Welcome back to Mini-Med Minutes.
And today… we’re going to be talking about Universal Healthcare.
A topic… I think is appropriate with our impending election.. as healthcare will probably be up for discussion considering how important it is and how much money we sink into it every single year.
17% of all the money us Americans make gets dumped right back into healthcare.
Initially I will admit, I started putting this topic together by brainstorming various subtopics and the number of bullet points I ended up with was frankly absurd.
This topic is wayyyy too big and you would definitely be bored of me if I did it all in one sitting. I also noticed that as a healthcare provider, I am heavily invested in the topic so it’s also very difficult to not just start ranting about something while still maintaining the main topic.
This is a podcast, you’re probably looking for a rant actually, it’s probably more entertaining to be honest, but I also would like to stay on topic too, so I will rant, I just won’t take it too far.
So we’re going to do this discussion piece by piece, a little bit at a time to hopefully encompass everything that we need to know and consider about the topic of healthcare systems.
So today, I thought we’d start off with what our healthcare system is now. For those of you who use our healthcare system, you probably know a little bit, or a lot bit depending on treatments you or a loved one has undergone…
But for those healthy young healthy people out there that anxiously walk up to the pharmacy counter and not knowing what to do and admit that like, “please sir, I just want my medicine, what do I need to tell you.”
This is for you in particular.
But first we have to talk about how does insurance work? A lot of Americans don’t actually know and I was victim of this before I got into healthcare. Like, I paid for health insurance, everything should be FREE or low cost. Those thousands of dollars of care that I just used should be paid for by my hundreds of dollars of premiums.
Kind of…
At its core, insurance is about risk pooling.
Imagine you and a group of friends decide to chip in to buy a big pizza. Each of you pays a small amount, and in return, you all get to share that pizza.
If one of you had to buy the pizza alone, it could be expensive. But by pooling your money, you make it affordable for everyone. That’s exactly how health insurance works. You pay a premium, which is usually a monthly fee, and in exchange, the insurance company covers a portion of your healthcare costs.
This helps spread the financial risk among a lot of people. And there’s a lot of different pools out there.
Now, let’s talk about premiums. Think of a premium as your ticket to the healthcare party. This is the amount you pay, monthly or annually, to keep your insurance active. Several factors can influence how much you pay, including your age, location, the type of coverage you choose, and your overall health.
Next up is the deductible. This is the amount you need to spend out of pocket for healthcare services before your insurance kicks in. For example, let’s say you have a $1,000 deductible. That means you have to pay that amount first, perhaps for doctor visits or tests, before your insurance starts to help with the costs.
Why are there such things as deductibles you might ask?
Deductibles exist to help share the cost of healthcare between the insurance company and the person with insurance.
By requiring people to pay a certain amount before their insurance starts to help cover costs, deductibles can lower insurance premiums and encourage smarter use of medical services.
Once you hit that deductible, you’ll encounter co-pays or co-insurance.
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A co-pay (which you’ll hear at the doctor’s office and pharmacy) is a fixed amount you pay for a specific service, like a $20 fee for a doctor’s visit.
And It’s usually due at the time of service, like up front.
Co-insurance, on the other hand, is a percentage of the costs you pay after meeting your deductible. If your plan has an 80/20 co-insurance split, your insurer pays 80% of your healthcare costs, while you cover the remaining 20%.
Now, what if healthcare expenses become overwhelming? That’s where out-of-pocket maximums come into play.
This is the cap on how much you’ll have to spend for covered services in a year. Like the absolute most you’d ever have to spend.
Once you reach this limit, your insurance covers 100% of the costs for the rest of the year. It’s like having a safety net that protects you from financial disaster.
Then there’s provider networks. Many insurance plans have a network of preferred providers. If you choose to see a doctor in this network, you’ll typically pay less.
However, if you go out of network, be prepared to shell out more from your pocket. Understanding your plan’s network is essential for minimizing costs and maximizing your coverage. So if you want to get the biggest bang for your buck, you do have to strategize a bit.
And speaking of coverage, not every service is included in your health insurance plan. Most plans cover services like doctor visits, hospital stays, preventive care, and prescription drugs (on their formularies), but always check your specific plan for details. Knowing what’s covered can save you from unexpected bills. A lot of times providers’ billing departments will have a sense of what’s not covered and let you know.
When you receive care, your provider submits a claim to your insurance company. They review this claim to determine how much they will pay based on your policy and its coverage limits. It’s a process that can sometimes feel like a maze, but it’s how insurance companies ensure that everyone is covered according to their agreements.
Very important to know: When you use your insurance at the doctor’s office, they consider it quote-unquote “paper billing” where they will treat you first and bill you later. They don’t necessarily know for sure if something is covered right away or if you are covered right away.
