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Benefit Plans That Limit Everything But Your Losses

Philip Betbeze, for HealthLeaders Media, December 15, 2008

Get ready to add another headache to your long list of gripes about the commercial insurance market: limited-benefit plans.

If you're fed up with high-deductible health plans, these plans will make steam come out of your ears. They've been around for a few years, but their growth is accelerating. And they're now being offered not only by the usual fly-by-night suspects, but also by well-known traditional health insurance plans like Blue Cross and Blue Shield.

Essentially, whatever the purveyors of the plans may say, they lull consumers into thinking they've taken care of their health insurance needs by obtaining such plans, which pay for predictable, preventive care like doctor visits, while leaving catastrophic care for the patient (and ultimately, your hospital) to eat. Health insurers, no doubt, see them as highly lucrative, and no wonder; they can build a critical mass of patients with which to negotiate steep discounts for preventive care with providers, and take on none of the risk and liability associated with catastrophic coverage.

Nice, huh?

Fine if for-profit companies want to sell a program like this to people. We're a nation built on free enterprise (at least we were before the mother of all bailouts this fall). And "buyer beware" should be ingrained in all consumers' psyches. But just don't call it "insurance." Insurance is supposed to protect you from catastrophic unforeseen events like cancer, heart attacks, broken bones, and automobile accidents—not the hangnails.

Would I buy homeowner's insurance that pays for my annual fire extinguisher and termite inspection but which won't pay off if I have an actual fire? Not no, but hell no. And neither would you or anyone else. But make no mistake, plenty of people are going to be attracted to these plans if for no other reason than the fact that they offer some false sense of security for those who can't or won't pay for the exorbitant cost of traditional health insurance.

For some reason, people don't see their healthcare the same way they see other forms of insurance. These things are like my vision plan at work, which is called vision "insurance" but is really just a prepayment plan for me to get contacts at the end of every year. Big deal. If my employer didn't pay part of that premium, I'd drop it without hesitation.

So get ready, hospital CFOs. I want you to print this article and stand in front of a mirror as you read the next two sentences.

Someone's going to get stuck with the bill for people who get in bad accidents or come down with serious illnesses while being "covered" by these cheapo plans. Guess who?

Now you can look up.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.
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