Health Insurance Plan Evaluation

Health insurance plans have some well known attributes such as deductible, copay, maximum out of pocket, and preferred or required healthcare providers. These things are usually nicely summarized and explained in the plan information and quotes.

But there is another factor which affects the actual cost of any given health service. This factor is the negotiated rate that the insurance company has with the provider. What happens is, insurance companies go to providers and say something like, “this CT scan costs too much, we only want our plan holders to pay this much, and if you make us pay more, we won’t cover it, and our large group of plan holders won’t buy your service.” And then a price is negotiated. So whenever you have a copay or a deductible, a usually hidden part of the calculation of your actual out of pocket expenses are these negotiated rates for health services/prescriptions.

One of the key factors in how low these negotiated rates are, is how many people are in a given health plan, which gives the insurance company more leverage during negotiations. Because of this, I think that insurance companies should provide estimated plan holder numbers and a list of negotiated rates for common services/prescriptions as a part of any insurance quote along with the traditional copay, deductible, out of pocket maximum, and preferred/required provider information.

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