Health insurance incentives are against your best interest

“They’re all ratf*ckers anyway.” 

Hearts popped out of the insurance broker’s eyes when I said that.

The broker was giving the usual spiel about which structure might provide the coverage that my client wanted to pay for.

I was two steps ahead and just wanted to cut to the chase. 

“They’re all ratf*ckers anyway. This group is willing to pay a little more to save their team from some of thee bullsh*t. Which plan is going to let them decide whether or not to offer gender-affirming care?”

I think he was relieved that he didn’t have to pretend he was selling a “good” or “ethical” service. 

He wasn't a bad person. He was a good man trying to help people make good decisions in a broken system.

And apparently he likes to say “fuck,” because he repeated the “ratf*ckers” comment a dozen times.

It's a relief when you don't have to lie anymore.

Insurance is confusing and intimidating for most people. But even the people who understand how it works agree:

Insurance is a racket.

Let’s be real: Insurance isn’t there to protect you.

It's is a financial product made to maximize shareholder value.

The employer isn’t the customer, they’re the asset.

You, the insured, aren’t the customer. You’re the liability.

We all know this intuitively, but it’s even more infuriating when you break it down.

Brokers exist to sell policies so that insurance companies can capitalize on vulnerability.

The sales pitch says, "If your misfortune meets certain criteria, we’ll pay for... most of it." ("Most" is a relative term.)

Investors seed a big pool of money to fund claims. The money to pay for your medicine is the same pool of cash that they call an "investment." 

Insurance providers exists to protect that pool.

Insurance’s job is to make sure that the subscription fees (premiums) are greater than the claims they pay out so the pool grows and investors get returns at the end of the year.

Except claims are expensive.

Doctors are a risk because they’re the ones with authority to siphon money out of the pool.

So insurance says, “You don’t really mean X, right? Prove it.”

Then insurance says, “But they won’t die if we say no, right?" 

"Okay, but they won’t definitely die, right? Maybe they can just sleep it off?”

All the while wondering, ‘But if they die quicker, they won’t be a liability on our balance sheet for so long.’

The incentives are all in the wrong place, which is why insurance is regulated to the hilt.

But even the regulations are an asset. Because they can profit from confusion and their own incompetence.

“You need to fill out form FU3K-Y02R53LF first.” 

“It takes 5-7 business days to process and we’re closed next week in observance of Susan B Anthony Day. Why don't you pay out of pocket and risk it?” 

“You filled out Section 3, but didn’t click ‘yes’ at the top. We’re going to need you to start again.”

“Your doctor, who’s booked out 5 months in advance, will need to send in a form for prior approval and spend 2 hours on the phone to ask for permission.”

“Can you fax it to us?”

And then you die.

And voilà. The big pot of money is preserved.

And I know some great brokers. Here are some of my favorites:

Bennie

I am a huge Bennie fan. Their people are actually knowledgeable. They provide the level of service that one of your most expensive fixed monthly costs should. And they give you tech tools that look and feel like they were designed this year, not last century.

AEIS

AEIS are the real deal. If you're looking for an insurance broker that will give it to you straight, use your tools rather than foisting some ancient monstrosity on you, and actually respond on a human timescale (not a geological one), talk to Ronald Bland, GBDS at AEIS.

Kept

And don't forget about COBRA. If you want a COBRA tool that's payroll/HRIS agnostic, will actually give your people guidance in a tough time, and gives you actual value at an affordable price, talk to Kept.

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