Monday, October 22, 2007

Prepaid Primary Care

[Welcome Wall Street Journal readers!]

Are prepaid plans the wave of the future?

For a monthly fee of $83 per individual or $125 for a family, the clinic provides unlimited primary and urgent care. Those who enroll in the prepaid plan get office visits, lab work, X-rays and as many generic drugs as the clinic can provide.

$1000 per year for an individual, $1500 for a family.

Sounds like too much for individuals and not enough for a family.

There are other issues as well.

One in five patients lacks insurance; others are saddled with sky-high deductibles.

One wonders how many of the uninsured will pony up $83 - $125 per month for primary care?

As for the folks with the high deductibles, the idea is to get away from prepaying for primary care. I miss the logic as to why someone with a high deductible would want such a plan.

Rather, physicians like Dr. Wood see them as filling an important gap in primary care. His main targets are individual patients with basic medical needs and employers who want to supplement costly, high-deductible plans.

Costly to who?

High deductible plans actually SAVE money.

To determine his fees, Dr. Wood says he estimated that the average adult would need about 20 itemized services a year -- from blood tests to X-rays. He leveraged his good relationship with the Ohio Valley Medical Center, an area hospital, to get lab work performed at low Medicare rates. He also put together a list of 100 generic drugs that he could buy directly from wholesalers. Drugs for chronic conditions such as high blood pressure he made available at $10 for a month long supply. Patients who needed to be on antibiotics and other short-term, acute-care medicines would get them at no extra charge.

I like the concept. Just not sure it is financially sound.

David Yuncke, a private music instructor, was the first to sign up. Joining his wife's company plan would have cost $400 a month, so he'd gone without coverage for four years -- and avoided seeing the doctor. Tests from his first visit with Dr. Wood in late 2003 showed he had a high cholesterol level, of 272. After getting more regular checkups and medication, his cholesterol level has since dropped by half.

"I get more than my money's worth," says Mr. Yuncke. "If you don't have something [very serious], this is wonderful." Even though he says he plans to eventually sign up for more comprehensive care, he doesn't plan to stop seeing Dr. Wood.

No coverage for 4 years, now has primary care for $83.

The good news is he is apparently taking care of himself . . . something he wasn't doing before when he had to pay when services were needed. Must be that monthly payment mentality.

Some local business owners say they've saved big by taking the prepaid route. Phil Santinoceto is one of them. After several years of premium increases, he says his medical-billing and management company was paying more than $130,000 a year to cover himself and his 20 employees. In a single year, 2005, he got hit with a 32% rate hike.

Last year, he included Dr. Wood's plan as part of the firm's medical benefits. He also switched to a major medical plan with a higher deductible. The result: monthly savings of $4,000. This year, instead of a premium increase, his insurer actually lowered rates by 3.4% -- largely because the staff used less specialty care, required less time in the hospital and used Dr. Wood's clinic for nearly all of their primary care. "That's the first time we've seen [a rate decline] in years," says Mr. Santinoceto.

If you are going to buy a prepaid plan, this is the way to do it.

I do contend the employer and employee alike would be better off with either an HRA or HSA.
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