Health Insurance As Currency

The “Health Insurance Card” and Health Insurance have taken on an importance in everyday life. These two items have, in a way, taken on a life of their own. Amidst today’s fervent, raging and emotionally charged debate over health care reform, the whole concept of Health Care Insurance should be re-evaluated. This is just one Health Care practitioner’s perspective on one small aspect of health care delivery. It is fueled out of my confusion that patients don’t seem to understand their personal responsibility for payment of the services (care) that they receive (purchase). It is almost as though health care has been devalued to the point that we don’t comprehend paying for it.

There is much confusion regarding the role and use of health insurance. Health care coverage is a product. It is sold to you, the consumer, by businesses. The business’ product is “health care coverage.” Coverage varies depending on the plan that you purchase. Cost of the “plan” varies depending on the scope of the coverage. Just like the size, quality and performance of an automobile may vary depending on the price you are willing to pay. The more you pay, the more you get. Health care insurance coverage works the same way.

Companies providing health care insurance are profit making businesses. They are not charities. I am hearing a great deal of mumbling (ok it’s more like shouting) about the profits that these companies are making. Many of us own stock in these companies in the form of our mutual funds. They are supposed to be profitable. Why are we thinking that there are moral dilemmas inherent in profiting from helping someone improve their health? Why should saving a life, solving a skin rash problem or counseling someone on being a better parent be non-profitable ventures? Can I be the only one seeing the benefit in all of these? I would pay for these. And if we wouldn’t pay for these services, is it the services themselves or our own selves that we fail to value?

Most people don’t even realize the single largest benefit to being enrolled in a health insurance plan. The largest benefit to health care insurance is that it buys the consumer a discounted rate for any health care related services that it covers. This is the biggest single benefit and most consumers don’t even realize it. When a provider is “participating” with an insurance company they agree to accept a fee lower than their full regular rate. HMO and POS plans pay the lowest fee to providers. PPO plans pay better, but still lower than the provider’s full rate. When a provider is “participating,” they always accept a “negotiated fee schedule” which is lower than their regular rate. The patient is responsible for only a co-payment as long as services provided remain within the benefits of the plan that they purchased. If the desired service is not covered in the insurance plan, the consumer is responsible for payment in full. Referencing back to the automobile analogy, if your care didn’t come with 20 inch rims and you want them, you have to buy them. You don’t expect the car dealer to pay the auto store for your rims.

When a provider chooses to be “non-participating” with an insurance plan, they charge what they want for their service. The “plan” usually covers up to a percentage of a “usual and customary rate,” or UCR. A provider can charge the UCR exactly, or above or below it. The patient (consumer) is responsible for the balance of the unpaid bill. In many instances, the patient pays the provider directly and in reimbursed by the insurance company. HMO and POS plans usually do not cover services provided by non-participating providers. This is partly how the can keep the cost of the insurance to the consumer low. It does, however, limit the consumer as to which providers will be covered for payment.

So with this understanding, health insurance is a product that we convert into a form of “currency” accepted by some providers as partial or full payment for rendering a service. It is the equivalent of dollars, pesos, a check or credit card. It is, in a way, a “promissory note.” It is a promise to the provider that they will be paid several weeks later after sending the insurance company a bill. It covers what the creator (the insurance company) and the service renderer (the provider) agree that it covers. Just as your local grocery store may agree to accept dollars and credit cards but not checks or pesos, your health care provider may or may not agree to accept your insurance as payment for a service.

The dilemma faced by many providers is a patient’s lack of understanding of the scope of coverage, payment and benefits, and the role of the insurance card in all of this. Let’s compare the insurance card to a credit card or a check. Some merchants accept them. Some do not. It’s up to the discretion of the merchant. If the credit card goes through at the time of the billing with no problem, you get your merchandise. If the card is declined, you either provide alternative payment, cash, check or money order, or you leave the store without the merchandise. If your check bounces, you don’t get the product.

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