Unless you have been on “Lost” for the past 12 to 18 months, you have undoubtedly heard some commotion about Health Care Reform.  Wait!  It started as “Health Care Reform”, then moved to “Health Insurance Reform” (check out an earlier post entitled “Health Care Reform vs. Health Insurance Reform“).  As an Insurance Professional, some may think that my views are motivated by greed (aka money).  In all candor, commissions from health insurance make up probably 1% of my agency’s revenue, so if I lost those commissions, no big deal.

My issue is not that I think that the status-quo is all that great.  In fact, I think that there are some serious problems with Health Care in the United States.  My problem is that the political debate has taken what could be a good cause, and turned it down a path that will do no good for the average American.  Now, I don’t care to, nor am I qualified to, talk about the actual constitutional validity of what is taking place in Washington right now.  I simply want to spell out some issues I see with the debate.

In the movie, The American President, Michael Douglas (playing the role of President) makes a speech where he talks about how his advisary (and pretty much all politicians) operates.  He states (I am paraphrasing) Bob doesn’t come up with solutions that can help the country, instead, he talks about better times and evokes memories of a better day.  Then Bob tells you who is to blame for your lot in life.  Wow!  I don’t think there is a much better way to sum up what has taken place in Washington.

When our President took office, a primary objective was to “transform, or fix, health care” (this has been a Democratic mantra for decades).  There is nothing wrong with that (to be “transparent” I am a registered Republican but my views are probably “Independent”).  If I were to go out and take a random survey of people, and asked the questions “Are you happy with the premium(s) you pay for Insurance?”, or asked “Would you like to pay less for Insurance?”, my guess is that 99.99% of the time people would answer in a fashion that they would like to pay less for Insurance.  Notice, I didn’t say health insurance.  People want to pay less (actually $0) for Insurance.  I bet you could substitute just about any common good or service in the place of “Insurance” and get the same response.  However, it is the politically vogue thing to blame the big bad insurance companies for everyone’s financial problems.  Let’s face it.  Most people have some form of insurance!  Then there are the stories of some insurance company not paying a claim (not very much talk when the carrier goes above and beyond to find ways around the policy language to pay a claim).  Add all that together, blend in a need to blame someone for people’s problems, and politicians have their villian.

Let’s Look At The Definition Of Insurance

Wikipedia’s Definition of Insurance “Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss.”

OR

Chris Rock’s view of insurance…”It shouldn’t be called insurance, it should be called in case stuff happens”!

Insurance is not something that you are required to have (not as of now at least, unless you live in a state that requires you to carry auto liability insurance, or your have an asset (auto or home) that insurance is required as part of the loan obligation).  So, why do people carry health insurance?  They have health insurance so if something “major” happens, they will not suffer a catastrophic loss.  The problem with health insurance today is that people don’t view their policy as something to prevent “major” loss, they look at health insurance as a “co-pay” for every time they get a sniffle!  Given this “co-pay” mentality, there has been over-utilization within the Health Insurance Industry.

Think of it this way.  We all get sick.  That “sickness” is usually something like a “cold” or a little “flu”.  If you know that you can go to the doctor and pay just $15 or $25, each time you get a little cold, you think nothing of going to the doctor to have them check it out.  Now, work the math backwards.

(Assumptions:  Doctor’s Normal Charge for an office visit $200, Health Insurance Company’s negotiated doctor’s rate $150, Insured’s Co-Pay $25 )

• Your Cost (if you were uninsured) – $200 / Health Insurance Company’s Cost – $0
• Your Cost (insured under co-pay plan) – $25 / Health Insurance Company’s Cost – $125

Now multiply the Health Insurance Company’s Cost for this visit due to a “sniffle” by the number of customers they have (let’s use Blue Cross & Blue Shield of NC) if each customer made just one of these trips a year.

3.7 Million X $125 = $462,500,000

You want to know why your health insurance premiums keep going up?  That calculation above generates over $450 MILLION a year in needless cost to the Insurance Company.

To further back up my theory, lets take a look at one Insurance Company’s ACTUAL 2009 Financial Results (Blue Cross & Blue Shield Of NC 2009 Financial Results).

• Revenue – $5.2 Billion
• Total Medical Cost (TCM) – approx. $4.52 Billion (87% of Revenue)
• Taxes – approx. $134 Million
• Executive Compensation – approx. $17 Million
• Net Profit – $107.3 Million (2.1% Profit Margin)

This is an actual example!  As you can see the insurance companies are not making an “above average” return!  Compare BCBS of NC’s Profit Margin of 2.1% to a company like Google.

