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Perceptions

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What's the deal with Consumer Driven Health Care? It just puts the burden on the consumer, taking the insurance company off the hook, right? Wrong.

There is a common, if inaccurate, misconception that Consumer Driven Health Care (CDHC) is really Consumer Dinged Health Care. The argument goes something like this:

By shifting the burden of health care decision-making from the employer and provider onto the consumer/patient, said c/p will lower his consumption of health care services, saving the employer and insurance company more money, but risking his health.

Wrong.

Interesting, but wrong.

First, it should be noted that – contrary to what most folks believe – employers do not pay for health insurance.

That last bears repeating: employers do not pay for health insurance.

Employers often provide access to group insurance plans. Most of us believe that we split the costs of those plans with our employers. That is not the case: employers simply shift the dollars that they would have paid us into the coffers of XYZ Mutual. This is also true, by the way, of Social Security, Medicare and other taxes that we believe our employers contribute on our behalf.

So, from the outset, we are already talking about spending our own dollars. How we choose to spend them depends, of course, on our priorities. In the typical scenario, we pay an extraordinary amount of money (in the form of premiums) for the privilege of seeing our physician once or twice a year, and having to fork over just $25. Some of us are unfortunate (or fortunate, I suppose, depending on one’s perspective) to have a large claim, and our insurance pays the lion’s share of those costs.

Usually, though, we have medicine committed upon us only a few times each year, and we gladly pay the receptionist $25, or the CVS guy $15, or the lab tech $75. What we don’t see, though, is the thousands of dollars that would have gone into our own pockets, but were instead diverted to XYZ Mutual, which is only too glad to then pay some few of those dollars to our physician (heavily discounted, of course, because we were in-network).

But what if a chunk of those dollars got diverted back to us, in the form of an HSA contribution or HRA subsidy? And what if, at the end of the year, we got to keep some of that money?

That’s the idea behind CDHC. It is not some dark, sinister conspiracy to rob us of choice or good health. Rather, the idea is to help us make better informed choices.

Next week: real life with CDHC. Until then…

Be well.

Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience "in the biz.”  You can read more of Henry’s work at InsureBlog.

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from InsureBlog on Sun, 06/18/2006 - 8:34am

My debut column at The Medical Blog Network is now up. The plan is for one every Sunday, so wish me luck.

Comments (1)

Submitted by Bob (not verified) on Sun, 06/18/2006 - 4:28pm.

Lately I have encountered people who do not have health insurance and are receptive to the idea of cat cover such as the HDHP. In the past when I suggested such a plan it was met with lukewarm reception at best.

Perhaps I am doing a better job of explaining the plan, or maybe I just got lucky.

What I have been doing is this. I ask them if they are paying FULL PRICE for their medical care and the answer is always "yes". Then I ask if they would like to get the SAME DISCOUNTS the carriers get AND have a known limit on major claims.

Again the answer is yes.

I price out a $2500 HDHP or sometimes higher which is always less than they have been quoted with lower deductible, copay plans. More often than not they get the big picture and now are signing on for the cover.

 



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