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January 7, 2011 > HealthCare... Who Cares?

HealthCare... Who Cares?

By J. Dennis Wolfe

One of my clients, a physician, shared with me how one of her patients views his health insurance. He believes that the money he pays for health insurance is a personal savings account and the same dollars paid in premiums are used to reimburse his physician for services rendered. This is incorrect.

It is time to reverse this paradigm (one's way of viewing things).

Insurance shares and spreads risk by collecting small amounts from individuals within large groups of people to pay sudden, large claims. Not everyone is going to have an expensive hospital bill, but everyone can afford a small premium to protect against this possibility.

Over our lifetime, we may change health insurance many times. There is a possibility that within a month following enrollment into a new health plan you could suffer from a sudden medical problem requiring extensive hospitalization and surgery - heart attack, traumatic injury, etc. You would expect your "new" insurer to immediately pay this claim.

Insurers must protect against such an occurrence and therefore have to "pad" their rates to reflect the potential for this risk. The mathematical logic that drives this is The Law of Large Numbers aka Probability Theory. Search the web for a more complete understanding. This is at the core of how rates are determined. An insurer must build predictability into random human behavior to guarantee that funds are available to pay these "shock" claims.

When you go to the store and buy $100 of groceries, you pay $100 at the checkout stand and go home with your groceries. You exchanged dollars for goods. You may also exchange dollars for services, such as an hour of time with your CPA. Yet, somehow over the last five decades we have come to believe that payment for health care services is different, We need to remember that when we seek health care, we are still simply exchanging dollars for services!

It would not be reasonable to pay $25 for a $100 bag of groceries, telling the store that your bank will send a check for the remainder in a month or so. You would be arrested for shoplifting! Yet we routinely do this to medical care providers.

This form of payment has become so pervasive that if you wanted to write a check to your physician for the entire amount due, the receptionist would look at you like a deer in headlights. Finally, the receptionist might say, "It's okay; we will bill your insurance."

If the insurer stalls processing and payment of the claim, stern letters from your doctor will be the result demanding prompt payment directly from you. Typically, you get mad at the insurance company. Your insurer does not owe the money for services provided; you do! Although your doctor cares about your health, the office manager cares about payment for services rendered. You owe the money and if the bill is not paid, you, not the insurance company, will be sent to a collection agency.

This system is flawed and cannot be fixed without an understanding of your role in it so stay healthy, stay tuned and get involved. Your life now does indeed depend upon it.


(Dennis Wolfe wrote a book on healthcare cost-delivery reform, published in 1991, that detailed the problems that we face today and what needed to be done. In 1976 he founded Wolfe Insurance Services, specializing in employee benefits. In 1977 he won a national award for developing a program known today all over America as Community Health Fairs. In early 2010 he founded Health Care Claims Consulting, LLC, a website-based business of experts that will be able to help people all across the country when they are not getting proper health care services or having trouble getting services paid for. He can be reached at dennis.wolfe@comcast.net and is available for speaking engagements.)

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