Finally, I think that the proof is in the pudding when you try to determine the true culprits in our “Health Care” Debacle.  Lets look at statements made by Blue Cross & Blue Shield of NC.  When asked about premium increases, BCBS of NC shared the following information:

Premium Increases In Major Health Insurance Plans

• Employer Group Plans – approx 15%
• Individual Co-Pay Plans (Blue Advantage) – approx 12%
• Health Savings Account – approx 3%

Why would High Deductible HSA’s see the smallest increase?  Think back to what the largest driver of Health Insurance Premiums is…Cost of Medical Care!  HSA’s have lower utilization of services, thus their costs stay low.  You want to know who is to blame for high health care premiums…all you have to do is look in the mirror.  In addition, if more people used this type of plan, you as the consumer would be more diligent about looking into what the Health Care Providers are actually charging you.  Gone would be the days of $1,000 Tooth Brushes & $140 Tylenol Pills.  You would pay attention to those types of over charging infractions.

The President and Congress decided that they could garner more votes playing on the emotions of “average” Americans.  They decided that instead of trying to tackle the wasteful practices within the Health Care Arena, they would try and blame the cost of Health Care on insurance.  In fact, during the recent “Health Care Summit”, President Obama stated their were two types of Health Care Insurance: Good Insurance & Bad Insurance.  To show how far the President and his Congressional allies are being, the “bad insurance” he talks about is the High Deductible HSA.  The very plans that could in fact start to reduce Health Care Costs (lower utilization + more fiscal accountability) and lower health insurance premiums (that is to say reduce your health insurance premiums)!  After all, isn’t that what the Health Care Bill is supposed to accomplish?  Or is the Health Care Bill a means to increase the government’s role in our lives?

There are far more qualified places to find information about the economics and political views about the health care debate.  I encourage you to read William “Bill” Heasley’s BLOG The Last Embassy.

About The Author:  Jack Wingate is the President and Co-Founder of ALLCHOICE Insurance, in Greensboro, NC.  For more information about Health Insurance, ALLCHOICE Insurance, or Jack Wingate, please visit: http://www.allchoiceinsurance.com

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Blue Cross and Blue Shield of North Carolina announced their 2009 financial results.  The financial highlights are as follows:

BCBS of NC 2009 Financial Highlights

Revenue:  $5.2 Billion

Profit: $107.3 Million

Total Medical Cost (TMC) Ratio:  87%

Taxes:  $134 Million

Customers: 3.7 Million

BCBS of NC Explanations

As part of the release of Blue Cross and Blue Shield of NC’s 2009 Financials, the company explained several components of the report.

Compared to 2008, BCBS of NC reported that customers (or membership) actually remained relatively flat.  According to the company, this was not unexpected given the economic climate in both the United States and the North Carolina.  The net profit margin was considerably lower for 2009 (2.1%) compared to 2008 (3.6%) (and well below expectations).  The drop in profit margin is due, in large part, to the increased TMC (Total Medical Cost) Ratio (87% vs 85% for 2008).

BCBS of NC explained the Total Medical Cost incurred was due, in part, to the following:

• Increased Cost of H1N1 & Seasonal Flu
• Waiving of Co-Pays for Generic Drugs (1st 6 months of 2009)
• Aging of Employer Groups

Increased Cost of H1N1 & Seasonal Flu

Blue Cross & Blue Shield of NC provided its members free immunizations for both the H1N1 & Seasonal Flu during 2009.  Given their severity, a large number of members received this benefit, thus increasing cost(s) to the company.

Waiving of Co-Pays For Generic Drugs

Over the past four (4) years BCBS of NC has actively encouraged its members to use Generic Drugs whenever possible.  This focus on generic drugs will allow more members to afford their medications and keep total costs down.  To help encourage the use of generic alternatives, BCBS of NC waived all “co-pays” for generic drugs during the 1st 6 months of 2009.  BCBS of NC witnessed an increase in the use of generic drugs of 2% (to 68%) between 2008 and 2009.

Aging of Employer Groups

Given the state of the economy, many employers have “laid off” workers.  In many cases, the workers that have been laid off were “newer” employees.  Essentially, the employer groups are reducing the number of “younger” employees, thus increasing the overall age of the employer group.  On average, Total Medical Costs increase the older a person becomes.

Blue Cross & Blue Shield of NC Premium Increases

Blue Cross & Blue Shield of NC has stated that, on average, health insurance premiums will be increasing.  These increases are due, in large part, to the increased medical costs and utilization.  BCBS of NC announced that average increases on their 3 major lines of health insurance will increase as follows:

Health Savings Account (HSA’s) – approximately 3%

Individual Co-Pay Plans (Blue Advantage) – approximately 12.24%

Employer Group Plans – approximately – 15%

These increases are “averages” and individual policies and groups may experience higher or lower premium changes.

