State to Set Rules on Health Cards
By Daniel Yi
Los Angeles Times
October 11, 2006
California on Tuesday joined a rising number of states imposing regulations on healthcare discount cards, a fast-growing product that has generated debate amid allegations of fraud or exaggerated claims.
The California Department of Managed Healthcare, which oversees health plans in the state, announced Tuesday that it would license the cards.
Discounts are no substitute for health insurance, Department of Managed Healthcare Director Cindy Ehnes said at a news conference in Sacramento. But “for many uninsured Californians, discount healthcare cards have become a growing alternative to traditional healthcare plans,” she said.
“The fundamental question is, ‘What is the discount?’ ” said Beth Capell, a lobbyist for Health Access California, a consumer group. “There is no sticker price in healthcare, so what is the discount from?”
Discount cards are a “new middleman who’s found a way to make money,” said Jack Lewin, chief executive of the California Medical Assn. “Most doctors would be willing to give uninsured people a break anyway.”
http://www.latimes.com/business/la-fi-discount11oct11,1,1206161.story
Comment:
By Don McCanne, MD
One of the most unique characteristics of health care financing in the United States has been our acceptance of a middleman industry that diverts hundreds of billions of dollars from health care to profoundly wasteful administrative services.
Health care discount cards are marketed as an affordable substitute for those who cannot afford health insurance, but they have a medical loss ratio of zero percent since they do not pay for health care. That means that 100 percent of their costs add to the administrative waste of our system.
Since most health care is paid for by public and private insurers, the “retail price” of health care is set by these third party payers. The “rack price” of health care services is rarely paid, though it is the price presented to uninsured patients. The discount card merely reduces rack fees down to the actual retail level.
These card companies are parasites sucking resources out of our health care system. What is astounding is that California and other states want to legitimize them by giving them a seal of approval through state licensing.
Instead they should be eliminating these thieves, which they could do easily by establishing a universal, publicly-administered health insurance program.