When you go to the pharmacy, they do electronic billing which means they’ll submit a claim to your insurance and get an answer within a few seconds. So if you go to the pharmacy and say my insurance just worked at the doctor’s office… there’s a possibility… it didn’t.
Preventive care is another important aspect of health insurance. Many plans cover preventive services—like vaccinations and screenings—at no additional cost. This is a great incentive to keep your health in check and catch any potential issues early.
Insurance companies would much rather pay for you to not get sick because paying for your while you are sick could cost an outrageous amount of money.
Lastly, let’s talk about changes in coverage. Health insurance plans have open enrollment periods when you can sign up or make changes. Outside of these periods, you may only change plans under qualifying events, like if you get married, you have a baby, or you lose yoru job. It’s crucial to keep an eye on these timelines!
Now how do insurance companies make money? Or rather, how do they fund themselves… to pay out claims while still being profitable?
And this is important when we’re talking about healthcare reform because… that’s essentially what it is, the redistribution of collective funds.
Insurance is in essence… all about money.
And insurances primarily make their income from premiums. As mentioned before, the premium is the money you or your family pays every month to have insurance.
And different people, pay different premiums depending on again, what kind of services they require and other factors about themselves.
They rely on experts called actuaries. Actuaries are people who are really really good at math, and their job is to figure out how risky it is to insure different people. By “risky,” I mean how likely someone is to need a lot of healthcare. The more care they might need, the higher the premium they might have to pay.
Actuaries look at a few key things. They consider age. Older people usually need more medical care, like check-ups, surgeries, or medications. So, older folks tend to have higher premiums because the insurance company expects to pay more for their healthcare.
Next, they look at your health history. If you’ve had a lot of serious health problems in the past, like heart disease or diabetes, the actuaries know that you might need more care in the future, either from the diseases themselves or diseases that come along in the future.
This means you could have a higher premium because the company expects to pay more for your care.
They also look at lifestyle factors.
For example, if someone smokes or doesn’t exercise, their risk of getting sick is higher.
In a nutshell, actuaries consider things like this to figure out how likely a person is to need expensive medical treatments.
Then…when you pay your monthly premium, the insurance company doesn’t immediately use all that money to pay for medical bills.
Instead, they keep some of it and invest it to make even more money! Because if you know the basics of finance, having stagnant cash laying around is in general a bad thing. It’s unproductive.
So, what do insurance companies invest in? They usually go for things that are safe and reliable. Because they can’t be making risky choices with money that someone might need for medical services.
For example, they buy certain stocks, which are shares of different companies. If the company does well, the value of the stock goes up, and the insurance company can sell it for a profit.
They also invest in bonds, which are like loans to companies or governments. These loans are paid back with interest, so they provide steady income. Bonds are considered safer than stocks, making them a popular choice for insurance companies.
Some companies even invest in real estate, buying property that can increase in value over time or generate rental income. They might also put money into mutual funds and other financial products that spread out risk so they’re not putting all their eggs in one basket and providing returns.
Now, you might wonder how much of their total profit comes from these investments. Well, it can vary, but for some insurance companies, investments can account for a significant portion of their profits—sometimes as much as 30-40% or more! This means that even if they don’t make a lot of money just from premiums, their smart investments can really help boost their bottom line.
There are other revenue streams of insurance companies but these are the primary two.
I hope that’s a decent enough explanation of how insurance works right now.
So let’s finally get into healthcare and explain…
Unfortunately for us Americans, our healthcare system is multifaceted and quite complex.
At its core, it’s divided primarily into two different sectors.
On one hand you have the private sector, and this is the category where most Americans live in. The private sector includes:
…and that can dive a little further into managed care plans like HMOs or PPOs which for the interest of our talk we’re not going to dive into.
But most Americans have employee sponsored insurance where your employer will pay a large portion of your premium and a portion of your paycheck gets deducted depending on some usually limited elections that you can make depending on your individual or family needs.
…Like if you need to go to the dentist a lot more often than normal, it may be more beneficial to pay into a more expensive plan that covers more to save you money down the line.
Different for everyone.
On the other hand, you have the public sector, which are programs that are sponsored by either the state or federal government.
The most common programs being Medicaid and Medicare.
Medicare is a federal program usually for people who are 65 and older, though it also covers younger people who have a disability. This is further categorized into Medicare Part A, B and D. Where Medicare Part A covers your hospital bills when you get sick, Part B covers some medical equipment like blood glucose testing machines, vaccinations, and some select medications like anti-rejection transplant drugs, and Part D is the plan that covers most other drugs.
You might have noticed, I skipped Medicare Part C.
We typically don’t call it that, we refer to this as Medicare Advantage Plans where private insurances can offer plans that are Medicare approved. On average they’re typically more cost-effective than regular Medicare but a bit more restrictive when it comes to choices of which doctors you can see and where to go.
