Having three young boys, we fill up our pediatrician’s “buy nine visits, get your tenth free” cards fairly often…which has led to a lot of questions marks in regards to certain insurance practices. And while you may like the occasional surprise party, surprise wedding engagement, or the surprise of the $10 you found in your pocket, I am not a fan of the unknown in health care.
Here are a few things you may not know about your insurance company:
- Your insurance does not pay the same amount you see on your doctor’s bill. Transparency is not a popular word with insurance carriers. They pay 50-60% less than what you see on your pharmacy/doctor bill. Most doctors are willing to discount services for “cash customers”—the provider comes out ahead and they don’t have to deal with filing the claim.
Why you care: If your deductible is $6,000 and your doctor bill is $1,000, consider haggling with the doc to pay $500-$600. They will be getting more than if they went through the hassle of filing your insurance.
- Insurance companies make profits from investing. As they should—insurance companies are businesses. They invest in stocks, bonds, real estate, etc., so their annual profits are proportional to how much money they invest.
Why you care: This explains why insurance companies love delay. If they can retain the money they owe you, they can earn additional profits or interest. You’ll find that outstanding claims at the end of each quarter strangely takes much longer than normal…just before they have to state quarterly earnings.
- Insurance companies love to use the word “reserves”. They boast about having $X in reserves at the end of every year to help you feel secure that they will be there when you need them.
Why you care: “Reserves” = profit…the same profit they are using to invest (see #2).
- There are much cheaper ways to get pharmaceuticals. Are you aware that pharmaceutical companies are the only health care related component that our 3,000+ page Health Care Reform law did touch? Primarily because pharmaceutical companies could show that they make available an incredible amount of money for consumers to use towards the cost.
Why you care: They don’t make it easy for you to find, but your $8,000/year is out there if you are currently taking Nexium. Insurance companies retain those dollars without passing back to you the discounts/rebates.
Do we really need Health Care Reform to force us in to being smart consumers?