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Medical Justice

Making healthcare safe for doctors


Risk Management

The Migration from Third Party Insurance to Accepting Risk 

11/13/17 9:54 AM

This is not a story of medical practices becoming insurance-free. 

This year, a number of friends and colleagues explained they received a note from their long time health insurer. These were all people insured on the individual market. Their insurance plans were “grandfathered” so they did not have to purchase a policy on the exchange. And though their policies were not inexpensive, they were within budget.  

The note from their long time health insurer was typically a brochure. It had a smiling face on the cover engaged in wonderful life-affirming activities.  

Inside, the message stated their plan will no longer be offered in 2018. But, the insured will be placed in a new plan. A new “comparable” plan might see the deductible for the family jump from $5.4k to $13k. And monthly premiums jump from $1,000/month to $2,300/month.  

Definitely sticker shock.  

If the math is accurate, then the family is $40k out of pocket before the insurer makes its first dollar payment on anything other than preventative care.  

Hard to believe it goes by the name the AFFORDABLE Care Act.  

I recognize that many families who had no prior coverage are able to afford new coverage because they are provided federal subsidies. And I think it is a good thing such individuals do have coverage.  

But many of my friends and colleagues do not qualify for federal subsidies. They make too much money. None are gazillionaires. Most are well off. Some get by.  

But, $40k is an enormous expense for 99% of the population (and then some).  

What are some of the options these individuals are exploring?  

If they are reasonably healthy and do not have pre-existing conditions, they are eyeballing health sharing plans (faith based systems that require a commitment to a set of core principles.) Health sharing plans are not insurance and there is no contractual obligation to pay any health bills. That said, they are given a shout-out in Obamacare and there is no tax penalty for purchasing such a plan in lieu of insurance. Also, they have had a reasonable track record over the years in terms of the bills being paid.  

Next, short term insurance as a band-aid for those who are within striking distance of qualifying for Medicare. 

This was “workable” until the rules were recently changed. A short term policy used to last up to 364 days (currently it can be purchased for only 3 month interval). It would cover catastrophic medical events not dissimilar to regular policy. If you stayed healthy, you’d do it again the following year. You could not “renew” per se. But, you could re-apply. These plans do not cover pre-existing conditions. So, it works for those who are healthy and stay healthy. If you did get sick with a chronic condition during the year, at open enrollment, you’d move into an Obamacare plan at the higher price I referenced earlier (which does accept those with pre-existing conditions).  

The President recently signed an Executive Order which suggests such short term plans will be expanded from 90 days to 364 days. But, even if that was made clear and certain today, because plans must be approved by state insurance regulators with established rates, it would likely be two more quarters before they became available. 

Finally, as a “safety net” to these new plans, some are purchasing critical care insurance. These plans pay a fixed sum, from $10k to $250k and more based on you receiving a diagnosis of a life-altering condition – such as cancer or stroke – during the term of the policy. The older you are, the more expensive these plans are. Further, if you are looking for any amount of payout >$50k, you likely will be underwritten as if you are getting a life insurance policy, with questionnaire, physical exam, and lab work.  

My goal in writing this is to disseminate the strategies some are using to avoid paying stratospheric sums for plain vanilla health insurance on the individual market because they believe they have limited options.  

If you already have a chronic or life threatening expensive condition, and you are purchasing insurance in the individual market, you will likely be limited to Obamacare options. And you should be able to obtain coverage that was unavailable to many before the law was implemented.  

If you are healthy and do not qualify for subsidies, you will either have to pay quite a bit or accept some risk. As noted earlier, health sharing plans are not insurance. There is no contractual obligation to make payment. But, some of these plans have been around for decades. And many of those who use them seem to be quite happy with how they operate. 

The choice for some will be how much risk they can live with. If they want (mostly) all healthcare payment risk to be mitigated, they will have to pay quite a bit to fully take care of that risk. Less expensive options are available, but leave some gaps exposed. 

What do you think? Also, if you are aware of other options, please chime in. 


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Posted by Medical Justice | in Risk Management | 3 Comments »
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retired
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retired

I retired from my practice and started a business. The health insurance is now more expensive than malpractice insurance. The Affordable care act has made health insurance UN-affordable by design. The game plan was to cause great distress so that the legislators hearing the public outcry would have no choice but to offer the government savior of single payer insurance. What the politicians did not count on was Hillary not winning and the Republicans remaining in control. As a result the competing option of more freedom of choice and less government intervention is now rearing its head and people like… Read more »

Michael Rosenblatt,DPM
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Michael Rosenblatt,DPM

Retired above wrote a comment that is exactly correct. Nobody in government ever took it “seriously” that Hillary Clinton would lose…or that another Democrat president would replace Obama. It just wasn’t in their radar. After all, Media was 99.9% in their favor. There was no lie gruesome enough against Donald Trump that they might avoid publishing it. After I retired, we had to replace our health insurance which we had for our employees in my Medicare Certified Surgical Center. I put myself out of a job after I sold it. To boot, one of us has an expensive “pre-existing” condition… Read more »

EasyE
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EasyE

You know our country’s healthcare system is crap when being in striking distance of Medicare is like seeing the finish line of a marathon. The Medicare law of 1965 is spooky since if you want to opt-out of Part A as a consumer, you will forfeit your social security “benefits”, and opting-out of part B may be impossible. Our family income precludes subsidies for OCare, but as long as we can afford it, we’ll pay for the paper OCare card simply because we have kids (dependents and all parasitic). Hopefully these alternative types of healthcare plans will flourish, and encourage… Read more »