Monday, October 25, 2010

Will Major Medical with a Wrap-around Plan make a Comeback?

I think about this all the time...the way it was prior to managed care and it's invasion into the U.S. system (which has both good and bad elements by the way)and what was easy about it.....deductible, then coinsurance (you 10, 20, 30, 40% after deductible) and coverage for big stuff like hospital, surgery (in and outpatient) major rehabilitative therapy etc.... running to the doctor for a cold, was billed directly to the consumer...that is where the "wraps" came in to place, to cover other stuff like doc visits.

So a layman would say, wouldn't it help if the doctor-visit part of health insurance system were pushed directly to the consumer, wouldn't we save money? Short answer is yes, but we need to incentivize folks to go for annual check-ups, preventative visits, OB/GYN for women etc...so they do not end up in the ER with a $50,000 claim. Education and communication especially between employer's and employees is essential for workers to start becoming more health conscious and proactive about their ongoing illnesses etc...

I happen to think it would not all be bad if we pushed all of the major illness (hospital et al) to health insurance carriers to cover, as they know how to do it effectively, and create an opportunity for more competition in the market for "wrap around" plans to come back...buy exactly what we want, and to cover what we want (like car insurance per say) and have the price be commensurate with what we purchase.

High-deductible health plans are taking a better foothold now with the economic crash of the last 2 years, and they will surely continue to gain marketshare. Will we see the professional services (doc visits other than preventative) style benefits be pushed back to the consumer? If insurance carriers did that, and decreased their bureaucratic staff numbers by 30-40%, we would have no speaking of health insurance problems in the U.S. Thinned out insurance carriers, and unbiased advisors (brokers and consultants) have been working well in financial services and specifically in stock brokerage, life insurance brokerage, etc...so why not in health insurance?

Call a bureaucratic health insurance carrier and try to get a right answer first shot, no way. It is not to say they are all this way, but certainly, there is room to dramatically reduce overhead of internal staff (salaries, bonuses, commissions, employee benefits, worker's compensation, 401k matches, defined benefit plans, long-term disabilities) and push the work to outside brokerages (1099 the commissions they earn and you're done).....food for thought.