insurance companies, and the government. We can
look at these payors in two different ways: 1) How much do they pay and
2) How many people do they pay for?

The majority of individuals in
America are insured by private insurance companies via their employers,
followed second by the government. These two sources of payment
combined account for close to 80% of the funding for health care. The
“Out-of-Pocket” payers fall into the uninsured as they have chosen to
carry the risk of medical expense independently. When we look at the
amount of money each of these groups spends on health care annually, the
pie shifts dramatically.

The government currently pays for 46% of
national health care expenditures. How is that possible? This will make
much more sense when we examine each of the payors individually.

Understanding the Payors

Out-of-Pocket

A
select portion of the population chooses to carry the risk of medical
expenses themselves rather than buying into an insurance plan. This
group tends to be younger and healthier than insured patients and, as
such, accesses medical care much less frequently. Because this group has
to pay for all incurred costs, they also tend to be much more
discriminating in how they access the system. The result is that
patients (now more appropriately termed “consumers”) comparison shop for
tests and elective procedures and wait longer before seeking medical
attention. The payment method for this group is simple: the doctors and
hospitals charge set fees for their services and the patient pays that
amount directly to the doctor/hospital.

Private Insurance

This
is where the whole system gets a lot more complicated. Private
insurance is purchased either individually or is provided by employers
(most people get it through their employer as we mentioned). When it
comes to private insurance, there are two main types: Fee-for-Service
insurers and Managed Care insurers. These two groups approach paying for
care very differently.

Fee-for-Service:

This
group makes it relatively simple (believe it or not). The employer or
individual buys a health plan from a private insurance company with a
defined set of benefits. This benefit package will also have what is
called a deductible (an amount the
patient/individual must pay for their health care services before their
insurance pays anything). Once the deductible amount is met, the health
plan pays the fees for services provided throughout the health care
system. Often, they will pay a maximum fee for a service (say $100 for
an x-ray). The plan will require the individual to pay a copayment
(a sharing of the cost between the health plan and the individual). A
typical industry standard is an 80/20 split of the payment, so in the
case of the $100 x-ray, the health plan would pay $80 and the patient
would pay $20…remember those annoying medical bills stating your
insurance did not cover all the charges? This is where they come from.
Another downside of this model is that health care providers are both
financially incentivized and legally bound to perform more tests and
procedures as they are paid additional fees for each of these or are
held legally accountable for not ordering the tests when things go wrong
(called “CYA or “Cover You’re A**” medicine). If ordering more tests
provided you with more legal protection and more compensation, wouldn’t
you order anything justifiable? Can we say misalignment of incentives?

Managed Care:

Now
it gets crazy. Managed care insurers pay for care while also “managing”
the care they pay for (very clever name, right). Managed care is
defined as “a set of techniques used by or on behalf of purchasers of
health care benefits to manage health care costs by influencing patient
care decision making through case-by-case assessments of the
appropriateness of care prior to its provision” (2). Yep, insurers make
medical decisions on your behalf (sound as scary to you as it does to
us?). The original idea was driven by a desire by employers, insurance
companies, and the public to control soaring health care costs. Doesn’t
seem to be working quite yet. Managed care groups either provide medical
care directly or contract with a select group of health care providers.
These insurers are further subdivided based on their own personal
management styles. You may be familiar with many of these sub-types as
you’ve had to choose between then when selecting your insurance.

• Preferred Provider Organization (PPO) / Exclusive Provider Organization (EPO):This
  is the closet managed care gets to the Fee-for-Service model with many
  of the same characteristics as a Fee-for-Service plan like deductibles
  and copayments. PPO’s & EPO’s contract with a set list of providers
  (we’re all familiar with these lists) with whom they have negotiated set
  (read discounted) fees for care. Yes, individual doctors have to charge
  less for their services if they want to see patients with these
  insurance plans. An EPO has a smaller and more strictly regulated list
  of physicians than a PPO but are otherwise the same. PPO’s control costs
  by requiring preauthorization for many services and second opinions for
  major procedures. All of this aside, many consumers feel that they have
  the greatest amount of autonomy and flexibility with PPO’s.
  
