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Health insurance, unbundled

InsureBlog has a new post up detailing some of the goings-on surrounding a Michigan insurer that’s gone belly-up.  I wonder if this will become a more frequent occurrence if federal policymakers are keener to restrict premium increases than they are to assure insurer solvency.

Following the links on the entry took me to some older posts that illuminate some of the nuts-and-bolts workings of the health insurance industry.  As someone with a background in economics (and being pre-med), the actual structure and operations of insurers are sometimes a “black box” to me — I know what goes in, I know what comes out, and I know little bits about basic structure and incentives, but nothing too detailed about how they work.

If you’re interested in this sort of thing, these posts are well worth a read-through.  In particular, I was struck by the fact that some of the functions of “health insurance companies” can in fact be unbundled.  When you think about it, there is some logic in the idea that the company selling the policies and setting the premiums/cost-sharing/benefits need not be the same company that assembles the network for its PPO, and so on.  I had just never thought about it before.

One result of this that’s particularly relevant to consumers is that in some places, you can purchase PPO access for yourself.  There exist managed care organizations (MCOs, like this one) that charge insurers for access to their network, and the pre-negotiated in-network price.  As I now understand it, PPO plan premiums include the “access fee” for the network.  Some networks, like the aforementioned Careington, let individuals “buy in,” such that they are entitled to the same discounts that would be provided to an insurer who uses that network.  You’d be paying out-of-pocket if the provider/procedure isn’t covered by insurance, but you’d be paying a lower negotiated rate than the sticker price.

I think that’s pretty cool.  Almost like Costco for medical care?  For people with high predictable expenses that they have to pay for out-of-pocket, this concept could be a real money-saver.

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