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Monday, June 20, 2011

Is the High Cost of Health Care Insurance Killing your Budget

According to the Kaiser Foundation 2010 report, the cost of employer sponsored health care insurance has gone up 46% since 1999 to 2010 .  This means the national average of health insurance is now costing about $13,770 for family coverage per employee per year, as compared to $6438 in 1999.  At the same time the average deductible has gone from $500 to $2500 during the same time.  This means you are paying more and getting less.  Where most insurance companies use to have an 80/20 split after the deductible was met, they are now starting to go to a 70/30 split and in some cases a 60/40 split.  Individual plans have risen at about the same rate.

So what is the answer? 

The first thing you need to do is get out of the health care delivery system.  Health care delivery is what we have now, not health care.  You need to take control of your health care as an individual or as an employee and quite expecting someone else to do it for you.  To do this we must find a way to control the cost as well as control our own health care.  If you are a business owner, and it does not matter what size form the sole proprietor to a corporation you have to take control of cost and health care, and help your employee’s do the same.

The first step to doing this is to become educated about our health care delivery system  and why it has risen in cost at such a high rate.  One place to get a quick education is at Care Liberty.  Dennis Rowley has worked as an insider in the health care insurance industry and has a lot of the answers.   Click here for the video:   Problem with third party payer system

Here is a quick example of how it works.  You go to the doctor whose cash price for a visit is $100, you pay a co-pay (if you have a health care policy),  the doctor files the paper work with your insurance company.  The insurance company then pays the doctor not the cash rate but the PPO Allowable which in this case is $50.  You have already paid $25 so the insurance company pays the other $25.  Lets say your policy cost you $700 a month.  That means you paid $725 for that office visit that month.  The average family goes to the doctor 6 to 8 times a year.  So you are paying $8400 a year for your policy and $200 a year for doctor visits for a total of $8600 for the year.  On average for every dollar you spend on health insurance you get a 25 cent back.  Is that a smart investment?
I don’t think it is.  If you got that kind of return on any investment you would be broke very quickly, because you are losing 75 cents on every dollar you are investing.    

Now what happens at the doctor’s office?  He has to turn your file over to someone in is office who does the paper work to file your claim with the insurance company.  The insurance company has 30 days to respond and usually what happens is they sent a letter back to the doctor office and want to know why you had come to see him.  The insurance company has another 30 days to respond and if the doctor is lucky he may get is $25 from them.  Usually it takes 60 to 120 days before he sees that $25.  He has to pay for is office overhead and expenses so he may see $10 of that $50 as profit before taxes.  Does this tell you why if your lucky you may see him for 5 mins.?  He has to see as many patients in a day as possible to make a living.

I hope you now understand why I say we have a Health Care Delivery System and not Health Care today.  In my next post I will explain how we got to this point.  So please Subscribe via email to my blog so you will get all of my post as I explain more.

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