• 
  Health Management Organization (HMO): HMO’s
  combine insurance with health care delivery. This model will not have
  deductibles but will have copayments. In an HMO, the organization hires
  doctors to provide care and either builds its own hospital or contracts
  for the services of a hospital within the community. In this model the
  doctor works for the insurance provider directly (aka a Staff Model
  HMO). Kaiser Permanente is an example of a very large HMO that we’ve
  heard mentioned frequently during the recent debates. Since the company
  paying the bill is also providing the care, HMO’s heavily emphasize
  preventive medicine and primary care (enter the Kaiser “Thrive”
  campaign). The healthier you are, the more money the HMO saves. The
  HMO’s emphasis on keeping patients healthy is commendable as this is the
  only model to do so, however, with complex, lifelong, or advanced
  diseases, they are incentivized to provide the minimum amount of care
  necessary to reduce costs. It is with these conditions that we hear the
  horror stories of insufficient care. This being said, physicians in HMO
  settings continue to practice medicine as they feel is needed to best
  care for their patients despite the incentives to reduce costs inherent
  in the system (recall that physicians are often salaried in HMO’s and
  have no incentive to order more or less tests).

The Government

The
U.S. Government pays for health care in a variety of ways depending on
whom they are paying for. The government, through a number of different
programs, provides insurance to individuals over 65 years of age, people
of any age with permanent kidney failure, certain disabled people under
65, the military, military veterans, federal employees, children of
low-income families, and, most interestingly, prisoners. It also has the
same characteristics as a Fee-for-Service plan, with deductibles and
copayments. As you would imagine, the majority of these populations are
very expensive to cover medically. While the government only insures 28%
of the American population, they are paying for 46% of all care
provided. The populations covered by the government are amongst the
sickest and most medically needy in America resulting in this
discrepancy between number of individuals insured and cost of care.

The largest and most well-known government programs are Medicare and Medicaid. Let’s take a look at these individually:

Medicare:

The
Medicare program currently covers 42.5 million Americans. To qualify
for Medicare you must meet one of the following criteria:

• Over 65 years of age
  
• 
  Permanent kidney failure
  
• 
  Meet certain disability requirements

So you meet the criteria…what do you get? Medicare
comes in 4 parts (Part A-D), some of which are free and some of which
you have to pay for. You’ve probably heard of the various parts over the
years thanks to CNN (remember the commotion about the Part D drug
benefits during the Bush administration?) but we’ll give you a quick
refresher just in case.

• Part A (Hospital Insurance):
  This part of Medicare is free and covers any inpatient and outpatient
  hospital care the patient may need (only for a set number of days,
  however, with the added bonus of copayments and deductibles…apparently
  there really is no such thing as a free lunch).
  
• 
  Part B (Medical Insurance): This part, which you must purchase, covers
  physicians’ services, and selected other health care services and
  supplies that are not covered by Part A. What does it cost? The Part B
  premium for 2009 ranged from $96.40 to $308.30 per month depending on
  your household income.
  
• 
  Part C (Managed Care): This part, called Medicare Advantage, is a
  private insurance plan that provides all of the coverage provided in
  Parts A and B and must cover medically necessary services. Part C
  replaces Parts A & B. All private insurers that want to provide Part
  C coverage must meet certain criteria set forth by the government. Your
  care will also be managed much like the HMO plans previously discussed.
  
• 
  Part D (Prescription Drug Plans): Part D covers prescription drugs and costs $20 to $40 per month for those who chose to enroll.

