Not understanding health insurance has a dangerously high cost, ranging from thousands of dollars in debt to personal bankruptcy. An estimated 90% of Americans have some form of health insurance coverage, but a recent study showed that 66% of all bankruptcies are linked to medical expenses.
The same study concluded that an estimated 530,000 families file bankruptcy each year due to medical-related issues.
Medical care costs Americans more than 3.4 trillion dollars per year, making up roughly 17% of GDP. To put that number into perspective, it's the equivalent of spending over nine million dollars every day, for a thousand years.
In 2013, Ali Diab, Co-founder and CEO of Collective Health, suffered a twist in his lower intestine which led to surgery, an infection, and a brutal few months in and out of the hospital. The care he received was phenomenal, but the administration nightmare that followed was the opposite.
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Faced with a few hundred thousand dollars in surprise medical bills, only about half of which ended up being covered by his insurance, Diab spent countless hours on the phone with his health insurance company and the hospital.
When he received no clear answers, he decided he had to do something to make a difference within the convoluted U.S. healthcare system. So he started Collective Health, which aims to simplify health insurance for employers-who cover the majority of Americans-and their people.
Understanding Health Insurance Plans and Costs
Not understanding health insurance is a very common obstacle. If you find it difficult to keep track of all the different health insurance companies, medical plans, and opaque costs, you're certainly not alone.
A recent survey found that a startling 96% of Americans couldn't accurately explain four basic health insurance terms: deductible, co-insurance, co-pay, and out-of-pocket maximum. And yet, we spend so much on health insurance.
Although health insurance prices vary based on location, age, and whether or not an individual or family qualifies for subsidized premiums, average monthly costs rang in at $440 for individual policies, and $1,168 for family plans, in 2018.
A survey found that 96% of Americans can't define basic insurance terms like "deductible" or "co-pay."
So, how does health insurance work? Typically, consumers pay up-front premiums to a health insurance company, which essentially allows them to share the risk of expenses with everyone else who's paying for coverage.
Most of the time, people are healthy. But for the minority of individuals who become sick or injured, funds from the insurance premiums are used to cover expenses.
One of the primary reasons these medical insurance plans aren't working for Americans - the same shortcoming that Collective Health is trying to address - is that understanding health insurance is flat out difficult. And that's intentional.
In our current health insurance model, you'll find a lot of fine print and seemingly endless regulations and stipulations regarding the cost of care.
Medical care costs Americans more than 3.4 trillion dollars per year, making up roughly 17% of GDP.
Collective Health took a different approach by working with self-insured employers, which cover over 100 million Americans. In a self-insured model, both premiums and employer contributions are paid to an account held by the company, and the employer takes on the financial risk by covering medical costs, rather than a separate insurance company.
Most importantly, the incentives in this model are properly aligned, as employers want to get the most out of their investment while ensuring their people are healthier and more productive.
Choosing the Best Plan, or Betting on Health?
If you've ever shopped for an insurance plan or had an employer present you with medical insurance options during an open enrollment period, then you already know how stressful and confusing it can be to select the right plan for you and your family.
First, you have to understand the types of insurance. These include HMOs (health maintenance organizations), PPOs (preferred provider organizations), EPOs (exclusive provider organizations), PPOs (point of service plans), and HDHPs (high-deductible health plans).
These various types of insurance also typically provide a variety of options, such as platinum, gold, silver, and bronze. Each type of insurance plan affects the amount you pay in premiums, up-front, and after care.
For many people, open enrollment feels like wagering a bet on one’s health, bank account, and well being.
They also affect whether you need a health savings account, which types of care are covered, which medical centers you can use, and which doctors you're allowed to see.
Although the deluge of choices is meant to accommodate a variety of consumers, it leads to a very convoluted selection process riddled with paperwork that you're forced to go through every year during open enrollment. For many, this time of year feels like wagering a bet on one's health, bank account, and well being.
Breaking Down the Barriers to Understanding Health Insurance
As CEO of Collective Health, Ali Diab has spent the last six years simplifying insurance for both its members and its employer customers. By focusing on employer-sponsored health insurance, Collective Health has designed a single, integrated system to manage employee healthcare.
It serves as an operating system to administer plans across health, dental, and vision. It also provides patient advocacy and navigation, an engagement hub for members to understand all of their health plan and benefits information, and an analytics suite for employers to understand how health programs are performing.
Using Collective Health, businesses can more easily administer insurance plans, while intelligently designing them by making data-based decisions that will better serve their employees.
In this model, employers take on the financial risk of covering medical costs, while providing data-based plans that best serve their employees.
For its members, Collective Health provides easy access to everything they need regarding their health insurance and benefits. The company has a Customer Experience center staffed with Member Advocates who are available to help members through any and all issues that arise involving their healthcare.
Additionally, members can quickly access all of their health information through Collective Health's applications, available via mobile phone, tablet, or computer.
Through his company's mission, Diab hopes to set a precedent for what a better, more empathetic healthcare experience looks like.
The hope is that this model will bring the same transparency and simplicity to the healthcare system that we've seen technology and good customer service bring to so many other industries that impact our daily lives.