Dental Insurance Madness- Part II
In follow up to my intro post last week and as we approach the deadline for signing up for the Affordable Care Act insurances through the state’s exchanges, I thought what’s a better way to learn about insurances than to share with you my personal experience while shopping for dental coverage.
This is a picture of my computer screen where my carrier (BS of Ca) spells out and encourages me to sign up for one of their pediatric dental insurance policies. While there are hundreds of options for coverage throughout the web, in my very limited search, I came across multiple polices like this one, where I cant make sense of how it can be a financially beneficial policy to purchase. You can see that after considering basic information including zip code, age, and other relevant data, I would need to pay $59.60 per month for their best “Enhanced Dental Plus PPO 25/500” policy.
The law requires carriers to explain a few basic numbers in their quote and though there are hundreds of fine print limitations and exclusions that go under the radar of the unsuspecting consumer, these numbers are enough for average consumers to get a glimpse of how dental insurers benefit themselves at the cost of consumers and medical providers. Allow me to walk you through this. We can see that the minimum out of pocket cost to insure one of my dependents for the year would be $715.20 (12mo x $59.60). Now, the maximum yearly benefits would not exceed $500. In other words, no matter what dental treatment my dependent would need, the insurance will pay a maximum of $500 for the year, and I would have to cover the rest out of pocket.
So, even if a 100% of people who have this policy use 100% of their benefits, the insurance would still be collecting 43% more ($215.20 to be exact) than their payout to add in revenue. But, of course, people forget to go to the dentist, get too busy, skip check ups, are too scared and they procrastinate – heck, people get sick and even unexpectedly die and their remaining yearly benefits are not refunded to them. Many policies are written in such a way that the insurance company just cannot lose out on a sizable profit even if all their consumers used all their benefits.
In all fairness, insurance companies have overhead and administrative costs in handling claims that need to be considered. However, if you talk to medical or dental insurance billers, they will concur with me that the insurance industry’s red tape and administrative systems are designed to be convoluted and cumbersome. That way, as the consumer and provider fatigue, the insurance pay outs are minimized and the insurance company keeps more.
So, if this insurance policy charges you more than it pays out, is there any benefit in buying this policy? Why not just give that $715.20 to your dentist in exchange for direct services, and take advantage of their 15% cash discount? insurance companies attempt to dodge this question by flexing their “preferred provider” muscles.., saying “we have a zillion dentists who are contracted with us, and by going to them, you would save money.” In other words, the insurance company has contacted with dentists across the country and invited them to sign a contract that involves shelving their Usual Customary and Reasoable (URC) fees for Contracted Fees that are 40-60% below what that same service would cost next door at the neighboring non-contracted office.
All that “discount talk” sounds like a good deal, until you stop and ask yourself “why would any dentist sign a contract to willingly cut their fees by 50% or more?” The wise consumer has got to ponder the motivation and ramifications when the insurance company and the provider come together to make a deal. Here, the difference between medical insurance and dental insurance really stands out and the unsuspecting consumer pays the price.
The truth is that insurance carriers do everything in their power to underpay and avoid payments and contracting with dentists to get them “in-network” is a lure to trade substantially lower reimbursement rates for a significant increase in number of patients coming in through this “network”. The loser here ends up being the patients first and the doctor second. The providers have to see more patients and are paid less for it, resulting in poor quality of services, less attention on individual patients, inappropriate corner cutting to save time, use of cheaper materials and older technology to save money, aggressive and unnecessary treatment to make up their increasing overhead, and a shift away from preventative care to drill, fill, and bill dentistry. If all this sounds interesting, read my next post to learn how this happens and what you need to look for when selecting your insurance policy.