How Insurance Carrier networks don’t work

Fortunately for Navinsure, we speak in some truths, based on over 20 years expertise advising employers, both large and small, all over the U.S. Though many could look at our model as antagonistic, it is our belief that something must be done far different than the status quo in the U.S. for both individuals and employers, to bring down the cost of healthcare services and related insurance premiums.

Many of us here grew up in our careers at large, insurance carriers. So we know the inside system as well as anyone. The building of insurance networks was simply the first “go” at controlling healthcare costs about 30 years ago, because of the increase in costs of healthcare for the previous 20-30 years. The old-fashioned plans were called indemnity plans. No network, deductible, then a % reimbursement that was shared between the member or consumer and the insurance company. For simplicity, think 80/20%…many times the 20% could go on an on without some of the protections we have today with “caps” or limits. The insurance carrier networks were a change for insurance companies to claim a huge amount of negotiating muscle versus providers and hospitals because of the hundreds of thousands, or millions, of members that purchase their plans. That part in principle should be true, but what has been missing for decades is governance of what providers and hospitals can deem their “cost.” It’s been opaque, and confusing, on purpose and most consumers really didn’t care as they do today, as premiums were high but not higher than their mortgageĀ payments as it is today in 2018. Additionally, with a copayment system, consumers were guarded by the cost of care and had no incentive to even ask.

Today premiums are many times the cost of a mortgageĀ for millions of consumers in the U.S. and huge deductibles and coinsurance %s have replaced lots of copay plans. The insurance industry claims, consumerism is needed, and that these products would create that effect. Again, in principle, we’d agree, though, there were no tools to see costs prior to a service, or compare them as well. With our system, you can see and compare the costs of services (based on a reference-based pricing negotiation using Medicare) as well as the providers who perform them (and also ratings of the physicians based on actual treatment data) and make an informed decision. With traditional insurance carriers, the facilities and providers govern the cost of claim – we see this daily sore to over 1,000-2000% mark-ups on top of what Medicare deems allowable. The last part of the negotiating lever used with providers and facilities is them supplying what they legally must provide yearly to Health & Human Servies (CMS/Medicare/Medicaid) as their “cost” of goods. Using the reference-based programs we harness at Navinsure, the markup on top of the cost is averaged around 13% – hence a provider gets a blend of what they’re calling their costs, alongside the markup of Medicare. It’s both quite fair, effective, transparent, and useful in both creating an affordable environment for consumers, as well as a profitable model for providers.