Tuesday, February 9, 2010
California regulators are cracking down on health discount plans that are marketing themselves as health insurance or dental insurance.The theory is that the discount plan companies negotiate with providers to lower their price for cash customers in these plans. The problem is that consumers often do not realize that most providers do not honor health discount cards, including doctors they are currently seeing.
Health discount plans should not to be confused with health insurance plans that happen to pay poorly. For example, if a plan pays $100 for a surgery that costs $30,000 after the deductible, it's still a health insurance plan even though it does nothing to prevent a financial catastrophe from medical expenses. Real health insurance makes payments for medical services while discount plans helps lower the cash price for those without insurance.
In Santa Clara County where unemployment is 11.2% as of December 2009, many residents are having a hard time regaining access to medical care that was once provided by Silicon Valley employers. Many of the unemployed may resort to health discount plans as a way to gain affordable access to medical care. Unfortunately, many residents have found that the number of providers that take the discount card in the area may be zero.
Not all discount plans. Santa Clara County offers a free prescription to any resident within the county. They are honored at many pharmacies around Santa Clara Valley and do result in an average of 22% discount for prescription drugs.
According to the Los Angeles Times, California's Department of Managed Health announced today that it is cracking down on unlicensed health discount plans marketing themselves as health insurance, and are considering additional regulations that would require plans to verify discounts, file reports about member grievances, and clearly state that a health discount plan is not health insurance.
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