Controlling Health Insurance cost: More Insurance?

The real question in the health care debate is "what's it gonna cost me"? No, me personally! What is my deductible, my out of pocket expense. However you choose to view the world it always comes back to the microcosm, me and my world. That is the way of our culture, this is why we debate so ferociously we are a nation of self interest. There really are a lot more answers when we research this matter and entertain different realities. Yes, the costs are high, but the natural course of business and government will modify these conditions. They always have. In the meantime how do we cover our personal needs.

So what's it gonna cost me? Lets build a model. First let's build an individual model then second a business model.

There is only one formula truly for both. You must have the conscience of good health. Then for the unexpected we need a major medical or catastrophic insurance that will keep our expenses from unfortunate events somewhere within reason with an ability to pay in a few years if need be. Example: A 5 day stay in a hospital, (the average) will cost about $5,000 to $10,000 a day for a total bill of between $25,000 & $50,000 that is difficult to pay for most people in a few years. But, lets say you have an insurance policy that has a $5,000 deductible with a co-insurance of another $5,000 that leaves you a $10,000 bill after which the insurance company now pays 100%. That's a bill most everyone can reasonably pay. Most hospitals and doctors take payments and negotiate bills. The point is there's a way out of a $10,000 bill vs. $50,000 & up.

So now let's tackle the $10,000 portion of non-coverage to reduce our out-of -pocket risk even further. Buying a coverage of a $5,000 deductible & up is very cost efficient with much lower premiums. There are several ways to offset this, the first being a gap plan that covers some of the major expenses when you have an event that reaches this level. A gap plan can cover portions of hospital stays, surgery, anesthesia even prescription drugs. These plans are inexpensive and you can justify the costs with the savings you get from the purchase of a high deductible plan. There is another way to offset the deductible and costs. These plans are usually called voluntary plans because while most plans are offered through work as voluntary insurance, they can be purchased on an individual basis. They also are very inexpensive (less than $75 a month on average) while most of the polices, such as cancer plans, accident plans, critical illness (heart, stroke etc..) & hospital plans can over indemnify, meaning their benefits are not tied to your costs while many times paying hundreds and thousands more for an event than the actual hospital and doctor costs.

Now lest not forget that every event we have always, always has expense associated with it that has nothing to do with hospitals and doctors. Missing work, not getting paid for a disability can add up pretty quickly and does devastate families all by itself. Just let your mind think about all the other expenses with and accident or illness. Its mind boggling.

But let's stay on task with this formula I have just mentioned. Basically with this model you can potentially have several companies insuring you at different levels. You've spread the risk. So now the event that can cost $10,000 is covered significantly with the possibility of paying even more, which as described is necessary. Example: I sold an accident plan to a man for him and his family for less than $500 a year. When his 12 year old was tragically burned the policy paid over $43,000. He had major medical coverage so his expenses where covered many times over. You say why? Well I say what could this young boy need down the road? More cosmetic surgery's? Point is that's what the insurance coverage agreed to pay! Pretty good policy?

This formula works in the business model as well but with application changes. The employer must get involved with employees health consciousness as there is tremendous benefits with a healthy work force that saves a lot of money for premiums because of better claims history.

Employers must also utilize the savings from high deductible health plans while also spreading the risk to other insurers to cover the gaps & financial losses for employees that experience health events.

Another major cost savings for employers is an organized and educated benefits distribution department. Usually called the Human Resource Department. Managing human capital, as its referred, must be efficient in areas that support not only employee benefits but be a support for business development and company goals.
In summary there are answers to health care costs that are not yesterdays answers. We must think in terms of alternate plan designs and the way we package our benefits & insurances. Simply, spread the risk and take some on ourselves.

Marvin Wilkerson is the President of TCB Insurance Group, LLC which can be found at http://www.tcbinsurance.net/. He has been in the insurance business over 10 years with exsentsive experience in voluntary, worksite insurance and group health insurance.