I decided to share some insight from a healthcare provider perspective on explaining how insurance works. Surprisingly, most people do not understand how insurance works.
You pay for insurance coverage. Based on of your health and predisposing factors, your insurance provider calculates how likely they will have to pay out for you. This affects how much you pay in your monthly premium.
Your plan then comes with a deductible: how much they expect you to pay before they will pay anything.
Your insurance will then decide how much of your costs they will pay. Some pay 80% and expect you to pay the remaining 20% even after meeting your deductible.
This is where out of pocket max comes in. Insurance will also put into the plan an “out of pocket max.” This means if you have paid your portion of the bills and eventually meet your limit then you will no longer be expected to pay your 20% or copays.
The trend nowadays is for most plans to be what most of us would consider “catastrophic” coverage. This means your deductible is so high that you end up paying for most of your medical costs yourself. The insurance is beneficial because it is that parachute in the event that you have a catastrophic accident or illness so you will not go bankrupt with unpayable bills.
The other benefit to the consumer of insurance is even if you have a high deductible, your insurance has negotiated a rate for you. Meaning that in order for me (as a provider) to accept and treat patients with a specific insurance, I have to accept the terms of the insurance of what they will pay me for my services. So if your insurance says it will only pay $60 for a visit no matter what you do, then that is what you get as the provider. This is why not everyone pays the same because each insurance has a different negotiated rate with a provider. Also, you will see some providers do not accept some insurances either because they demand too low a payment that the provider will not accept. Or they try to keep all costs in network and have a very restrictive policy for accepting providers into their network.
In Physical Therapy, most insurances have adopted a policy of giving only a certain number of visits a year. This means, all costs aside, your insurance will only pay for 20 visits. After that, you are responsible for all of the cost. What is even more ridiculous is this is not “per injury”; this is just per year. You could have multiple surgeries or injuries in 1 year, but they will only provide coverage for 20 of those visits. The most ridiculous thing I have run into is a patient with a high deductible who had to pay for all medical costs and so paid for all 20 visits with no payment from insurance. Then insurance told them they could have no more therapy based on the fact that they had met their 20 visits. Insurance did not pay for those visits; the patient did. The insurance also would not pay for more visits after they reached their deductible because they had already had their 20 visits. Sounds crazy right? “We didn’t pay for your bills but we are going to act like we did and not pay for any future visits now that we could be held responsible for the cost.”
We pay so much for our insurance. We want to feel we are benefitting from it. If we step back, we see how broken the system is and how exorbitant the costs. Of course, insurance is part of life, right? We all understand the concept that insurance is in it to make money (not to help people). You buy life insurance, and the company hopes you die when you are 90 so you pay all of your premiums. Your car insurance hopes you pay each year and never have an accident. I feel health insurance is the worst of these. There are so many aberrant costs put into the system that it is out of control, and we are spending so much on health insurance.
I hope there is a future where we pay out of pocket for health expenses and demand transparent and lower costs because we take responsibility for the costs instead of assuming we are being taken care of by an insurance company. It is almost like we have let a rich uncle manage our assets and assume he is doing what is in our best interests. In reality, he is buying jet skis and taking luxurious vacations with our money hoping we never come looking for it.