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Soulful Sundays: Healthcare (Part II)

"Take a chance on faith – not religion, but faith… I don’t believe in hope. Hope is a beggar. Hope walks through the fire. Faith leaps over it." -Jim Carrey

"We but mirror the world. All the tendencies present in the outer world are to be found in the world of our body. If we could change ourselves, the tendencies in the world would also change." -Mahatma Gandhi

If you haven't read Healthcare Part I, I would recommend starting there. I briefly covered the history of the American healthcare system with a critical focus on the inflated price of health insurance and medical bills. This post is centered on troubleshooting the problems with the current system including practical actions that people can start doing immediately. For a problem as complex as this one, there is no ultimate solution, only more sensible alternatives. We will cover a few here.

In a nutshell, the problem with healthcare is twofold. One, premiums are in excess of services covered for the majority of people with insurance. If you have insurance you are paying for other peoples' costs as well as padding the pockets of the corporate insurance providers. Most Americans put money into a system year after year, with little return on their investment. When they eventually do end up drawing money out of the system, the costs are exorbiatant, which brings us to point two. Price negotiations between health insurance companies (including the government) and providers have increased the price of goods and services well beyond their market value. These negotiations also create incentives for providers to overtest and overmedicate patients. Big pharma, big insurance, and big hospitals all win.

We have created an entire industry around overcharging people for drugs and procedures that they don't need, while not incentivizing them to take preventative measures. As a result, Americans are becoming sicker and sicker and their medical costs are being absorbed by the rest of the population. Otherwise avoidable diseases are being postponed until the problems must be handled by advanced medical care. I know this is a rather dismal summary, but it's the reality. As I hinted at the end of the last post we have three major options in moving forward with healthcare in the US: leave the casino, count cards, or become the house. We'll look at each one now.

The obvious answer seems to be not to play the game in the first place. There is risk in this scenario, as a major accident or emergency procedure might leave you at the mercy of hospital billing departments and credit collectors, so let's look at the numbers. We have all heard stories of people who go to the hospital for an emergency and end up with a $50,000 to $100,000 bill afterward. Thank god they had insurance and only have to pay $10,000 of that (the insurance picking up the rest), right? Wrong. Insurance already has a negotiated price with the hospital that is much lower than the difference between what the patient pays and what is quoted as the total. This is otherwise known as a scare tactic. Furthermore, if you were able to get a cash price for all of your necessary care it would be on average 10-30% lower than the out-of-pocket price you pay with insurance.

Now, let's say you have been paying $500 per month in premiums for just one year. You have already paid $6,000 to the insurance company before your deductible. Had you saved that six grand you would have been able to pay the cash price for your emergency procedure (in the scenario above). Given that most people will not need a major hospitalization for the first five decades of their lives, doesn't it make more sense to save the money you would have allocated to a premium and put it in an indexed stock market account? By the way, that is exactly what the insurance companies do with a percentage of your premiums. They invest it in the market and make money off of it. If you have the discipline to save money like this, it is well worth it and there should be better tax shelters for savings allocated for health spending (but that's a topic for another post).

The second option is learning to count cards, so to speak. By this, I mean learning how to play the insurance game from the inside. When job-searching look for companies with the best insurance plans. If you are shopping for insurance look for options that cover preventative care like acupuncture, massage, chiropractic, gym memberships, advanced bloodwork, and supplements. Look for ones that allow you to use an FSA or HSA on your routine care. If you are taking medications or using medical devices (like a continuous blood glucose monitor or a CPAP), be sure those costs are covered. The more you can get your insurance to cover, the better. There are certain coding and billing loopholes you can use if you know how, however, it takes time to figure them out. Knowing someone in the health insurance field can help.

Due to the lack of competition in the marketplace, most major insurance plans are lacking in the aforementioned areas, so you might have to think outside of the box. There are groups called health share programs that are comparatively very pro-preventative care and will cover a wide variety of modalities. Most of these programs are faith-based, but there are a few that aren't so you have to look around. Health shares are similar to health insurance, in that you pay a monthly "share," but they lean heavily on the member to do the legwork of negotiating with providers to get lower cash prices for services and then following up for reimbursement. Shares end up being cheaper than most premiums and can be a good way to hedge against catastrophic emergency costs.

The last option I'll explore is how to become the house. One way of doing this is to pay cash for everything. In a cash-only system, insurance middlemen are eliminated. That MRI would only cost $500 instead of the $5,000 insurance price. That $50,000 knee replacement surgery would only cost $8,000. The price differences between two hospitals in the same city can vary greatly, so you have to call around. It might even be more economical to fly to another state or country to get a procedure. The Surgery Center of Oklahoma is pioneering cash-based surgery in the US. If you need surgery I would suggest checking them out first.

There is one major Achilles heel to only paying cash, and that is prescription medications. In the United States, the regulations are such that the major pharmaceutical producers will not deal directly with consumers, meaning that everything is routed through Pharmacy Benefit Managers (PBMs). PBMs are absolutely criminal. They incentivize exorbitant non-insurance prices for essential medications, getting away with this by offering rebates for uninsured consumers. The result has been a 700% inflation on many patent medications, most of which are paid back to the PBMs. Legislation in multiple states is in motion to dethrone the PBMs, but the war is far from over. Alternatives include using more generic medications, buying medicines from companies in Canada or Mexico, or (my preference) getting off the damn medications through better lifestyle choices.

One last thing...Direct Primary Care (DPC) and other membership models are rapidly increasing in popularity. They are for people who expect to have a higher number of yearly visits but don't want to pay the high insurance premiums needed to make them affordable. Most DPC businesses charge $50-$80 per month for unlimited visits and lab work. Similarly, concierge medicine models charge a flat yearly rate to manage their clients' health needs. Membership and flat rate clinics are a win-win. The customer gets dependable service at a reasonable price. The provider gets consistent income from a committed population. Both want the other to succeed. Healthy people are much easier to keep healthy, so the trend is always upward. Insurance companies, PBMs, and traditional hospitals make more money from people being sick. Which do you want to support?

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