Ok,
now how does Medicare pay for everything? Hospitals are paid
predetermined amounts of money per admission or per outpatient procedure
for services provided to Medicare patients. These predetermined amounts
are based upon over 470 diagnosis-related groups (DRGs) or Ambulatory
Payment Classifications (APC’s) rather than the actual cost of the care
rendered (interesting way to peg hospital reimbursement…especially
when the Harvard economist who developed the DRG system openly disagrees
with its use for this purpose). The cherry on top of the irrational
reimbursement system is that the amount of money assigned to each DRG is
not the same for each hospital. Totally logical (can you sense our
sarcasm?). The figure is based on a formula that takes into account the
type of service, the type of hospital, and the location of the hospital.
This may sound logical but often times this system fails.

Medicaid:

Medicaid
is a jointly funded (funded by both federal and state governments)
health insurance program for low-income families. Eligibility rules vary
from state to state and factors in age, pregnancy, disability, income
and resources. Poverty alone does not qualify an individual for Medicaid
(there is currently no government-provided insurance for the American
poor…despite the fact that almost all first world countries have such a
system…enter the current health care debate) but is a significant
factor in Medicaid eligibility. Each state operates its own Medicaid
program but must adhere to certain federal guidelines to receive
matching federal funds (you may be familiar with California’s MediCal,
Massachusetts’ MassHealth and Oregon’s Oregon Health Plan due to their
recent media coverage). Medicaid payments currently assist nearly 60
percent of all nursing home residents and about 37 percent of all
childbirths in the United States.

How are the bills paid?

We
now understand who is paying the bill but we have yet to cover how
those bills are paid. There are two broad divisions of arrangements for
paying for and delivering health care: fee-for-service care and prepaid
care.

Fee-for-Service

As we
mentioned briefly while discussing PPO’s, in a fee-for-service
structure, consumers select a provider, receive care (a.k.a. “service”)
from the provider, and incur expenses (a.k.a. “a fee”) for the care.
Deductibles and copayments are also required as previously discussed.
Pretty simple. The physician is then reimbursed for their services in
part by the insurer (i.e. a private insurance company or the government)
and in part by the patient, who is responsible for the balance unpaid
by the insurer (the return of the unanticipated medical bill despite
your overpriced insurance). Again, the major downfall of the
fee-for-service approach is that medical professionals are incentivized
to provide services (and by this we mean any and all services they can
legally request or must request to be protected legally), some of which
may be nonessential, to increase their revenue and/or “C.Y.A.” (revenue
that has steadily decreased as insurance companies continue to lower the
amount they pay medical professionals for their services).

Fee Schedule

A
fee schedule operates in the same way that Fee-for-Service does with
one exception: instead of using the “usual, customary, and reasonable”
amount to reimburse medical professionals, states set fees to be paid
for specific procedures and services. The reimbursement is very low
($.10-.15 on the dollar) and barely covers the actual direct cost of
providing the care. Physicians may chose to opt into the plan or not
(starting to see why a doctor might not be so excited about this plan?).
Would you sign up to be paid 10 cents for every dollar you charged for
your work? Try the insurance reimbursement approach next time you go out
to eat. We’ll come bail you out of the Big House if things go awry.
What happens when the insurance system does this? You get the Wal-Mart
approach to medicine (high volume, low quality). Not the kind of heath
care we recommend.

