In 2019, I took on a new client in the construction industry that had about 90 employees at the time. They had struggled for years to manage their healthcare and benefits costs, always offering a very high deductible health plan. In fact, the individual deductible on their plan was $8,000 and the covered employee had to meet 100% of that dedcutible on their own before their insurance plan would cover anything.

In the first year, we made several significant changes to their benefit offerings, offering alternative plans with much lower deductibles and member out of pocket costs, and we encouraged employees to reach out to us in advance of non-emergent medical services – things like diagnostic imaging services (MRI, CT scans, etc), prescription drugs, and surgeries. We told them we could help them locate high-quality care at the best price possible, a fair price.

A decade-long need

About two weeks into the new plan year, an employee from this company reached out to me and asked if he and his wife could come visit with me at my office. The next day he and his wife shared with me his story about how he needed an umbilical hernia repair surgery, and that he had had this hernia for 10 years. 10 years!

For years they had inquired with his health insurance company, and yes, the surgery was “covered”, but he would have to pay the first $8,000 before insurance would kick in. That led to them calling around, providing their health insurance information to hospitals and surgeons, and they said they never received an estimate under $13,000 for the entire procedure. That left them facing having to pay $8,000 out of pocket (their deductible and coinsuance) for this procedure, or so they believed.

That led to them calling the same locations again and asking them for the “cash rate” for the surgery. What would it cost WITHOUT insurance coverage? Once again, they stated they never received an estimate under $10,000. They were also told that the $10,000 charge was simply the cost of the surgical facility, and that it did not include the price of the surgeon’s fee or the general anesthesia. Upon further inquiry, he discoverd that in addition to the facility fee, the surgeon was estimating their cost to be $2,500, and the anesthesia cost was going to be an additional $1,000. That brought the total bill to $13,500.

I really couldn’t believe what I was hearing. Here they were, a family covered by health insurance, but hadn’t been able to get this surgical procedure for a decade because of the cost. I recall at one point asking him, “Why haven’t you taken care of this, you have insurance?”, and to be honest, I immediately regretted that question. His wife explained that they had tried saving the $8,000 “many times”, but eventually “life just happened” – the car would need new tires, the hot water heater went out and had to be replaced, their oldest child was attending college and tuition had to be paid. I was listening to a family, that in the United States, that is considered “functionally uninsured”. They had health insurance coverage, but they couldn’t afford their deductible, a problem millions of Americans face.

Good news

After taking in their story, I told them I could help them. We have partnered with a local ambulatory outpatient surgery center, and I knew we could refer him there. So, I turned around, picked up the phone, put it on speaker, and called the surgery center Administrator. I watched this couple over the next few minutes just shake their head in disbelief. They couldn’t believe what they were hearing.

The Administrator didn’t use words like “estimate” or “estimated charges”. He confidently said, “We’ll do the procedure here, and the total cost is $3,500.” The wife spoke up again, “OK, that’s $3,500 just for the facility fee, what’s the rest going to cost?”

“No ma’am, the $3,500 covers the cost of the initial consultation, surgeon fees, our facility fee, and the anesthesia fee.” This is what we call a “bundled rate” or a “bundled price”, an all-inclusive procedure with one pricetag. They looked at each other with astonishment, and I’ll never forget what the wife said next. She looked at her husband and she said, “It’s been ten years, and I don’t care if we have to put this on our credit card or go borrow the money, for $3,500, it’s time to get this taken care of.” He shook his head in agreement.

Within ten minutes we had scheduled him for his initial consultation with the surgeon, and within another week, he had his laparoscopic hernia repair surgery. After ten years of struggling to afford his high deductible, he got the health care he needed.

Now, if we just stopped here, it would still be a tremendous story, right? But it actually does get a little better. Remember I said we had implemented some pretty significant changes to his employer’s benefit plan, and this man had chosen an alternative plan to the high-deductible health plan, that contained some “unique” provisions. One of those provisions was that if an employee used our “direct agreement”, like the one we have with the surgery center, then the employee potentially qualified to have their deductible and out of pocket costs reimbursed by the employer.

After I finished up with the couple, and they left, I called the insurance provider of the alternative plan he had chosen, and confirmed he was in fact eligible for 100% reimbursement according to the plan. So, I called him and his wife on the phone, and let him know that not only was his bundled procedure $3,500, but that his employer was going to reimburse him 100% of his out of pocket costs. No need to take out a loan, no need to put it on a credit card, no monthly payments. Because the bundled procedure was also saving his employer a lot of money, this particular plan was set up to share those savings with the employee by reducing and/or eliminating the employee’s out of pocket costs. Everyone wins, and true value is restored to a benefits plan.

Employers, you can solve this problem for your companies, and the country….

Umbilical hernia repair isn’t the only example where we can help people get the care they need for a reasonable price. We’ve even advised and assisted uninsured patients get procedures they needed. Think about it, the difference between $13,500 and $3,500 isn’t just $10,000, it’s the difference between getting a hernia repaired right away vs. having to wait ten years because you couldn’t afford to pay your $8,000 deductible. It’s the difference in having to choose between a medical procedure you need or a hot water heater for the house. It’s the difference between getting the necessary health care you need vs. not getting it, and that, unfortunately, is a decision thousands and thousands of Americans face each year.

It doesn’t have to be that way.

I’m going to pivot for a moment and briefly use this man’s story and put it in context from his employer’s perspective. The “alternative plan” we advised this employer to implement is built, somewhat, on a “self-funded” chasis. In other words, the employer and employee, collectively, are paying medical and pharmacy claims directly, up to a certain point before “insurance” will kick in or reimburse the plan. We had shown his employer that if the employees were willing to “redirect” to places where we could help them receive high-quality, low-cost care, then it would save the employer a lot of money. But we also discussed sharing a portion of that savings directly with the employees through reduced or waived deductibles and out of pocket expenses. After all, without their cooperation in this kind of plan, there wouldn’t be any savings for anyone.

They deserve a lot of credit. They understood the concept, and they had the courage to try something a little different. And it’s working. This alternative strategy has reduced the employer’s costs, and it has put “value” back into their benefit plan. Employees are sharing their stories with other employees, and at least for one gentleman who got his surgery after ten years of not being able to afford the deductible on his old plan, hope is being restored that high-quality health care is affordable and accessible.

Brave employers all around the country are beginning to adopt innovative health plans that can deliver things like $0 deductibles and still save the employer money. As more and more companies discover these alternatives, perhaps we can solve this major issue many people face, having to choose between necessary medical care or prescription medication, and every day life. Studies show that almost 50% of people who take a prescription drug are non-compliant (they don’t take it as regularly as they should) primarily because the medication costs too much for them. That not only leads to higher health-care related costs, but it causes almost 125,000 deaths per year.

Imagine the impact employers can have via the health plans they implement and provide employees! By solving the “cost” problem, we can also solve the effects of people delaying and/or foregoing care. These strategies and tactics can be applied to all facets of health care, from primary care and outpatient surgery, to chronic disease management and outrageously priced specialty drugs.

This isn’t a pipe dream. We are not only witnessing, we are actively particpating in helping employers implement plans that drastically reduce and/or eliminate employee deductibles and out of pocket expenses in many medical scenarios, returning true “value” back to hard working employees and their families.