Low Cost Health Insurance - Oxymoron?

Some people would underscore "oxymoron" when reading the words"low cost health insurance," especially since healthcare costshave been rising by double digit inflation over much of the pastdecade, slowly now to the 8-9% level, still way ahead of overallinflation. Yet, just "Google" the term and you will receivedozens if not hundreds of opportunities to purchase "low costhealth insurance" through broker groups. In fact, it is possible to obtain lower cost health insurancewith a slightly different proviso, i.e., "There's no such thingas a free lunch." Regardless of the advertising you will seeon-line and elsewhere about low cost health insurance, theseofferings are based on one of two models: some type ofgroup-like coverage at negotiated rates or some type of generaldiscounting program. Let's look at general discounting first. Companies that offer amedical care discount card, usually for an annual fee, haveestablished networks of medical providers who will accept adiscount on their fees when presented with a discount card. Ingeneral, these discounts are very simple for providers to agreeto because in most cases, they never expect to get full,established prices for services. Most providers have fees thatare established at higher than expected levels because thosefees will necessarily be discounted by major insurers as well asMedicaid and Medicare. Anyone who opts for a discount card, bydefinition, does not have any other insurance, and will berequired to pay by cash or charge. Providers are happy toprovide the usual discounting in exchange for a simple billingarrangement. So, are these cards useful? Yes, they can behelpful in dealing with medical providers, pharmacies andmedical supply companies. If you have no insurance and need tobe hospitalized, you are better off working directly with thehospital to negotiate the best arrangement. Companies offering low cost insurance, or brokers who offer tofind such insurance products for you, may have legitimateofferings and may be able to help you select the right coverage,but you must understand that by purchasing low-cost coverage,you are trading payment today for some type of risk or paymenttomorrow. These insurers or brokers have not discovered some new, secretformula for lowering healthcare costs. They are simplymanipulating risk or payment options. In general, healthinsurance can become lower cost, that is, lower premiumpayments, in one of the following ways: * High deductible. You may pay a low monthly premium but need topay a large amount out of pocket before the insurance begins tocover expenses. This may be an excellent type of coverage forsomeone who is healthy and probably won't need much medical careduring the year but does need to insure the risk of a majoraccident or some other hard-to-predict major medical event. * Coverage exclusions: Some health plans keep premiums low bynot covering services that they consider to be expensive, suchas prescription drugs, allergy treatment, etc. Again, this typeof coverage may work for you if you can live with theexclusions. * Pre-existing conditions: Some plans will not coverpre-existing conditions for a period of time. This tactic doesnot save enough money over the long term to be a viable singlestrategy so pre-existing condition clauses are usually just onecost-saving component of a low cost insurance plan. * High cost-sharing. Some plans reduce the cost of healthinsurance by creating significant cost-sharing requirements. Forexample, instead of requiring a $15 co-pay for a doctor's visit,the plan may require a 40% cost share that could translate intoa $50 to $100 cost to you, depending upon the services rendered. In general, the healthier you are, the more likely you will beable to manage well with a plan that requires less monthlypremium payment in exchange for higher payments if you actuallyneed service. If you have chronic medical conditions, you willneed to look very carefully at which plan provides the bestbenefit for your situation.