In this episode of the Next Generation Healthcare Podcast, we delve into the evolving landscape of healthcare options. Starting with a comparison between traditional health insurance and medical cost sharing, we explain common terms associated with each model. We explore the benefits and challenges of medical cost sharing, using Sedera as a case study, and discuss the crucial role of trust within healthcare communities. Join us for a comprehensive guide to understanding these alternative healthcare solutions. For more insights on health insurance vs. medical cost sharing, check out this article. Calculator: https://www.kff.org/interactive/subsidy-calculator/
Chapters:
1:02 Introduction: Traditional Health Insurance vs. Medical Cost Sharing
2:57 Common Traditional Health Insurance Insurance Terms
8:48 Common Medical Cost Sharing Terms (Sedera)
13:43 Pros of Medical Cost Sharing
21:13 Cons of Medical Cost Sharing
23:37 Importance of Trust In Healthcare Communities
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Welcome to Next Generation Healthcare, proudly presented by Optimal Telehealth, our soaring health insurance costs for your family or business causing you stress. tired of the long waits and high fees for a simple doctor's consultation? Then you've found your podcast. Next Generation Healthcare is here to empower you to take back control over your healthcare decisions, freeing you from the constraints set by insurance companies. In our episodes, you'll uncover the secrets to circumventing traditional insurance to access direct services from your preferred providers at savings of 40 to 50 percent. Stout, the visionary founder and CEO of Optimal Telehealth. Now, let's hear from Larry. Thanks, Mandy, for that gracious introduction and thanks to our viewers for tuning in. In our previous episode, I spoke from a broad perspective about the problems with our nation's health care system and why people don't like it. I also talked about alternatives to traditional insurance-based health care, which many feel represent the future of health care in America. In this episode, I'm going to compare traditional health care and health insurance to medical cost sharing. More specifically, I'll be talking about insurance compared to a combination of virtual primary care services and medical cost sharing, which Optimal Telehealth markets as our Optimal Care membership. Optimal Telehealth is partnered with Lyric, as our virtual healthcare service provider. Lyric's one of the largest national providers of virtual healthcare services with over 6 million members. Our partner in medical cost sharing is Sidera, one of the first companies to bring medical cost sharing out of the faith-based community for general availability. We'll learn more about these providers in future episodes. To set the stage for this discussion, you need to understand how traditional health insurance works, and you might be surprised to learn that the average consumer finds it confusing and is not familiar with all its components. You will begin to see the structure of health insurance is somewhat arbitrary and has little relationship to how patients actually utilize medical services. I once had a woman tell me that you never understand how health insurance works until you have a baby. I think that's probably very true. Whether it's giving birth or experiencing a major medical event, the average consumer will be surprised at what they don't know. In fact, as a direct result of the complexity of health insurance, an entire new vocation has emerged called patient advocacy services. More discussion on advocacy services in later episodes. To begin our Insurance 101 course, let's define some common insurance terms. The first three of these terms fall under the general heading of COPE, in industry terms. In other words, they are all methods by which the policyholder participates in the cost of their own medical expenses. The most common word is deductible, which is the term most people are familiar with. Deductible is the amount of money the policyholder spends out of pocket for medical services each year before their insurance begins to provide financial support. The average annual deductible for a silver-level insurance plan is between $5,000 and $6,000 for an individual and twice that for a couple. A silver plan is a middle-of-the-road plan purchased by most consumers. Bronze would be a low-cost plan and Gold or Platinum more expensive executive-level plans. There are exceptions to the deductibles such as copay for a primary care office visit, where the policyholder will cover a small initial amount of the appointment cost and the insurance company pays the rest regardless of whether the policyholder has met their annual deductible. Every policy will disclose these copays. related services. Another form of co-payment is called co-insurance. This is a term most policy holders don't understand. Co-insurance becomes effective once the policyholder has paid in their annual deductible each year. It is a percentage of medical expenses paid by the policyholder until the out-of-pocket annual maximum for the policyholder is reached. For example, If a plan has a $5,000 annual deductible and a policyholder has paid out-of-pocket medical expenses exceeding that $5,000 in a given year, the policyholder will now be responsible for paying a co-insurance as an additional out-of-pocket expense. The co-insurance rate for a silver plan is typically 30% of any