If you just switched to Medicare from private insurance unfortunately and I know it sucks, it could force you to see a different doctor than you’ve been seeing since the beginning of time.
On the other hand, there’s Medicaid, which is primarily a state sponsored program which provides coverage for low-income individuals or families. Being a state sponsored program, it’s important to know that each state has its own Medicaid program and it can be called something different depending on the state. For instance, here in Washington we have “Apple Health” plans, in California there’s Medi-Cal, Connecticut there’s Husky Health, etc.
Also important to know that if you have a medicaid plan, coverage doesn’t necessarily extend if you need healthcare in another state. A very common issue I see frequently in the pharmacy.
As you can already tell, the system is already complex without explaining any detail due to the possibility of thousands of different plans and this is just the tip of the iceberg. Any private company can offer individualized insurance, and although Medicare Advantage Plans have a minimum requirement for their members, they’re still able to modify large portions of their plans to suit individual needs.
So knowing that, when you come to the doctor’s office, or when you come to the pharmacy, just know that if you ask “does my insurance cover this or that,” there’s a high possibility we just don’t know. We might run into 20 Blue Cross Blue Shield plans but because there’s hundreds of different plans for Blue Cross Blue Shield, each of which covers different things, we don’t know for sure until we bill them or until we call them or you call them.
Ideally, everybody who signs up for insurance knows exactly what they’re signing up for. Pie in the sky situation. What medical procedures are covered, which specialist they can see, which providers they can go to and the cost of each and every drug that they take.
Realistically, this is completely unreasonable. There are tools on like healthcare.gov when you’re choosing specific plans to check if your current medications are covered and at what cost but there is no way to predict what medical procedures come your way and what medications you may have to take in the future.
Additionally so, there’s no way for your doctor to know what’s covered and therefore has no idea what they can prescribe you that a regular person could comfortably afford.
Let me give you an extraordinarily common example.
You see your doctor and he diagnoses you with COPD. He would like for you to start therapy with a steroid inhaler. He likes an inhaler called QVAR, he sends the pharmacy a prescription.
Now we’re at the pharmacy, pharmacy bills the insurance for the inhaler. Insurance says no, either they don’t like how much medicine the doctor wants the patient to take, or they have a deal with another manufacturer to use their inhaler instead.
Basically, insurance says no. If they’re nice enough, they’ll tell you what they do cover… and then the pharmacy can spend some time, time they don’t have, to either call the doctor’s office, wait on hold, to talk to reception (not even the doctor) to send them a note, or be transferred, then put on hold again, so doctor can take the time, again, time they don’t have, to draft another prescription to send to the pharmacy.
Outside just flat out covering the medicine, that is BEST case scenario. There are two other common scenarios that are far more complex but I don’t even have to get into it. If this is the best case scenario for a non-covered drug, that’s already pretty bad.
So if you’re at the pharmacy and you’re wondering why your prescription is taking so long to fill. It’s probably either your insurance, or someone else’s insurance holding up the line due to stupid requirements they might have.
That is the clinicians view point of the healthcare payment system in the US. Healthcare providers are forced to become not only experts at their field of work, but it’s now nearly mandatory to be part lawyer and insurance expert.
Though, we pay our doctors here very generously. They earn as much as 2-3 times as much as their counterparts in countries like Japan, Sweden, Taiwan but honestly, for what we expect them to do here, it’s pretty well deserved. It’s too much stuff out of their scope.
So.. I know just bashed our healthcare system a little bit but… there are some advantages.
Choice and Flexibility: You usually have more options when it comes to choosing doctors, specialists, and hospitals, particularly for non-emergency or elective procedures. Many people can select healthcare plans that match their specific needs and preferences, including provider networks and coverage levels.
Access to Advanced Medical Technology: The U.S. healthcare system is known for having cutting-edge medical technology and treatments. This access allows for quicker availability of the latest innovations in medical procedures, pharmaceuticals, and tools. This however has the obvious drawback of being very, very expensive.
Shorter Wait Times for Certain Procedures: For specialized surgeries or elective procedures, we usually have shorter wait times compared to other systems, allowing patients to schedule treatments faster if they have the financial resources or the right insurance coverage.
IF they have the financial resources, so unfortunately this advantage stems from others not having access to the same care.
And that’s why it’s such a topic in the United States and why Healthcare reform is on a lot of people’s radar.
So in a Nutshell, that is our Healthcare System with as little detail as possible so you get the jist of it.
We’ll be continuing the series next with what a Universal Healthcare system is and if it’s worth it to change.
If you found this episode interesting or helpful, please do follow and if you have any questions for me, you can find our contact information at PharmacistNutrition.com
Once again, thanks for tuning in and I’ll see you next time!
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