Slowly Removing Prescription Coverage

I was at a meeting for Anthem Blue Cross Blue Shield today and they were going over their new BeneFits small group plan and the new RightPlan PPO 40. They pointed out that ~50% of the 225,000 small group employers in Colorado are uninsured, so that makes about 110,000 uninsured small businesses. In 2002, there were 1.3 million uninsured people in Colorado (about 33% of the population).
The main thing I noticed about these plans was that the BeneFits plans had no brand name Rx coverage and the RightPlan PPO 40 had it as an option. These type of plans are a great way to possibly lower the price enough to make a big dent in the uninsured population of Colorado. I think Anthem has done a great job of designing plans like this so brokers will have more options to give people who might otherwise not be able to afford anything.
All of the carriers in Colorado are coming out with plans like this. Of the bigger names; United HealthCare has the Saver plans that don't cover Rx at all, most of Celtic's plans only have brand name Rx as an option now, Kaiser Permanente offers 5 plans and only 1 of them (the 100% HSA) covers Rx at all. Humana is the only company with all of their plans covering full prescriptions. But I hear they are working on a plan to compete with Tonik (from Blue Cross), which doesn't cover brand name Rx either.
On the surface, it seems like a great way to offer more options to lower the uninsured numbers. But when these plans become more common and having Rx coverage is seen as an unnecissary luxury, what then?

Correction -- the number of uninsured in Colorado at any given time is around 700,000; or 18.1% of the population. (Source)

Financial Exposure

Your financial exposure is what your wallet (financial) would lose (exposure) if you have a catastrophic medical situation. The reason for health insurance is to minimize your financial exposure, because without health insurance your financial exposure is everything. A lot of people think it's best to have the lowest financial exposure you can get and request the lowest deductible possible.

A deductible is something you'll only need to pay if you have a big claim. However, your premium is something you need to pay no matter what, just to keep the insurance. Just for an easy example, we'll say that a 50 year old male is looking for a policy from Anthem Blue Cross Blue Shield of Colorado (we'll call him Larry). Larry requests a $500 deductible with $25 copays for doctors visits, $15/$40/$60 copays on Rx, and an 80/20 coinsurance with a $5,000 maximum. Right now, this would cost Larry $338.50 per month. This would give Larry a maximum financial exposure of ($500 deductible + $1,000 coinsurance + $4,062/year in premiums) = $5,562 per year plus copays if he had a catastrophic event.
As a good broker, I try to help Larry by pointing out that he can get the same exact plan with a $1,000 deductible for $291.70. This would save him ($46.80/month x 12) $561.60 per year in premiums, and give him a maximum financial exposure of ($1,000 deductible + $1,000 coinsurance + $3500.40/year in premiums) = $5,500.40 per year plus copays if he had a catastrophic event.
So in a worse case scenario, Larry would still save $61.60/year by having the higher deductible if he had a big claim every year. But in a year where he doesn't have something happen, he would save $561.60. Either way, he comes out ahead with the higher deductible. Sometimes I'll talk to people so entrenched with the idea of having a low deductible that they still choose the lower deductible when I give them an example like this. Usually, it's because they're just coming off of a group plan that had a low deductible and have it in their heads that they need to get a comparable individual/family policy.

This example is just the beginning, I'll go over the logic in choosing an HSA later.

MEGA Insurance and NASE

Research on MEGA/NASE/Midwest/Alliance:
HERE is a very informative article from "The Health Care Blog" to first connect the dots -

AHIP, Goldman Sachs, Credit Suisse and BlackStone - the comments are very helpful too.

Just announced on 10/21/2010 - "Mega and Mid-West are alleged to have engaged in a massive scheme to defraud consumers through the sale of "junk insurance" -- insurance products that are represented to be comprehensive but include exclusions and limitations that are obscured from consumers and result in inadequate coverage."

More:
here
here
here
here
here
here
here
here
here
here and here.

MEGA/NASE and Midwest/Alliance were each fined $75,000 a couple years ago by the Colorado division of insurance for misleading consumers about their health coverage, among other sales violations. Read more about that here.

Finding the Right Health Insurance

Voxen's Blog shows how much of health insurance makes sense to people when they start looking around. The insurance companies start to forget that not everybody is using terms like traditional health insurance, coinsurance, copayment, and deductible on an everyday basis, and tend to not explain the coverage very well. Not only is it hard to decipher all of the terms used and break down all of the plans a company may offer, but there are numerous other companies with just as many plans.
A health insurance broker does nothing else but deal with all of these different options all day. At Insurance Shoppers, for example, we're able to look at all of the options available to somebody and narrow those options down to 3 or 4 that we think will work best. We put them in a side-by-side format, like this, so it's easy to see the difference between each plan. Then, we help you apply and get through underwriting.
After you have the health insurance in place, a broker will always be there to help you with any problems you have with billing or claims. (If you think deciphering the sales material was tough, wait until you get an explanation of benefits saying why they aren't paying a claim). In addition, each year we will compare the best options available to you so you can always be sure you have the best policy you can get.

