5 Common Misconceptions About Health Insurance

Let’s talk health insurance. Throughout the years working in corporate benefits, I have run into several common misconceptions about health insurance. I thought that this might be a good opportunity to dispel some of these myths. Hopefully this post can give you some information about health insurance. Have any other questions about insurance you want answered? Have any other myths you want to mention? Please add them in the comments section!

Myth #1: Insurance covers everything

Truth: No matter what you might think, the truth is that insurance does not cover everything!

Each plan has at least 2 pages of exclusions. Some of those exclusions are fairly narrow and exclude a specific procedure. However, several of the exclusions are incredibly broad. For example, anything that an insurance company deems investigational or experimental is not covered. From my experience, it seems like it takes about 7 years of evidence before they deem something to not be considered experimental.

There are also a slew of other random exclusions that vary so much from plan to plan and insurance carrier to insurance carrier that you have to closely read your plan to know about all of them. Anything considered education is not covered. Often speech, occupational, and physical therapy are not covered for special needs children. Certain medications aren’t covered. Infertility treatments may not be covered. Nursing care for more than 100 days is generally not covered. And the list goes on and on!

Myth #2: Most insurance is handled through private health plans

Truth: The government handles the responsibility of health care in the US.

Roughly 54% of all health care in the US is paid for by the government in the form of Medicare, Medicaid, Tricare (military health care), and Children’s Health Care. Source
So while many employers ignore what is happening with government reimbursements to doctors for Medicare and Medicaid, it impacts employer based health care. Think of total health spend as a pie chart. If costs are cut from one area, another area has to pick them up.

Myth #3: Doctors understand how much things cost

Truth: No one understands how much things cost

Health care pricing is pretty much a complete mystery. Don’t bother asking your doctor about how much something costs – they simply don’t know (at least generally – I’m sure there are 1 or 2 doctors that do know). They each have a different negotiated rate with different insurance companies and then a cash rate on top of that. There are thousands of different medical codes – for just a regular office visit there are at least 8 that I know of based on if the patient is a new or existing patient as well as how long the appoint time was.
The price information is proprietary and confidential according to insurance companies. So good luck trying to get adequate information about the price. While a doctor may know the average cost, they are unlikely to be able to rattle off the cost for each different insurance contract.

Myth#4:  Insurance companies all share data with each other and keep a black list of the uninsurable

Truth: They couldn’t share information like that even if they wanted to!

Privacy rule, both federal and state, pretty much prevent insurance companies from sharing information about potential members. Additionally, having worked at an insurance company, they simply lack the technology to share with each other. They house information in different systems, in different formats, and all have completely different criteria for qualifying people for different plans.
While I do know that they deny a lot of people – it’s not because of a secret black list that your name is on. It’s simply because they don’t want to take the risk of ever having to pay any significant amounts for your care.

Myth #5: Preventive care is anything that keeps me healthy

Truth Preventive care is considered certain approved procedures that prevent or diagnose a condition

This one has come up a lot since the health care reform mandate to cover preventive care kicked in. In fact, I had an employee once tell me that preventive care should be anything that prevents death! There is a list of approved preventive care tests and immunizations. But once you are diagnosed with a disease, then everything becomes “managing a chronic condition” and any associated blood work or testing is no longer considered preventive.
Make sure you check with your insurance company, particularly if you are enrolled in a high deductible plan, prior to getting any tests done to ensure that they are indeed preventive. You’ll need the diagnostic code and the procedure code in order to find out.
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