In 2015, I thought my healthcare renewal statement was wrong.
The premium for my shrinking family of three (two adults and one child) was increasing by more than 30%, to $1,454 per month. My earnings place me out of the subsidy bracket, so these are real dollars out of our budget.
There were plenty of insurance companies to choose from. Shrinking availability was not a problem. It was just breathtakingly expensive.
Or so I thought.
In 2016, my premium jumped to $1,733 per month.
The galling part is that I had no control. I’d kept tabs for years. The insurance companies had never paid total reimbursements anywhere close to the premiums we’d paid, and our deductibles climbed even as our premiums shot higher.
This is not how insurance is supposed to work.
Insurance is a hedge against something unexpected happening.
The current system is glorified cost-sharing with a lot of middlemen.
With true insurance, I’d pay for small or ordinary medical costs like a broken arm or asthma treatments, and I’d pay for scheduled surgeries with savings or a payment plan. But big things, like car accidents or cancer, would be covered.
That sort of coverage isn’t possible today. Even if the proposed American Health Care Act allows it, I’m not sure how many insurance companies would offer such stripped down service.
I don’t claim to know how to fix the national problem.
Caring for everyone as we age will be expensive, but no one (including me) wants to ration care or tell doctors they simply earn too much compared to their peers in other countries.
But that doesn’t mean I sat still when I got my premium renewal notice last year.
I searched for alternatives… and I found them.
The Affordable Care Act includes a carve-out for health-sharing arrangements that existed before 2000. These organizations tend to have a religious component and work like mutual benefit societies from a bygone era.
I investigated several before choosing Christian Healthcare Ministries (CHM, www.chministries.org). There’s also Medi-Share and Samaritan Ministries, among others. Each one operates a bit differently, which is why I chose CHM. But they each have the same basic principles.
I contribute $150 each month per person, or $450. That’s $1,283 less than my cost would have been in the traditional market. It adds up to $15,396 per year.
The organizations ask that you affirm your faith, and that you live a responsible life. It’s not that you need to live a life of austerity or denial. You can still have one too many at the local barbeque from time to time, or ski the black diamond runs.
What you can’t do is expect your fellow members to pay for things outside the bounds. If you have an accident while driving under the influence, it’s not covered. If you get addicted to illegal drugs, it’s not covered.
In short, these organizations give you the opportunity to exchange responsible behavior for lower-cost healthcare.
This is not insurance. It’s health cost sharing. It sounds like semantics, but once you get into the details the difference becomes clear. Even though CHM mailed me a card, there’s nothing to show a doctor or hospital.
When we visit the doctor, we say one thing: “Self-insured.”
Last fall, while away at college, my daughter went to the hospital. She was short of breath due to an allergic reaction. She called from the waiting room. I told her to do everything necessary to get the care she needed, and, when it came time to settle up, to tell them she’s self-insured and to give them my contact information.
She left without paying a nickel, and then I waited for the bill.
Five weeks later, I received her statement. The hospital had reduced her bill by 71%.
The CHM gold plan we have covers costs outside of tests and transportation, with a $500 deductible per condition. We pay for our routine doctor visits.
The plan includes a prescription drug benefit, but I’ve found that GoodRx, a free app that anyone can use, is better. I recently filled a prescription that would have been $39, but GoodRx directed me to a large chain grocery store where my coupon provided by them brought the cost down to $8.
Clearly this approach won’t work for everyone. I’d imagine there are pitfalls to these programs that will come up as time goes on. But, so far, it seems to be working just like insurance used to work.
And the basic tenets seem solid enough to help all of us achieve lower costs.
As a consumer, I’m asked to be responsible for my health, to do my part to keep my costs down, and I ask for the best price a vendor has to offer when services are rendered. In return, my health cost sharing premium stays in the reasonable range. That seems like a fair trade.
I’ve had two friends sign up for similar programs in the past six months, as they ran into the same astronomical costs that I did. I imagine these organizations will attract many more users in the months and years ahead as costs continue marching higher.
If you end up looking into these programs for yourself, check them all out to find the best fit. And if CHM ends up the top choice, tell them I mentioned it… because they also have a referral program.
Follow me on Twitter @
P.S. I mentioned last week the special Q-and-A that Lance was holding about his Treasury Profits Accelerator service. If you missed that – and his soon-to-end two-for-one subscription offer – check it out here.