Why Don't People Use Brokers?
That is what I'm always trying to figure out. When I'm talking to clients about it, quite a few of them tell me they thought there would be an extra charge for having a broker. And I could see why they would think that, because for a lot of services like real estate or stocks, having a broker does cost more. But for any type of insurance you buy, the price for any given policy is always the same whether you buy it directly from the insurance company or from a broker. So, it's like you're paying for a broker whether you have one or not.
I'm guessing that's Voxen's reason for trying decipher all of the Blue Cross stuff himself instead of having a broker figure it out for him. If anybody has any other reasons, I'd like to read your comments.
By the way, a good option for people like Voxen is Tonik, from Blue Cross Blue Shield. We only do health insurance in Colorado and Texas, but Tonik is available in California too.
Good luck!

HSAs Aren't the Answer

Don't get me wrong, I think HSAs are the best thing going right now. But they are not a solution to this country's healthcare problem like this administration claims they are. HSAs are a great alternative to traditional healthcare if you have the money to pay the premium and still have extra money to invest. If this works for you, great!
But if so, you are not the type of people that are part of the growing healthcare crisis. There are nearly 45 million Americans that are uninsured. I agree that some of those uninsured just have their priorities mixed up and may have plasma TV's and iPod's at the same time they "can't afford" health insurance. But most of those 45 million really can't even afford the premium for an HSA qualified high deductible health plan, let alone the extra money to invest in the health savings account.
Our government needs to think of a real solution to this healthcare crisis soon (other than slashing Medicare). But as soon as any other ideas are mentioned, critics start screaming "national healthcare". They claim that any type of national healthcare program would increase the already inflated tax burden on families and businesses. This message is so loud because the insurance industry is providing the megaphone.
I'm the only health insurance broker I've seen that isn't screaming about how HSAs are the magic bullet for everybody's needs. For our clients in upper income tax brackets, I am saying that. But health insurance companies and brokers are acting like the healthcare crisis in this country is now fixed because of HSAs. Mainly because they fear that helping the uninsured with anything that smells like national healthcare would put them out of the job.
Actually, it's their idea to look the other way that's going to put them out of the job. As more and more people can't afford health insurance and aren't paying premiums, they're still getting necessary medical services and eventually aren't able to pay the doctor or hospital. The doctors and hospitals need to shift those costs and charge more to paying clients, or the insurance companies. This, in turn, increases the premiums for everybody with health insurance and will cause a few thousand more to be unable to afford their health insurance anymore. And that cycle will continue to accelerate and is just about to explode in our faces.

Humana Creates RightSource

For mail order prescriptions, Humana has been using Walgreens. They must now feel they can do a better job with customer service and probably cut costs a little by doing it themselves, because they just created RightSource. RightSource is their own prescription drug facility. Starting September 1, they will start moving the mail order prescriptions of their clients' from the Walgreens mail service to RightSource. If you are a Humana mail order customer, you shouldn't notice a difference.
Humana mail order clients can now receive a 90 day mail order supply. Humana claims that the new system will cut costs and offer more generic alternatives and discounts, saving their customers money. Humana will also notify the clients when they receive their order and when they ship it, and customers will also be able to speak directly to a pharmacy technician.if they need help.

Humana finally offers a high deductible - high deductible health plan

For several years, Humana has been one of our "go-to" plans at Insurance Shoppers when it came to high deductible health insurance plans. But lately, plans from Anthem Blue Cross Blue Shield of Colorado and United HealthCare have offered more choice by having the more desireable deductible for people looking for that type of plan.
If somebody is looking for an HSA qualified High Deductible Health Plan (HDHP), they understand that they can save a lot of money by self-insuring non-catastrophic events. The highest deductible Humana had was $2,650 for individuals or $5,150 for families. The niche of people looking at plans like this really want to save money and they can already find plenty of other plans to compare with this deductible. When they do compare, the 100% coinsurance is going to be more expensive because it offers less of an exposure and the 80% coinsurance is right in line with a lot of plans that can offer more benefits - like non-HSA qualified plans.
Well, now you can actually find a Humana HSA qualified plan with a $5,000 deductible for individuals and a $10,000 deductible for families in Colorado and Texas. For more information about these plans, visit the Humana page at Insurance Shoppers.