About The Author:  Jack Wingate is the President, and co-founder of ALLCHOICE Insurance in Greensboro, NC.  Jack Wingate is an authorized agent for Blue Cross & Blue Shield of NC.  For more information about Blue Cross & Blue Shield of NC, ALLCHOICE Insurance, or Jack Wingate, please visit:  http://www.allchoiceinsurance.com

ALLCHOICE is pleased to provide the following updated information for Health Savings Account (HSA).

HSA DEDUCTIBLE REQUIREMENT(S)

HSA ANNUAL OUT OF POCKET MAX

HSA CONTRIBUTION LIMIT

Blue Cross & Blue Shield of North Carolina is promoting Seasonal Flu Shots & H1N1 Vaccines to its customers. In a recent press release, BCBSNC stated they will cover the seasonal flu vaccine for all customers who have plans with Preventative Benefits. Those customers who have plans without Preventative Benefits may be charged a copayment, deductibe, or coinsurance. BCBSNC Customers are urged to review their Statement of Benefits, or contact Blue Cross & Blue Shield directly, to determine their individual benefits. In addition, BCBS of NC are urging its customers to get the seperate H1N1 Vaccine, and will waive the out-of-pocket costs for eligible customers.

BCBS of NC has decided to cover the H1N1 Vaccine based upon the guidance it has received from the Centers for Disease Control (CDC) and Prevention’s Advisory Committee on Immunization Practices. Prevention’s Advisory Committee on Immunization Practices predicts H1N1 outbreaks to be widespread this fall and winter. BCBS of NC customers are urged to contact their primary physician, in-network pharmacist, or CVS Minute Clinic to get the H1N1 Vaccine.

The CDC projects more than 100 million doeses of seasonal flu vaccine will be available during this flu season. The US Government to have 6 to 7 million doeses of the H1N1 Vaccine available the first week of October and 250 Million doses by year end.

Health Care reform has been a hot item starting prior to the most recent Presidential Election.  The Obama Administration, has now moved Health Care Reform to the forefront of their agenda.  Regardless of your political affiliation, the obvious facts are that Health Care Costs have continually increased over the last decade.  How should the problem(s) be resolved?

The average person who favors government intervention with Health Care Reform believes that the reform needed is with Health Insurance.  Be careful not to confuse Health Care Reform with Health Insurance Reform.  The two issues should be completely different, but it seems the Obama Administration has focused their energies in solving the Health Care Issue by focusing on Health Insurance.

While there have been few specific plans for the administration’s reform, many experts believe that the reform will involve a major involvement from the government.  While there are factions in this nation that favor a “Nationalized Healthcare System”, there is equal opposition.  Unforunately, the public divide seems to rest within the “class system”.  A majority of those families and businesses in the upper-middle to upper class oppose a nationized system, while the lower-middle to lower class favor a Nationalized Plan.

I say to those that favor a Nationalized Plan, be wary of what you wish for!  The problem with the divide actually resides with education and communication.  Too often, those in the lower portion of the class system have been conditioned to believe the Insurance Companies are the big, bad profit mungers that cause your premiums to increase.  Let’s be frank, insurance companies are in business to make money.  However, if you take a look the profit margins within most Health Insurance Carriers, you will see that most are lucky to achieve a 10% profit.

If the problem with our Health Care System is not with the Health Insurance Carriers, then where should the blame go?  Unfortunately, there is no one cause for the skyrocketing cost of Health Care.  Rather, there are mutlitude of issues that have caused our Health Care System to become the inefficient beast you see today.  There is no one “magic” pill that will fix our system.

If you take a step back and analyze our system as whole, you have to concur that we have the BEST Health Care Services in the world.  If this were not the case, then why would the world’s wealthiest people fly around the world just to have their medical needs taken care in the United States?  The fact is, wealthy people who live in countries with Nationalized Health Care Systems do not trust those Health Care Providers with routine procedures, much less the more complex ones.

So if we can agree that the Health Care Professionals and Facilities are the best in the world, then you should further assume that those individuals providing that care are deserving of whatever money they make.  For my part, I want the guy who is about to open my chest up to perform heart surgery to be paid like a surgeon, and not a garbage man.  So how do we fix our system?

The first thing is to focus on the real problem.  The real problem is with the inefficiencies present in the system, not with the Insurance Industry.  There are cost savings available through the efficiencies that can be made through the use of technology.  By gaining the cost savings within the system itself, Health Care Providers (not the actual Professionals) do not have to charge as much money.  That means the Health Insurance Carriers do not have to pay as much to the Providers.  Guess what!  That means the Health Insurance Carriers do not have to charge as much in premium.  Finally, Joe & Jackie Blow do not have to pay as much for Health Insurance!

