Health Insurance 2009, Part II

Last week we looked at some of the things that should stay the same with our healthcare system regardless of how President Obama’s plan is implemented. It also gave us an opportunity to review the important aspects of health insurance plans and how they fit together. Last week we touched upon insurance premiums (your monthly fee to be in the plan), deductibles (that portion of a medical bill that you pay before the insurance company steps in) and coinsurance (how the insurance company splits the bill with you after you pay your deductible). This week we continue the discussion.

Health care is expensive, no doubt about it. Doctor visits alone can cost $100 or more for a family physician and $200 or more for a specialist. Throw in prescriptions that can easily cost over $100, $200 or $300 more, and you can see that some kind of mechanism needs to be in place for people to access care affordably. That mechanism is called a copay. A copay is a flat fee that you pay to the doctor or pharmacist at the time of service. It’s unclear at this point whether labs, X-rays, and other diagnostic procedures will be part of your deductible, part of your copay, or an additional copay under the new rules that will come with new health plans.

Unlike your deductible and coinsurance, copays typically don’t get added up until you meet a maximum amount that you pay. As such, a lower copay is beneficial, especially if you are on multiple medications. Speaking of medications, the concept of generic drugs should still be around. Generic drugs are legally required to be indistinguishable from its brand name counterparts, but because they don’t have the research and development costs that the brand names have, they are usually a fraction of their cost. The generics also don’t have the advertising expenses or recall possibilities that plague the brand name companies, so they are coming into a market that’s already using it’s product, but at a greatly reduced price.

A great cost-saving feature inherent in most current health plans is the mail-order pharmacy program. There are variations, but generally you can get a 90-day supply of maintenance drugs for 2 to 2.5 times your monthly copay. They arrive via the mail. Insurance companies currently have particular vendors that they use for this service which doesn’t allow importation of the drugs from other countries to take advantage of the cost savings. Under Mr. Obama’s proposed health plan, importation of drugs from other countries will be part of the program. I foresee insurance companies subsequently incorporating this into their mail-order programs, hopefully passing on the savings to the consumer.

The cost of all these changes is sure to be substantial, even by the incoming administration’s accounting. One way to reduce cost is to reduce unnecessary tests and procedures. Insurance companies use a preauthorization procedure whereby you or the doctor calls into the insurance company and proves you actually need the test or procedure. I foresee this becoming more stringent to help reign in costs. Along the same lines, case managers, insurance company personnel who work with hospitals to assure that no one is in the hospital longer than they have to be, will be utilized more.

With this new administration, we are potentially ushering in a whole new system of how we access our nation’s healthcare. However, the old adage, the more things change, the more they stay the same, may be appropriate. Be sure to check in each week as we try to help you make sense of future developments.

Until next time, stay healthy!