Pre-Paid

Pre-paid
health care? Like a phone card? Not exactly–but close. The pre-paid
system evolved out of the insurance company’s desire to share its risk (
a.k.a “pooled risk”) with health care providers. Essentially, they
wanted the doctors to have some skin in the game. In the pre-paid
system, insurers make arrangements with health care providers to provide
agreed-upon covered health care services to a given population of
consumers for a (usually discounted) set price-the per-person premium
fee-over a particular time period. What does that mean? It means that
Dr. Bob gets paid, say, $30 per month to take care of Joe the Plumber
including his blood work and x-rays. If Dr. Bob spends less than that
caring for Joe, he makes money. If Joe is sick every month and needs
lots of tests and follow-up visits, Dr. Bob could lose money caring for
Joe. The set monthly fee paid to the doctor for taking care of a patient
is set up on a per-member, per-month (PMPM) rate called a “capitated fee.”
The provider receives the capitated fee per enrollee regardless of
whether the enrollee uses health care services and regardless of the
quality of services provided (not a good thing in our book).
Theoretically, providers should become more prudent and subsequently
provide services in a more cost effective manner because they are
bearing some of the risk. Often times, however, less care is provided
than is needed in hopes of saving money and increasing profits. In
addition, physicians are incentivized to cherry pick the youngest and
healthiest patients because these patients typically require less care
(i.e. they are cheaper to keep healthy). We like that doctors are
encouraged to keep patients healthy but we have to worry about the ways
in which they are being encouraged to reduce costs (as little care as
possible?). Again, the incentive system falls short and encourages
providers to act unethically.

The Take Home Message:

Health
Care in the United States today is complex and messy at best. The
layers on top of layers of failed attempts to correct the system
continue to encourage the wrong behavior in both patients (out of fear
of medical bills) and providers (out of fear of bankruptcy). We have yet
to provide every American citizen with medical care (something that
goes without saying in most 1st World countries…even Cuba has it!). We
spend more money on caring for our citizens than any country in the
world yet we continue to lag behind in terms of national health
outcomes. We think it’s safe to say that we’re not getting the best bang
for our buck. The ultimate solution? We wish we knew. Only time will
tell where the system goes from here. Our goal: to help you better
understand the system as it stands today in hopes of developing a more
effective, efficient, and comprehensive system for the future. Are you
with us?

References

1. Levey N. Soaring cost of healthcare sets a record. Los Angeles Times. Feb 4 2010.

2. McKenzie J, Pinger R, Kotecki J. An Introduction to Community Health, 6th Ed. Jones and Bartlett Publishers. 2008.

3. Bodenheimer TS, Grumbach K. Understanding Health Policy. 5th Ed. Lange Medical Books/McGraw-Hill. 2002.

4.
Kaiser Family Foundation. “EXPLAINING HEALTH CARE REFORM: How Do Health
Care Costs Vary By Region?” Brief #8030. December 2009.

The post Who’s Paying For Health Care appeared first on New Health and Fitness.

Discount Health Care Cards-Consumer Driven Healthcare

What are discount health cards?
Discount health cards provide one part of the solution to the nation’s
healthcare crisis by enabling consumers to purchase healthcare products
and services at discounted retail rates. Discount health cards are not
insurance and are not intended to replace insurance. In fact, many
consumers choose a discount card to complement their health insurance
program, filling in gaps such as prescription drug benefits or vision
care.

Why Choose a Discount Health Card? Discount health cards are NOT insurance.

Discount
health cards enable consumers to purchase healthcare products and
services from providers at discounted prices, similar to the rates that
healthcare providers charge wholesale customers such as preferred
provider networks (PPOs) or large insurance plans.

Many consumers
choose a discount card to complement their health insurance program,
filling in gaps, such as prescription drug benefits, chiropractic care,
dental or vision care.

Discount health cards have gained
popularity because they provide consumers access to the healthcare they
need without the limitations, exclusions and paperwork associated with
insurance plans.

In addition, discount health programs typically include the cardholder’s entire household.

How You Benefit with a Discount Health Card? Discount
health programs, or discount benefits cards as they are sometimes
called, were created to help bridge the gap for consumers burdened by
the increasing cost of healthcare by providing opportunities to directly
purchase healthcare services and products at discounted retail rates.
Discount cards offer:

Access: Individuals
and families without insurance can use discount programs to receive
access to and substantial savings on health care services such as doctor
visits, hospitalization, prescription drugs, eyeglasses and dental care
that they might otherwise not afford.

Affordability:
While insurance rates have increased at double-digit rates over the
past 12 years, discount card providers have kept their rates virtually
unchanged.