additional expenses. as the last of the three, not to confuse it with the overall concept of copayment, the last of three terms that fall under the general category of copayment. In this application, it mostly refers to the initial amount of the cost of a primary care office visit that is paid by the policyholder. The insurance will cover the remaining cost of the office visit, but may not cover expenses resulting from additional services provided during the appointment. such as x-rays or lab work. A typical copay for a silver plan is $60. Copayments can also be associated with major medical services, such as the cost of an overnight stay in a hospital room, imaging services, or lab services. The national average cost of a hospital room is just over $3,000 per night, and copay for a silver plan can be four to five, four to $600 per night. That's your out-of-pocket for those types of expenses. Then we move towards annual maximum, which is a government established limit on the amount of out-of-pocket expense a policyholder can be responsible for each year. When this limit is reached, the insurance company pays 100% of all additional covered expenses. The annual maximum for an individual's silver plan is around $9,500, and for a couple it's about $18,500. The next term is one you're familiar with. It's premium. The premium is the monthly cost of an insurance policy. An insurance policy is a contractual agreement between the insurance company and the policyholder, and the premium is the amount the policyholder pays for that financial protection provided by that contract. Premiants can vary significantly depending on a number of conditions. The Kaiser Family Foundation is a great resource for information and statistics about the healthcare industry. They have a health insurance marketplace calculator. You can do a web search on health insurance marketplace calculator, or we put a slide on the screen with the actual URL if you want to copy that down. This calculator can be very... helpful when you're comparison shopping. It's broken down state by state and has a lot of variables that you can plug in, but it's very accurate. The last term we'll discuss is pre-existing conditions. Prior to the Affordable Care Act, people had medical conditions prior to their purchase of an insurance policy were rated and their premiums were adjusted in consideration of their pre-existing medical condition. In other words, unhealthy people paid a higher price for insurance. After the Affordable Care Act, insurance companies can no longer consider pre-existing conditions in the calculation of their insurance premiums. Common pre-existing conditions are typically chronic illnesses like diabetes, heart disease, or cancer, but it can be a short-term illness that is curable. Pre-existing conditions are This Disaffordable Care Act requirement for pre-existing conditions is for both individual policies and group policies that employers might use. Now let's move over to medical cost sharing. A medical cost sharing community is a group of like-minded people who voluntarily pool their money together to be shared with the other members for the purpose of providing financial protection against major medical expenses. that are for-profit public corporations with thousands of employees. Sharing communities, also referred to as health-share communities, are typically non-profit corporations that are managed by either a non-profit or a for-profit corporation with a conservative administrative support staff. Insurance companies are focused on profits and return on investment for their stockholders, the effectively managing the community's financial resources and assuring the money spent for medical services are competently utilized. This includes assuring accurate diagnosis of medical conditions and obtaining treatment at a fair cash price. The management company in a sharing community typically obtains their operating revenue by taking a percentage of the monies contributed to the community, making their operational transparent to the community. Because health share communities have their roots in faith-based companies, it is common for employees of a health share community to view their work as a ministry rather than an opportunity to generate wealth. Insurance companies' profits fluctuate depending upon many variables and are published for the benefit of stockholders. Sharing communities are very sensitive to being mistaken for insurance companies. so they go to some length to differentiate themselves to the extent they create their own language and avoid using words that are common to the insurance industry. Sharing communities do not have standardized language, so different communities use different words that may have the same or similar meanings. At Optimal Telehealth, our cost-sharing partner is Sidera, so we'll be using words common to their community. The first of these words is need. M-E-E-D, need. A need is any injury or illness that results in a medical expense that exceeds the member's initial unshareable amount. We call it an IUA. In other words, it's a major medical event. The next term is initial unshareable amount, IUA. The IUA is the amount of money the member feels comfortable paying before they begin to share expenses with the community. This amount is determined by the member when they select their memberships. Memberships are segregated into five different IUA levels. $500, $1,000, $1,500, $2,500, and $5,000. The $1,000 and $1,500 memberships are by far the most popular. It would be natural to draw a correlation between an IUA and the annual deductible in an insurance plan, but they are completely different in how they function. The annual deductible is a significant fixed amount that must be paid each year in its entirety before the insurance company pays anything towards the cost of major medical events. The initial unshareable amount is a much smaller amount that is paid only when there is a major medical event. The IUA is only paid once for any given need, even if treatment for that need carries over to subsequent years. The only time an IUA would be paid again for the same need is if the member went for more than 12 months with no treatment and no diagnosis for that medical condition. Another unique characteristic of the IUA is that the IUA is a non-discriminatory system is that members and their families are limited to paying only three IUA's per year. After the third IUA is paid, 100% of the cost of any future need is shareable with the community. The final term we'll discuss is membership. Where insurance companies are contracts belonging to a cost-sharing community is a membership, and the monthly cost of membership is $1.5 million. being a member is considered a contribution since it's a voluntary group. Membership is completely voluntary and it can be terminated at any time. So how do you decide what's best for you? Medical cost sharing is not the best solution for everyone, but it is the superior solution for most. Let's look at some pros and cons for medical cost sharing. First, a pro. cost of acquisition. Membership in a cost-sharing community can be as much as 50% less than insurance premiums when compared to the market price of family coverage. Even when compared to group insurance coverage obtained through an employer, the monthly cost is always significantly less, with the possible exception of a large self-insured corporation. How about cost of utilization? This is the area where medical cost sharing excels compared to insurance and represents the primary savings associated with medical cost sharing. As previously stated, medical cost sharing is structured in a way more consistent with how members utilize medical services. In other words, the members share of any major medical expenses paid only when the event occurs and the amount is much smaller than insurance deductibles. Sedera has nothing comparable to either co-insurance or co-pays. When a medical need occurs, the members responsible for paying, payment of the initial unshareable amount, and all remaining eligible expenses are shared with the community. Sedera has nothing comparable to the out-of-pocket maximum of an insurance policy, but it's possible to make some projections that would indicate what the financial exposure would be for a health-shared member. When a medical need occurs, the initial unshareable amount would constitute the bulk of out-of-pocket expenses. Since the IUA is limited to three per year per family, multiplying the member's IUA times three would establish a good basis for an out-of-pocket maximum. For example, if a member has a 1,500 IUA membership and has three major medical events in one year, which is statistically unlikely. their out-of-pocket is still only $4,500 compared to the $5,000 or $6,000 insurance deductible. Additional out-of-pocket expenses during any given year would be comprised of cash-pay services provided by medical specialists. Remember, your basic primary care services are included in your virtual services, so the only time you'd pay for primary care services is when you go to a specialist or go out for imaging services, etc. Imaging centers are laboratory service providers, the combined cost of which do not reach the level of a need. In other words, if a member accumulates cash-paid medical expenses for a given medical condition that do not reach the level of their IUA, those expenses would be the responsibility of the member. You must factor in that the insurance deductibles start over again every year, but when an initial unshareable amount is paid on a given need, treatment can be continued into subsequent years with no additional IUA payment. Considering the insurance deductibles for a silver plan are between $5,000 and $6,000, this can be a huge savings, to say nothing of the fact that having three needs per year is highly improbable. In-network and out-of-network insurance companies negotiate preferred pricing with certain medical service providers, so they offer better coverage when the policyholder uses their providers. It's not uncommon to find that cash pay rates offered by service providers are lower than the insurance company's negotiated rates. SIDERA has no provider network. Members can select preferred providers anywhere they want. SIDERA's only concern is that the provider is offering reasonable cash prices for their services and SIDERA will take a hands-on role in working with the provider to assure fair pricing. Price transparency is another pro. Price transparency is almost impossible for insurance companies because there are so many variables. Here are a few examples. As the treatment for a major medical condition progress, services will be included that weren't anticipated in the beginning, and the policy may require a co-payment on some of those services. SADERA doesn't have co-payments. They cover the entire cost of the services. Another is that an in-network major medical treatment center can quote a price for a medical procedure, but if a doctor performing the procedure that doesn't does not, you know, coming into that center to perform the procedure does not have a negotiated rate with the insurance company, the patient will be charged for out of network pricing for the doctor's services. SADERA doesn't have provider networks. In the last example, medical service providers use what they call CPT codes to identify the various treatments they deliver for a given condition, and hospitals use ICD codes. We can talk about those at another time, but these codes not only record the condition being treated, but also the level of treatment delivered during that patient interaction. For instance, a 5-digit CPT code like 12345 might be followed by two more digits like 01, which means the doctor merely observed the condition. If the code was followed with an 02, it might mean the doctor spent time taking steps to examine the condition in more detail, and a code 03 might mean the doctor went as far as treating the condition. When claims are submitted to insurance providers, these codes determine the amount of payment to the provider, so a frequent practice is to up-code these services which causes the insurance company to overpay the provider based on the treatment level delivered. It's very difficult for the insurance company to identify upcoding, and there are reasons why they are not overly concerned about regulating upcoding. I'll discuss this in more detail in future episodes when we discuss the ways in which insurance companies can manage their profitability. How about annual price increases? The last probe we'll touch on is annual price increases. The insurance industry is diligent in providing. Health share companies only increase their contribution rate in response to actual increases in the cost of medical services. And there's no maximum sharing limit with a cost share community. Well, I shouldn't say that. With Sedera's cost share community, there's no maximum limits. Some communities do have maximum limits. Some healthcare communities established max limits on periodic or lifetime sharing. CDERA has established no such limits. Now let's look at a few cons. The most common reason for someone to remain with traditional health insurance is the presence of a pre-existing condition. Imagine yourself in the role of managing a cost sharing community. One of your responsibilities would be to assure a person who has just received a significant medical diagnosis for cancer for existence could not join the community immediately and take advantage of the inexpensive coverage. To address this, SADERA uses a phased-in approach that provides no sharing for the pre-existing condition for the first 12 months. During the second 12 months, sharing is maxed out at $25,000 and in the third 12 months at $50,000. Beginning with month 37, any expenses related to your pre-existing condition are 100% shareable. If a person has a controlled condition and does not anticipate incurring any major expenses in the subsequent 12 to 24 months, they might feel comfortable moving forward with membership. The other significant consideration in joining a HealthShare community is the nature of the agreement between the member and the community. An insurance policy is a legally binding contract requiring the insurance company to pay all claims that fall within the coverage limits of the policy. A cost-sharing community has no such contractual obligation to their members and therefore no legal obligation to pay the medical expense of the members. It's understandable that this may be a cause for concern among some considering health those concerns can be diminished by researching the communities you're considering. The most common question to ask is how many times the community has failed to meet their monthly sharing requirement. In a future episode, we'll be diving deeper into how to evaluate and compare the very sharing communities, so stay tuned in. The primary point I want to make on this topic is that HealthShare communities are built on trust. So if you're skeptical person and not inclined to be trusting, HealthSure communities are probably not a good option for you. In closing, I know I provided an abundance of information here, and I hope I didn't overwhelm you. As we go forward into future episodes, I'll begin to microanalyze the various components of next-generation health care. But in the near term, I'll be providing more generalized overviews on major topics. I'll conclude this episode by pointing out that upon first exposure, many people think next-generation healthcare is complicated. But it's really not, like switching from an Android to an iPhone. In reality, it's much easier to understand than an insurance policy with far fewer variables. Our intention is to help you break free of the controls the insurance industry exercises over your access to affordable healthcare by making you savvy consumers. We hope you found this episode informative. Until next time, remember, next generation healthcare fosters a brighter and more empowering future for all. Thank you for tuning into Next Generation Healthcare, brought to you by Optimal Telehealth. Your engagement means the world to us. If you find our content informative, follow our podcasts on Apple, Spotify, or YouTube. We welcome your participation. and we'll review listener input in future episodes. 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