Wednesday, August 11, 2010

Insurance Stupidity

I am a real tightwad with my money.  I make a sport of living as cheaply as possible.  But there a few things where I will spend the money for quality.  One of them is my eyeglasses.  I don't get designer frames, but I always go for the high-tech lightweight titanium frames and the best quality thin lightweight polycarbonate lenses.  It is worth paying the money for something that literally affects every minute of my waking life.

The school health insurance has a $300 per year 'wellness benefit' that will pay for things like glasses and physicals and vaccines.  I had not spent any of it this year, and it resets on the 15th, so I got a pair of glasses today and will be getting a tetanus shot tomorrow.

The insurance will pay 100% of expenses at certain eye doctors, but will only pay 80% at Wal-Mart.  The problem is that good glasses at an eye doctors would cost over $400, while the same glasses will cost less than $300 at Wal-Mart.  So even though I pay 20%, I end up paying less out of pocket by going 'out of network' to Wal-Mart, because of the $300 payment cap.

When I turned in the paperwork, I asked the people in the office why Wal-Mart was not covered at 100%.  The answer was that, in order to be put in the 'network', you had to agree to give a discount to people with the insurance.  Wal-Mart does not have profit margins high enough to do that.

Of course, the eye doctors solve the problem by massively boosting the prices that they would theoretically charge to anyone without insurance, and then only serving people with insurance.  This is common practice among any medical provider that has to deal with insurance companies.  They set outrageous base prices and then claim to give a massive discount, but in reality they are far more expensive than they should be.

This is an example of how brain-dead bureaucratic stupidity is not limited to the government.  Any sane insurance company would compare prices and quality among various providers and then give favored status to those that provided the best value.  This would mean going with Wal-Mart for most people, and to more advanced eye doctors for people with things like blood pressure problems or really severe eye issues who need the better doctors.  The status quo encourages people to go to the expensive eye doctors, so the company has to pay a lot more money, and everyone has to pay higher premiums.

If I had the ability to choose a health insurer, I would go with whichever one gave full reimbursement to Wal-Mart vision center, both because of personal benefit and because it would be a sign of a sane and well-run organization.  But I do not choose; I am stuck with whatever the school chooses, and there is no selection pressure to cause any reform and end the stupidity of demanding discounts.

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