Secrets of the Health Insurance Industry
Health insurance may seem like a complex and impervious beast to many policyholders. If you’ve ever tried reading through your policy, you know what we mean. Add confusing state regulations, enigmatic pricing practices, and a plethora of coverage options to that, and you’ve got one baffling topic. Ensconced in the confusion surrounding health insurance are some oft-perpetuated myths that are either patently false or were only true long ago. To help dispel these myths, we’ve created a list of the seven biggest secrets of the health insurance industry.
- Health insurers have a 3% profit margin. You might think health insurers are making money hand over fist based on how high your premiums are, but this is hardly the case. The high cost of medical care and prescription drugs make health insurance a barely profitable enterprise. Insurers would actually have a higher profit margin if they made toys!
- Your health insurance company pays for unnecessary tests on a regular basis. Ten cents of every 86 cents spent on medical services goes toward liability costs and defensive medicine. With the litigious current climate, doctors feel compelled to cover all of their bases so they don’t get sued, which results in higher costs for everyone.
- Health insurers pay a 10%-20% commission to agents. If you buy a policy from an agent, that person receives a commission then and every time you renew.
- You can take your issue with your health insurer to an external grievance panel. If your formal complaint to your insurer is getting you nowhere, you are entitled to have your grievance heard before an external review panel.
- Insurers provide financial incentives to physicians who adhere to best-practices treatment. Health insurers want to know you’re being cared for in the most efficient and effective manner possible, so they often give performance pay to doctors who prescribe best-practices treatments. If his or her treatments jibe with the best-practices guidelines of the day, he or she might receive financial rewards from the insurer.
- You may not be able to sue your health insurer. Only 17 states in the U.S. have laws that allow policyholders to sue their insurers in civil courts to make them accountable for treatment decisions.
- Your health insurer can legally take your car insurance settlement after an accident. Your health insurer can put a lien on third-party settlement money that you receive from your car insurance company after an accident if your health insurer paid for your medical treatment after the accident. This process is known as subrogation.