The Discount Fallacy: Finding a Better Way to Afford Health Insurance

BY BEN CONNER

As business owners, we expect insurance to be expensive. Each year, we battle with our brokers to keep the costs as low as possible, but premiums still increase between 5% and sometimes 20%. This leaves us in the tough spot of trying to protect the stability of the business without passing expensive deductibles and copays onto our employees. To help combat these concerns, many insurance companies dangle discounts as a method to help drive costs down. Every year, these carriers pull all of their negotiating power and come to the table with a deeper discount, but it’s a discount off a high price. Overall, your rates are still going up and your employees are still paying more out of pocket. You might feel like you won a battle at the negotiations table, but you ultimately lost the war and will lose it again next year as well. The problem, of course, is that health insurance is still expensive. Consider this: In the state of Indiana, the average deductible is $1,500, and the max out-of-pocket expense runs from $4,000 for an individual to $8,000 for a family. Those numbers are in spite of the fact that most Americans are lucky to save $100 a month after paying for all of their other expenses. If the average Indiana citizen needs emergency knee surgery, he’s going to have a tough time paying a $4,000 deductible with the $1,200 he can scrounge up each year!

A Different Approach

Let’s think about this from another perspective. Say you’re based in Indianapolis, and one of your employees blows out a knee while playing basketball over the weekend. If you have a standard health insurance plan, he’ll rush to a major local hospital for routine knee surgery. In this region, the average knee surgery runs between $60,000 and $90,000, putting him on the hook for a hefty deductible. It’s important to remember that the $60,000-$90,000 doesn’t mean he’ll get the best surgeon in central Indiana or the best post-op care available. After the surgery, he’ll have to crutch to a popular pharmacy for painkillers that will help him through the healing process. What if your health insurance was atypical? Instead of heading to a major hospital, he could travel to a higher-quality facility in the region where the care is better and the price for routine knee surgery is $30,000. Because his surgery would go better, he’d need less post-op care, which means he would be on medication for less time than if he had received surgery at an alternative facility. Since he purchases his medication online through an inexpensive platform, the cost of his medication is nominal compared to what it would be through a regular pharmacy. Consider that for a moment. At $30,000 for standard knee surgery, the savings are automatically at 50%-66% what they would be at a major health care facility in Indianapolis. That first health insurance plan would have offered discounts within the plan, but what good are they if the bill for the surgery’s going to run between $60,000 and $90,000? This system isn’t a pipedream. By creating a health insurance plan that’s designed for your employee’s specific needs, you eliminate unnecessary excessive costs. It’s a concept that’s inaccessible through the off-the-shelf health insurance plans so many employees are saddled with today.

Craft Insurance that Works for You

To improve your company’s insurance policy, ditch the traditional broker model and take control of your plan. You’ll get to control your healthcare costs with the same agility and thoughtfulness you apply to the rest of your business expenses. —

theconners