Why You Should Not Decide About Obamacare Until You Know All The Facts

My wife and I did our part for the nation’s economy on Black Friday.  We bought a new SUV.

My wife swears that she likes to “sit up high” when she drives.  Both boys are grown and out of the house.  We really do not need a SUV or mini-van to haul around kids anymore.  However, the only other vehicle that allows her to “sit up high” is a pick-up truck.  That is more my style.

Right now we share the vehicle.  With the rise in popularity of the internet, I am able to do most of my consultations over the phone and internet.  Since I have an office in the house, I only need to go to see people for business rarely.   Although most of my clients like me as a person, there is something about having an “insurance agent” come to their house that gives many people the “willies.”

I know that some people learn visually.  If that is the case, I will make arrangements to go to them, if possible.   However, most people who call me only have a couple of questions.  We are able to talk through them on the phone. I do not need a car on a daily basis.

That will change after the first of the year.  I will be experimenting with a new marketing program for local business owners.  The new program involves taking new business owners to lunch to discuss the special insurance needs for a new entrepreneur.  That will require me to get another car in the spring but for now we only need the one.

While we were negotiating for the car I experienced an all too familiar phenomenon.  After the sales person found out what I do, he shared with me how terrible he felt about the greedy insurance companies.  It wasn’t anything that I hadn’t heard below.

The thing that bothered me was not his obvious political spin.  As a health insurance agent, I am almost used to that.  What bothered me was that a seemingly intelligent and educated individual would repeat rumors and half-truths that he heard from a politician or political lobby.

I guess I should not have been surprised.  I did just live though the most divisive 5 year political period of my life.  (And I remember Viet-Name, Hippies and Watergate.)

This sales-person talked like all the problems in the health-care industry are caused by the “greedy insurance companies.”  He backed down a bit when I reminded him that in addition to federal laws, insurance companies have to abide by state insurance laws as well.

In most states, before Obamacare was even thought of, laws were already in force that require insurance companies to collect enough money from their members to pay for all the anticipated medical bills their members may have.

When I told him that, he got a little quieter.  Then he shared with me a recent experience one of his co-workers had.  That experience put things into perspective.

Apparently, one of his co-workers needed surgery to remove a skin-cancer.  When he got the bill, he noticed that the hospital had charged his insurance company $750 for a bottle of rubbing alcohol that he could buy at the local drug store for $0.98.   After the insurance company paid their portion of the surgery, he was still stuck with a bill from the hospital of $16,000.

These type of bills are rare for people who have major medical insurance.  It means that they have done one of the following.

They purchased a policy with no Maximum Out-Of-Pocket limit.

Most insurance polices today have a device called a Maximum Out-Of-Pocket.  It used to be called a Stop-Loss provision but the term was found to be too confusing.

The Maximum Out-Of-Pocket, a.k.a. OOP, is designed to limit the exposure of the insured to medical bills.  After the insured has paid a specified amount of money on medical bills, the insurance company will pay 100% of medical bills for the rest of the year.

The largest OOP that I have ever seen is $7500.  Most of the ones that I deal with are around $3000.  That means that the maximum that a client would need to pay for a $100,000 cancer treatment would be $3000 plus whatever deductible they chose.

The average deductible that I work with is around $2500.  That means that if you have an average policy and obey the rules, the amount you should have to pay for cancer surgery should be no more than $5500.

They purchased a policy with an excessively high deductible.

Most health insurance plans with which I work have deductibles of no more than $5000.  Most of the plans that have deductibles that high qualify for special IRS Health Savings Account rules.  One of those rules requires insurance companies to pay 100% of medical bills after the deductible has been paid.

If you understand the insurance company’s network rules and follows them, there is no way that you will ever have a $16,000 hospital bill for a cancer surgery.

With that having been said, I must admit that I have seen policies with a deductible as high as $10,000.  I do not recommend them very often.  In my opinion, the difference in premium between a plan with a $5000 deductible and one with a $10,000 deductible is not sufficient to justify the extra exposure to medical bills.

They use a hospital that is not in the insurance company’s network.

The use of networks by the insurance companies has been around for decades.  Still, people claim not to be aware of the restrictions.

When you use a doctor or hospital that is within your insurance company’s network, your insurance company has negotiated a discounted price on your behalf.

When you elect to use a doctor or hospital that is not in your insurance company’s network, your insurance company has not been able to negotiate any discounts for you.  Your doctor and hospital are able to charge whatever they want for your health care.

Using a hospital for your surgery that is not in your insurance company’s network is what causes charges of $750 for a $0.98 bottle of rubbing alcohol.