Wednesday, April 08, 2009

The "No Insurance Club"

[Welcome Industry Radar and Kaiser Network readers!]

With unemployment in Georgia topping 9%, and at least one county over 20%, many are finding themselves without employer sponsored health insurance. Even with the employer COBRA subsidy, paying for group insurance without a paycheck can be a challenge. If the employer drops the group insurance plan, COBRA goes away as well.

This is not just a Georgia problem. Individuals and families everywhere who have had health insurance that is tied to their jobs fall into a trap of believing they can't afford health care unless they have health insurance.

For most, nothing could be further from the truth.

Routine health care usually is affordable for most, it is the catastrophic care that is a problem. But some medical providers in Kansas City think they have a solution. The Briarcliff Medical Associates have started what they call a "No Insurance Club".
For one person to join the No Insurance Club, it cost $480 for the year.

After you sign the contract, you get 12 doctor visits a year that include services like physicals, blood work and flu shots.

For a family, no matter the size, it will cost you $680 for the year. It includes everything that an individual plan does, but ups the number of doctor visits to 16.
Sounds great, right?

But it has drawbacks and can convey a false sense of security.

The idea originated out of Arizona. A visit to their site indicates the No Insurance Club has a participating provider in Georgia. A single, participating provider.

How about Kansas City?

A single, participating provider.

Arizona has about a dozen.

There are some other gotcha's as well.

How about this. Why prepay for a dozen visits when you may only need 3, or none? We think a better approach is to access places like Take Care Clinics where you pay as you go and only for needed services. Most office visits run $40 - $60 and you pay only for services provided. Plus the Take Care Clinics are offering free health care for those who are unemployed.

But say you join the No Insurance Club and use up your 12 visits. What happens then?

According to their site, you prepay for another 12 visits.

So far this isn't impressive. And apparently they are flying under the radar in the handful of states where it operates. Surprisingly, New York is one of those states with (again) a single participating provider.

Apparently the New York Dept. of Insurance has not yet put the No Insurance Club in their crosshairs. But a similar plan is already under fire for operating an unliscensed, unregulated prepaid medical plan.

Even though the plan appears pricey to me, there is some transference of risk and that is the very essence of insurance. Don't misunderstand. I like the idea of individuals and families paying for their own primary care out of pocket rather than overpaying for phantom insurance.

One thing I learned a long time ago is any insurance plan with the word copay is a bad choice. I constantly remind my clients that Bare Bones health insurance is the way to go if they want to stop overpaying for health insurance.

But how does a No Insurance Club create a false sense of security?

Primary care is not where the big dollars in health care are spent. Roughly 80% of claim dollars go to cover catastrophic health care and almost 20% of those dollars are for prescription drugs.

The No Insurance Club does nothing to address Rx costs or catastrophic coverage.
One thing the No Insurance Club does not cover is a visit to the emergency room or if you are required to stay in the hospital. It also does not cover a specialist.
$480 per year is no bargain when you have a $50,000 claim. (Warning, shameless plug follows). I have quite a few clients who have solid, catastrophic coverage for $500 - $1000 per year in premiums.

Which makes more sense? Paying $480 per year for 12 doctor visits or paying about the same for a plan that will cover office visits, Rx, hospital, surgery, E.R. visits and more up to $5,000,000?

To me, this decision is a no-brainer.
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