Health insurance is an incredibly complicated and obtuse system. Regulations vary from state to state, each insurance company is different and now the federal government is throwing their hat in the ring. This blog is an attempt to sort through the mess and provide simple, clean explanations of these issues.
We have a ton of exciting topics that we want to write about, but first I want to take a minute to go over who we are and what approach we're going to take with this blog.
Clarifying Health is written by three members of a company called Zane Benefits. We are working hard to change how healthcare works in this country. One thing we see every day at work is that most people just don't understand the basics of healthcare which is what inspired us to start this blog.
We'll get started by posting general information that we think most people should know. As we hit our stride, hopefully readers like you can tell us what you want to see. So if you have a question, send it our way (
tips@zanebenefits.com).
Here's a little info about us:
Paul is the main writer at
Clarifying Health. His list of accomplishments is too long to go over here, but his most relevant credentials are that he is an eight time best-selling author and has published several books on health insurance and wellness (check out his
bio). Paul is very involved in forming the public policy related to health care so he'll be writing posts explaining not only how things work, but how they
should work.
Rick is very involved in the health insurance industry and he knows as much about the tax codes, compliance issues and state laws as anyone. When our readers ask tough questions, Rick will be the go-to guy.
Hey, that's me! I'm a product guy. I design and build tools that help people deal with their health coverage. I'll be writing more about the technological and operational issues that come up related to healthcare.
Other members of the Zane Benefits team will also contibute posts from time to time.
I just saw
this post from Alan
Katz discussing how President Obama is trying to use
budget reconciliation to make it easier to enact health care reform. This would basically mean that the Senate could pass legislation with fewer votes than would normally be required so that changes to the existing system would face less resistance.
I'm not one to analyze the politics involved in this situation (I'll let Paul handle that) but there are some takeaways for those of us in thehealthcare business, or anyone interested in how this reform plays out.
Obviously no one knows exactly what will happen, but if the reconciliation protection is passed, it's probably safe to assume a few things:
- Major health insurance companies are too large to be put out of business overnight. The changes can't be so sudden and dramatic that they would disrupt the business practices of major insurers.
- Other aspects of health insurance will be subject to major changes. Tons of new opportunities will appear out of nowhere.
Once again, I'm not claiming to know what will happen. I'm just giving some vague predictions. That said, rapid change means that some of the systems we currently have in place will need to be adjusted. Someone will make a lot of money off these adjustments.
While we can't predict exact what will be different for the healthcareindustry, something will be different. If you currently sell or use traditional insurance products, your bread and butter isn't going to be swiped out from under you right away, but the writing may be on the wall.
As a young adult with an entrepreneurial spirit, I think this is great news. Anyone that is waiting for anew opportunity to arrive might not need to wait any longer. Something will change and large companies are notoriously slow to adapt.
Everyone working in healthcare should start building some flexibility into their business. You can't specifically prepare for the future (since you don't know what will happen) but you can create infrastructure that will support the change that will be required in the coming months and years. The first companies to market with some new ideas will be at a huge advantage.
To me, this also means that we should all consider what we depend on to keep our careers afloat. If you depend too heavily on selling one type of insurance or providing one type of service, consider what would happen if new legislation makes your one product obsolete. Diversification has always made sense, but maybe now is the time to actually reflect that with your actions.
My view: Bring it on
There are two stories in the news that you might have heard about recently. The first is about how hackers may have stolen millions of electronic medical records. The second is that President Obama wants all medical records to be electronic in the next 5-10 years.
As you can imagine, these two stories are combining to form "All your medical information will be stolen" stories. Putting aside the fact that the hackers may be lying about stealing the medical records, I thought I'd talk about the relationship between these two events and what I, as a programmer in the healthcare industry, think about it.
First of all, when implemented properly, electronic information is generally more secure that paper files. It's harder to "hack" into a well designed system to steal records than it is to break into a hospital and steal all the files. Also, electronic data can be encrypted so that even if a hacker does get their hands on the information, they won't be able to read it.
When you hear stories about credit card or social security numbers being stolen from a server, it's almost always the case that either the system they were being stored on was at fault (which can easily be prevented) or it was an inside job (which can also happen with physical records). What I'm saying is, assuming we implement this system correctly, there's nothing to worry about.
But I am worrying all the same. I know a few doctors and it sounds like the technology hospitals use for administrative work is poorly designed and outdated. If Obama expects these hospitals to be entirely digital in the next 5 years, chances are good that they will try to patch their existing systems rather than building from the ground up. This could lead to a real mess. Adding new functionality to old, broken systems doesn't normally work very well.
In the mid-90s,
the IRS began upgrading their antiquated IT infrastructure which was designed in the 60s. The result was one of the most embarrassing technology failures in the history of computers. Like many computer science students, I studied this as an example of what not to do. The moral of the story was that at some point, a system becomes so broken that you are better off rebuilding it from scratch rather than trying to fix each and every problem individually.
I could see this happening if we're not careful. Apparently
each hospital will be eligible for up to $11 million in reimbursements in return for being an early adopter of electronic medical records. If this money is used properly, the country will be in a much better place in 5 years. If the money is squandered on patching problems rather than rebuilding, it wouldn't surprise me if we see a few more cases of identity theft via stolen medical records.
Before we get into a bunch of specific posts about how insurance works and what is right for you, there are a couple of things that everyone should understand about insurance. I'm talking about all insurance from your health policy to a
warranty on your
tv from Best Buy.
Insurance companies make money. They provide a lot of useful services, but you must understand that insurance companies make money when they offer you a policy. This means that you should only use insurance to cover things that actually need coverage. Otherwise you're just handing the insurance company money and then they hand you back less money. Here are two examples of types of coverage you might not need:
#1 - Insurance is meant to mitigate risk by distributing it across a large pool of people. Only some of the people in the group will need the insurance which means that everyone is chipping in to pay for bad things that only happen to a small percentage of people. You're paying to reduce your risk.
So how should this affect your actions? Insurance is not meant to cover things where there is no risk. There is no risk involved in going to the doctor for an annual checkup. Sure, it feels nice to have your doctor visits "covered" but don't you think the insurance company considered that fixed cost when they offered you a policy? You're paying for that doctor visit one way or another, but if itgoes through the insurance company, you're paying them a little bit extra. It really only makes sense to pay the insurance company to cover expenses you can't predict.
#2 - Insurance also doesn't make sense in situations where you can afford the cost burden of the worst case senario on your own. For example, if you go and buy a new MP3 player from a major retailer, they will offer you a warranty for that item. It sometimes sounds like a good idea, but it really isn't.
Remember that the company always makes money by selling you coverage, and this is no exception. Additionally, consider that the company is probably much much better at math than you. They already figured out the probability of your device breaking and how much they'd have to pay you. This allows them to figure out the exact amount of money that they'll have to pay out to you if you buy thewarranty. If the warranty costs $20, they know that they'll only have to pay out $15 on average. There's nothing to think about because they already ran the numbers for you.
You'd be much better off refusing all extended warranties. Simply take the money that you would have paid and save it in your own personal "warranty fund". Then if a device breaks, you'll have enough money saved up to cover it, but you didn't have to pay that extra little bit to the company that sold you the warranty. This is call self-insuring. You're effectively accepting the risk because you can afford to.
We'll dive much deeper into these topics in future posts, but it's a good idea to familiarize yourself with these two situations where you should avoid "coverage". Obviously, there are exceptions, but think twice next time you're offered an extended warranty on that newiPod.