Savings: Those with limited
insurance, the under-insured, and insured individuals with high
deductibles can reduce out-of-pocket expenses and receive discounts for
services not normally covered by insurance such as chiropractic care.

Choice:
In some cases, consumers with discount health cards pay less for
services such as dental and vision care than those covered by
traditional insurance plans.

Convenience:
Discount programs are accepted at some of the nation’s largest
healthcare retailers including national pharmacy and optical chains.
While each program varies, many companies offer programs with providers
that include:

* Pearle * LensCrafters * Medicine Shoppe

* Eckerd’s * Safeway * Wal-Mart

* Sears * Target, and many more!

What types of services are typically included by discount health cards?
Discount health cards include a wide range of services and products
including dental services, prescription drugs, vision care, chiropractic
procedures, hearing care, physician/hospital & ancillary services,
nurse medical information lines, vitamins and emergency care for
travelers. Choose a program that offers discounts on services that you
need and that you will use.

Who should use discount health cards?
The wide array of choices in the discount health card industry and the
many discounts available make it possible for everyone to enjoy the
benefits of discount health cards. Discount health cards are designed to
provide benefits for a wide-range of consumers. For individuals and
families without insurance, discount health cards offer substantial
savings on healthcare services such as doctor visits and on everyday
health related expenses including prescription drugs, eyeglasses and
dental care that they might otherwise not afford.

For those with limited insurance, the under-insured,
and insured individuals with high deductibles, discount health cards can
reduce out-of-pocket expenses and offer discounts for services that may
not be covered by insurance such as chiropractic care.

In some
instances, discount health cards for ancillary health services and
products such as vision, dental and chiropractic care offer services at
overall out-of-pocket costs lower than insurance co-payments.

For
these reasons, many of the country’s Fortune 500 companies now offer
discount health cards to their employees as part of their benefits
packages.

How do consumers get discount health cards and how do the cards work?
You can obtain discount health cards either through your employer, an
association, union, or another entity with which you are connected or
you can go directly through a reputable discount healthcare program.

Signing
up for a card is easy. Complete an application and pay a nominal
monthly fee. In some instances, your employer will pay the fee. To
access care and receive savings, a cardholder must simply provide the
card to a participating provider at the time health services are
rendered and pay the discounted fee.

How do discount healthcare programs offer such benefits?
Discount healthcare programs enable members to access similar rates
that healthcare providers charge wholesale customers such as preferred
provider networks (PPO) or large insurance plans. The difference is that
instead of financing the medical expenses of members by charging high
monthly rates, consumers agree to pay a discounted fee to the provider
directly at the time of service.

What is the difference between discount health cards and health insurance?
Discount health cards are not insurance. Card companies who indicate
otherwise are not being truthful. Unlike health insurance, there is no
sharing of risk by the consumer and the discount healthcare company.

Discount
health cards afford consumers the opportunity to directly purchase
health care services and products from providers at amounts discounted
below their retail rates. Cardholders are required to pay the provider’s
discounted fees in full at the time healthcare services are rendered or
as dictated by the provider’s agreement. Consumers are free to make
their own choices about which services to purchase and from whom to make
those purchases.

Insurance plans, on the other hand, define
specific benefits available to the consumer at rates determined by the
plan purchaser. Insurance plans also pay health care providers on behalf
of the consumer.

Do I still need insurance if I have a discount health card? That’s
a decision each consumer must make. Discount cards and insurance plans
frequently provide complementary benefits. That is why many of the
nation’s leading companies offer their employees both insurance plans
and discount cards. Each individual should evaluate his or her own
health needs and the various benefits offered by each type of program.

Why has there been controversy surrounding some discount health card providers?
Millions of consumers have embraced discount health cards because of
their value and simplicity. This popularity has led a number of
companies to enter the discount health card business. Unfortunately, not
all of them are reputable. Some card providers charge steep up-front
fees or promise dramatic savings they can’t deliver, while others
bombard consumers with misleading and confusing sale pitches.

For more information and clarification contact: