MMA Blog

An Opinion: Has Healthcare Really Come Full Circle?

If you are younger than 45 years old you probably don't know what a Comprehensive Major Medical insurance plan is. You probably have grown up believing that the cost of a doctor's office visit is only a $20 co-pay or the cost of a name brand prescription is only a $35 co-pay. The older Comp Major Medical plans had no co-pays, required you to file your own claims every time you received service from a provider and before you received any payment from the insurance carrier you were responsible for some amount of money (usually around $250) in the form of a deductible. You then shared in the remaining costs (usually around $250) through co-insurance capped at a specified dollar maximum. So, your total out of pocket costs were somewhere in the range of $500.

Then, in the late 70's and early 80's all of us were told that we would be better off with HMO's and Managed Care because they were going to make premiums cheaper and benefits better. They made us believe that the price of admission came in the form of a $5 co-pay and that we no longer had to file claims because the doctor's office would do it for us. The few requirements the HMOs did impose didn't seem that bad at first. The HMOs required us to pick a gatekeeper provider for all our care. They required us to get a referral (essentially a permission slip) from our gatekeeper if we wanted to see another provider. And they would only let us see doctors that were in the book - the participating provider directory. You see limiting access to providers who gave deep discounts in order to receive higher volumes of patients really did make sense. It was to be a cheaper way to delivery healthcare but being told what we could do and what we couldn't do wasn't really the freedom of choice we thought we were getting. We had forgotten the simple concept that tightly managing the patient's care would result in lower premiums. And we didn't remember hearing that the HMOs were going to make our healthcare decisions for us.

But for the next 20 to 30 years consumers continued to demand that their Health Plans be more like the old way. They wanted to go to doctors they liked but were not in "The Directory". They didn't care what the doctor or hospital charged. But they didn't want to go back to the higher premiums. Over time, we began to demand being able to see providers that we thought were the best in the business and we told Health Plans that we wanted the privilege to go out of network whenever we wanted. The Health Plans responded and gave us the Point of Service (POS) and Preferred Provider Organization (PPO) plan designs. We continued to demand and told the Health Plans that the gatekeeper concept had to go away. So the Health Plans created open access privileges and allowed us to go to any provider we wanted to in or out of the participating provider network. We all wanted our cake and we wanted to eat it too. We wanted virtually no costs (co-pays were okay) but we also long for the days when we could see any doctor or go to any hospital we wanted to go to. Remember though, limiting access to healthcare and limiting your ability to make your own healthcare decision was why HMOs could give us cheap premiums. We liked the low premiums but we wanted to be able to make our own healthcare decisions.

Well, on December 8, 2003 President Bush signed into law the Medicare Prescription, Improvement and Modernization Act. It allowed consumers to set up Health Savings Accounts. HSAs allow you to put pre-tax dollars into a savings account which the consumer owns and could use at their discretion. You can use the pre-tax money for eligible expenses of which deductibles and co-insurance qualify. If you didn't use the money in the year in which you put it away you can roll it over to the next year and if you left your job you can take it with you. The only requirement, you could not have any co-pays in your plan of benefits any longer. You had to return to the Comprehensive Major Medical style plan. You control the healthcare decision again and you decide what providers you want to go to. But now you purchase health care services and you know what the price of admission is. You still get the discount from the participating provider if you go in network but you bear the costs of the deductible and the co-insurance in and out of network. You see, in 30 years we have come full circle. We are back using Comp Major Medical plans with the added bonus of a pre-tax fund for our out of pocket costs called an HSA!

Posted June 06, 2011

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