Sky High Insurance Costs: Doctors Now Charging Subscriptions

Courtesy of  The Virginian Pilot:

According to Yahoo Finance Monday morning, and a write-up by The Virginian Pilot, insurance costs are finally forcing doctors to rethink their business model. You may think, ‘wait, don’t doctors make a ton of money off of insurance?’

Well, yes and no. The insurance companies collect massive amounts of money from their customers, some may call them excessive, for them to then pass the money back to doctors. So, if the business model is not broke, why fix it?

Here is why the system is ‘broke and needs to be fixed.’ As the health insurance industry continues to collect new customers, the insurance industry has become infamous for sky-high insurance premiums, especially over the past decade or so. You could have practically picked a major health insurance company out of a hat and doubled or even trebled your money. For example:

Since 2014, United Healthcare went from a $50 stock to a $250 stock, from a combination of re-shuffling of the industry after the great recession, and deeper market penetration thanks to the Affordable Care Act forcing people to sign up for insurance that can cost $350 a month, minimum, even for a healthy young customer.

I had a pet theory, that one could allocate the money they WOULD pay as a penalty for not having insurance [$695, or more, last time I checked] – into UNH, the stock doubles [these stocks doubled several years in a row under Obama], pay the taxes a year later, and STILL have enough money to pay the penalty with a maybe 10% profit all said and done.

But I digress.

Now, don’t be fooled, the ACA was NOT a profitable venture for insurance companies, as it forced them to give insurance free to low-income applicants. This business model did not last long; most insurance companies pulled out after the first year due to heavy profit losses from free customers, but it DID give the insurance companies new customers, some of which became recurring customers.

In any case, here is how insurance works. A person gives its insurance company their full profile, from age and weight, to hereditary disease history, to lifestyle choices such as smoking or exercise. From there, the insurance company determines your health insurance cost based off of how risky they deem your lifestyle to be, and gives you a cost.

The money goes into a giant pool of money collected as premiums; the pool of money is supposed to be allocated to a portfolio of investments that grows to offset any irregularities that may occur, such as a patient’s health suddenly going sour and their cost of healthcare spiking.

That portfolio investment growth is supposed to be enough for a health insurance company to cover the cost of its patients. Just to make sure, the insurance companies also raise their prices every year….just to be safe.

You know, just in case you’re not the same old you as last year. *Wink Wink*

So here is the problem with this business model. The patient pays in, the insurance company ‘invests the money’ into its pool of investments, and the insurance company hooks up with doctors’ offices. It is then up to the doctors office to keep up with and organize all of the paperwork involved for the patient, and maintain communication with the insurance company.

This all translates into an avalanche of paperwork, and major delays in money collection on the behalf of the doctor’s office. It is estimated that 50% of doctors office personnel’s time is spent just chasing down paperwork, updating, and matching with patients’ ever-changing life situations.

Information gets lost in the shuffle, as you might imagine, and this leads to inefficiencies with communicating with insurance companies.

Monetary losses crop up, due to the major delay between reporting to the insurance company and the time it takes for the insurance company to determine what it owes the doctor, the patient, and what their profit and loss looks like.

Insurance is about profitability, and it favors the corporation behind the insurance company. These are public companies we’re talking about.

It appears that we may be reaching the inflection point in inefficiencies; why else would doctors’ offices be turning insurance companies away?

Here’s why it makes sense: doctors’ offices rely on insurance companies to funnel in patient fees and keep the lights on in the office. However, massive paperwork loads are a major barrier that keeps them from getting that money. Perhaps the delay between when the patient walks in and when the doctor’s office finally receives an answer from the insurance companies has become too long for doctor’s offices to be able to stay in business.

According to Virginian Pilot:

“More than a dozen direct primary care practices have popped up in the Chicago area, and there may be more than 800 across the country, according to Dr. Philip Eskew, a direct primary care physician and attorney in Wyoming who tracks the industry.”

The whole process of filing an insurance claim is akin to filing your taxes: everybody in the US files by mid-April, and the government has a mountain of documentation to sift through. Thus why it takes until May or even June to get a paper check back from the government.

So, wouldn’t it then make more sense for the doctor to can manage her own subscriptions?

Wouldn’t it just make more sense for the doctor to do it on her own terms, and avoid the month-long gap between sending documentation off to United Health and getting an answer and a payment?

And, what about the patients? Will this benefit them?

In most cases, yes.

The in-house insurance model makes it possible for patients to pay a Netflix-like subscription cost [$70-$130] every month, to cover smaller needs like a pap smear or blood work. These smaller needs may or may not be covered by insurance, making it difficult for the patient to know what they’ll need to pay, and often creating redundancies and double-charging. This gives the patient more visibility into the costs matrix, and makes it easier to make sure they can afford care.

So, doesn’t this business model basically make everything easier for everybody? It looks to be so. But, will this idea finally gain traction and adoption? That much is yet to be seen.

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