President Obama, focus on the real problem of fixing our system, and Health Insurance Premiums will become more affordable.

About The Author:  Jack Wingate is a Professional Insurance Advisor and Founder of ALLCHOICE Insurance in Greensboro, NC.  For more information about Jack Wingate, ALLCHOICE Insurance, or Health Insurance visit http://www.allchoiceinsurance.com

Are you looking for health insurance in North Carolina? You have probably looked online for NC Health Insurance Rates.  You might have even spoken to your local insurance agent.  Before you make the decision to purchase a policy, make sure you know exactly what you are paying for.  If you base your choice on Health Insurance Coverage solely on price, you could end up facing serious financial difficulty.

North Carolina Health Insurance is being researched and purchased more and more via the Internet.  The fact is, finding NC Health Insurance Quotes is quick and easy.  North Carolinians simply need to go to the search engine of their choice, perform a search for any number of combinations of “North Carolina Health Insurance” and they will be inundated with site after site offering “Free Quotes”.  If anything, North Carolina Health Insurance Shoppers might face too many web-sites to get “Free Quotes”.

The real problem with this “new” way of shopping for Health Insurance is that far too often, the only research that takes place is with regard to “Monthly Premiums”.  The Health Insurance Shopper visits one or more web-sites he/she came across after doing an Internet Search and chooses the lowest possible premium choice.  So far you might be saying, “Good for you, you are being frugal!”.  The truth is, you might be!  Or, are you being “penny wise and dollar foolish?”

I am a huge fan of the internet.  I am a huge fan of finding and purchasing North Carolina Health Insurance online.  My biggest problem is that most North Carolina Health Insurance Web-Sites are simply “rate quote generators”.  Most of these web-sites, fail miserably when it comes to teaching the North Carolina Health Insurance Consumer about the in’s and out’s of the actual policies and/or carriers that the consumer is choosing.

When it comes to North Carolina Health Insurance, there are really only a handful of insurance carriers that I would personally trust my family’s health insurance needs with.  In the spirit of un-biased journalism, I will not tell you the companies that I find to be worthy.  However, as a good rule of thumb, if you haven’t heard of a particular health insurance carrier, then you might want to stay clear of their policies regardless of price.

Once you have made the important decision of which carriers are actually worthy of your premium dollars, the next choice you must ask yourself is what type of coverage am I getting.  The policy choices are in ample abundance in North Carolina.  Instead of diving into all of the various types of policy choices people have, lets focus instead on a few key components that make a big difference with Health Insurance.

• Major Medical or Co-Pay Plan: Most people have become used to going to the doctor and paying a “co-pay” for the services that are rendered.  However, over the past few years, as Medical Insurance costs have soared, many people have started moving to a High Deductible Major Medical Plan with a Health Savings Account.  Neither plan can be considered “better” than the other, you just need to ask yourself if the cost of having the “co-pay” option is worth the increased premium costs.
• Deductible: Regardless of which decision you make as to the type of policy you choose (see above), the deductible you choose is of great importance.  The fact is, the bigger your deductible, the lower your premiums.  With a major medical plan, you are responsible for ALL health care costs until you reach your deductible.  With a co-pay plan the deductible comes into play for “the bad stuff”.  Remember, with a co-pay plan, most of the everyday medical charges are covered by the co-pay.  As a general rule of thumb, I advise clients to pick a Deductible Amount that is “manageable”.  You don’t want a deductible so high that you could not come up with that amount of money, nor do you want a deductible so low, that you could write check for it without thinking twice.
• Co-Insurance:  This is probably the most mis-understood concept in Health Insurance.  Co-Insurance is the percentage of Health Care Costs the Health Insurance Carrier will be responsible for once you have reached your deductible.  Assume you have a Major Medical Policy with a $1000 Deductible and 80% co-insurance.  Now, assume that you have a heart attack and you are hospitalized.  The total cost of your stay come out to be $100,000.  The first $1,000 is yours.  The remaining $99,000 is split between the Health Insurance Carrier ($99K X 80% = $79,200) and yourself ($99K X 20% = $19,800).  Again, as a general rule of thumb, the lower the co-insurance percentage the lower the premium

Now, there are many other aspects that can and should be taken into account when choosing a Health Insurance Policy.  However, assuming you choose a viable insurance carrier, knowing the three items above will make sure that you will not be left out in the cold once a tragedy hits.

Remember, you get what you pay for!  Just make sure you know what you are paying for!

About The Author:  Jack Wingate is a Professional Insurance Advisor and Founder of ALLCHOICE Insurance in Greensboro, NC. For more information about Jack Wingate, ALLCHOICE Insurance, or North Carolina Health Insurance please visit http://www.allchoiceinsurance.com