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Major Medical Cost Comparison

Insurance Commissioner Reveals Shocking Truth

That Americans are Paying Thousands Of Dollars
Too Much For Their Health Insurance & What You
Can Do About It

• Would you like to learn what Insurance

Companies “Don’t” want you to know?
We Call It Insurance, but That's Not Healthy
(By Lawrence H. Mirel - Commissioner of Insurance and Securities, Washington, D.C.)

• “The current system for paying the costs of health care is

seriously flawed, because insurance is the wrong model --
at least for part of the system.”

• “The general definition of an "insurable event" -- from

traffic accidents to tornadoes -- is something that:”

• First: is very unlikely to happen;

• Second: will come without warning; and
• Third: is not something the person who is insured ever
wants to happen.
(Excerpts From a Washington Post Article – 2001)
We Call it Insurance,…(Continued)

• That definition applies to such catastrophic health events

as serious illness or injury. But it “does not” apply to
routine health maintenance.

• Yet the current system for the payment of health care tries
to cover both those needs, for catastrophic insurance and
regular health care, in one system. This effort contains a
built-in contradiction. The insurance system works best
when the fewest people use it (i.e. make claims); the
health care system works best when the most people use it
(i.e. get checkups and tests and vaccinations). The goals
are incompatible!
Two Different Tiers Of HealthCare

• To begin with, we must recognize that we are dealing with two

different tiers of health-care needs and must cover those needs
with two separate tiers of payment.

• One tier is catastrophic illness -- and for that tier, insurance is the

• The second tier comprises health maintenance and routine

medical procedures. For this tier, insurance is not the answer.
Instead, I see other options: One is for people to pay these costs
out of pocket, the way we now pay for many other routine
needs, such as car and home maintenance.
Cost Analysis Major Medical

(Blue Cross, Blue Shield Of Texas)

John and Mary (Ages 51/48) - April 2011 (Houston, TX)
PPO Select Choice (Comprehensive Coverage)
$1,000 Deductible (80/20 Co-insurance)
$970.00 Per Month
Cost Analysis Year by Year
(Comprehensive Coverage - $970 per month)

$970 x 6 months premiums = $5,820

$25 co-pay to the Doctor, would have cost us $5,820 + $25

1 year Of Premiums = $11,640.00

10 years = $116,400 to $150,000 (with yearly rate increases)
20 years = $300,000 to $400,000 (with yearly rate increases)
Catastrophic Coverage

Blue Cross Blue Shield of Texas

Hospitalization Only Insurance Plan

$10,000 Deductible (with Co-Ins)

Monthly payments (For John and Mary)

$325.00 a Month
10 Year Cost Comparison with a $40,000
Hospital Bill

• Option A- Comprehensive Health Insurance

• 10 years Premiums + $1,000 Deductible + $3,000 Co-ins for a

$40,000 Hospital Bill =

$154,000 (Approx.)
Same 10 Year Cost Comparison
Hi-Deductible Plan

• Option B - $10,000 Deductible Plan (Hospitalization)

• 10 years Premiums ($40,000)+ $10,000 Deductible + $3,000

Co-ins and the same $40,000 Hospital Bill =

Section 125 Cafeteria Plans

Here, an employer-based system could be

useful, but not a system that tries to insure
routine health care. Instead, employers and
employees might be asked to put money into
individual “Flexible Savings Accounts“ and/or
“Health Re-imbursement Arrangements” for
AWIS Including Hospital Patient Advocacy

• Option C
AWIS and Catastrophic Insurance
Add a “Section 125” FSA and/or HRA to
offset the deductible for Employees
• Same $40,000 Hospital Bill
• Over a Ten Year Time Frame with premiums
Which would you prefer?
• Option A---- $154,000 Total Cost
• Option B---- $53,000 Total Cost
• Option C---- AWIS & PAC and Option B
Sensible Options

• Use Catastrophic Hi-Deductible Major Insurance

Plans for the Big Medical Bills

• Use AWIS with plans around $119-$219 a month (for

an entire Family) for the small Medical bills,
(Doctor visits, Blood or lab work, Prescription meds,
X-rays, MRI’s, Cat Scans, Dental Services, Eye-Glasses, etc..)
Example: AWIS Plan Cost $119-$219 a month for a Family:
$10,000 Accident, $10,000 Critical Illness, and more

• Catastrophic Insurance and an Awis plan would save you

anywhere from $250 to $700 a month.

• If put aside into a monthly savings account, it could grow from

$100,000 to over $200,000 over a 10 - 20 year time frame.

• Do you want the Insurance company to keep this, or

would you rather keep it in your bank account?

Requirements for a Proposal

1. A company census of all employees, age,

single, married, children, for a group quote
on a Hi-Deductible Major Medical Insurance
Plan within 3-5 business days.
2. An AWIS Plan will be added to help offset the
insurance deductible.
3. (Optional)- Set up a Section 125 plan. This
can be a FSA, HRA or both.
Thank You!

And Welcome To

American Workers Insurance Services!