30 Oct Let’s Learn About Health Insurance
Okay, I’m stumped. How do I make health insurance interesting to a business owner who only wants to run his/her business? It’s expensive, and it’s complicated. What’s not to like about that?
Business owners have options concerning their health plan, but the first order of business is to become educated about how it works. I don’t mean that a Health Policy Ph.D. is necessary, but at least a working knowledge of how a health plan works.
Let’s learn about health insurance, starting with the basics.
Does it need to be this complicated?
Probably not, but this is the reality of our health care system today. The Affordable Care Act was touted as a more straightforward and less expensive way to provide health insurance to all Americans. While there are certainly positive aspects of the ACA, it is still costly and complicated. In the midst of all of the smoke and mirrors of our current system, there is one thing to remember: Paying claims is the primary purpose and the majority of health insurance costs. One provision of the ACA is that no more than 20% of health plan dollars can be spent on costs other than claims.
It seems pretty simple. People get sick and need a physician and hospital services, as well as prescriptions and therapies, and there are costs associated with these services. The most efficient method of paying for them is a direct transaction between the patient and the provider, but that is not how it works. Our health system consists of several layers of “middlemen” between the patient and provider, complicating the transaction while touting simplicity and efficiency.
If 80% of my premiums will pay claims, isn’t that where the focus should be?
Bingo, but to effectively focus on claims management, you must have at least a basic understanding of networks, pharmacy benefit managers, reinsurance, eligibility, plan design opportunities, self-funding, and more.
Throughout the rest of this blog series, we’ll define some of these terms and discuss strategies to save. If you have any questions in the meantime, don’t hesitate to reach out.