How to Get the Best Deal on Health Care

Healthcare has been in the news a lot lately, and that has caused me to reflect on some of my own experiences with healthcare.

I had a brief and largely unsuccessful ‘career’ as an insurance agent. (I allowed my licenses to expire long ago, so you don’t have to run shrieking for the door.)

Why insurance sales? Well, I had worked as a contract programmer for a larger life insurance company for about a year and a half, and during that time, I had completed most of the LOMA courses, and would have qualified for the LOMA Life Master designation if they hadn’t discontinued it a couple of months before I would have been eligible. So I knew a lot about insurance, including the math and actuarial science behind it, the laws governing insurance companies, the principles of operation, and owing to my work on a quoting system that agent could use to help maximize their commissions from a given mix of insurance products, I knew a lot about how agents work. Or so I thought. Any rate, when the contract programming market went soft in 2002, I got my insurance licenses (both P&C and L&H), and tried for a while to make a living that way.

Turns out that knowing how insurance works, and being able to sell it effectively are unrelated skills. In fact, one of my observations during my stint as an agent is that the best-performing agents didn’t really know much about insurance at all; what they knew was sales.

Having actually run some numbers, it was obvious to me that the very best deal available (to a non-politician) in the health insurance business is a combination of a High-Deductable Health Plan (HDHP) and a Health Savings Account (HSA). Very few companies actually offer this combination, probably because it is inexplicably unpopular. I tried many times to explain this to potential clients, and it’s like it was talking to a brick wall. With very few exceptions, everyone wanted health insurance that covered EVERYTHING, including such items as yearly checkups, immunizations, and routine office visits.

I was appalled. This is like trying to buy car insurance that covers oil changes, wiper blades, and tires! It is a guaranteed recipe for paying about four times as much as you really need to for healthcare. You will get a MUCH LOWER overall medical care expense if you get insurance that doesn’t cover anything at all except catastrophic injury or illness that costs more than $5000, and set aside (preferably in an HSA) that $5000 in an emergency expenses account. The insurance premiums will be about 20% to 30% of what full-coverage runs, which will probably save you well over $5000/year. The basic principle at work is that if any time you “insure” against something that is predictable, you aren’t really getting insurance. You are pre-paying for routine care, and your money will be skimmed at least 3 or 4 times before it actually pays for that care. The purpose of insurance is to shield you from the unpredictable — the insurance companies are much better at predicting things than you are, and will gladly charge you for that.

There is yet another really important principle at work here — the fact that insurance companies stand between you and your doctor drives up the cost of all medical care dramatically. Part of this is due to the fact that there are 2 or 3 extra fingers in the pie, and part of this is due to the Faustian bargain that the medical industry has made with the insurance industry. The doctor now receives some arbitrary fee for his/her services, and gets that money from 90 to 120 days later. Meanwhile, the doctor has a business to run and employees to pay, and often ends up doing so on borrowed money. If the arbitrary fee happens to be arbitrarily denied, then the doctor has to either eat it, or go after the patient. So they end up playing the “insurance game”.

Let me illustrate this with a personal anecdote. About 20 years ago, I was shopping around for the best deal on an overnight stay in a sleep clinic. I called ten different sleep clinics (back then they were relatively challenging to find), and got quotes that varied from $4500 to $6500 for what amounts to a stay in a high-tech hotel with a couple of full-time attendants (one for each 4-5 patients), strapped to monitoring equipment that costs maybe $25,000. I was getting really discouraged. But the last one I called gave me a shocking clue: The girl that gave me the the quote asked me why I cared about the expense. “After all, your insurance will pay for it, less a small deductible.”

I replied with the explanation that I did not have health insurance (actually, technically, I did, but it had a $5000 deductible), and that I would be paying cash. To my utter astonishment, she came back with, “Oh, the cash-in-advance price is $1750.” Less than half of the first figure she mentioned.

After I hung up, and gave that a few minutes to sink in, I went back and called all of the other sleep clinics again, this time asking for the cash-in-advance (“I’m paying for this out of my own pocket”) price. The prices quoted were in the range $1100 to $1750, down from $4500 to $6500.

Quite a revelation. That’s the cost of insurance that covers “everything”.

Project 2996, Remembering Michael J. Berkeley

I signed up for project 2996 about a month ago, and was assigned a name of one of the 2,996 people killed in the WTC atrocity. The name was chosen at random.

The name I drew was Michael J. Berkeley.

Michael J. Berkeley was murdered, along with many of his co-workers, on his 37th birthday, while working for Merrill Lynch’s sales and trading section at the World Trade Center.

Michael Berkeley was born on September 11, 1963, in New Rochelle, New York. He was a standout athlete as early as grade school, playing both basketball and football, but his real love was golf, starting at the age of 12, when he started caddying at the Winged Foot Golf Club. His passion for golf never subsided. At the time of his murder, he was a member at Winged Foot Golf Club, Atlantic Golf Club, Muirfield Village Golf Club, and Hudson National Golf Club.

Michael is survived by his wife, Lourdes, and his two sons, Eric, and Jason. His wife founded, and serves as the chairperson of, the Michael J. Berkeley Foundation, a charitable organization that provides scholarships and other assistance to minority youth, helping them to realize their highest potential in the sport of golf, through education, business ventures, or a professional golf career.

What kind of gun should I buy?

About once, sometimes as many as three times, a week, I get a call from someone who has little or no experience with handguns, asking me for advice on what kind of gun to buy. Unfortunately, that question falls into the same category as “What kind of car should I buy?”, and the answer is the same, namely, “I don’t know.”

I drive a small pickup with a 5-speed stick shift. I like it, and it suits my needs pretty well. It gets reasonably good gas mileage, it’s dependable, and on those occasions that I need to haul a moderate-size load of something, it handles it nicely. I even like the fact that standard-transmissions are less likely to be stolen. So, all of you should go out and buy a small pickup just like mine…right? Probably not. Your needs, wants, and tastes might differ from mine, and the type of vehicle that works best for you might be radically different.

For those of you new to shooting, there is about as much variety in handguns as there is in cars. And since people come in all different sizes, shapes, and dispositions, the gun(s) that I like may not suit you at all. But I can give you some general guidelines that will help you shop for your (next) gun.

Most importantly, the gun needs to fit your hand. If you have really short fingers, a Glock 19 (which is a very nice, dependable handgun that I like a lot) might not work for you. If you have really large, meaty hands, you might have trouble getting the right grip on a Bersa Thunder or a Lady Smith.

Second consideration is how well you can shoot the gun. If it has too much recoil, or the trigger is too stiff (or not stiff enough) for you, or the grip isn’t right, then you probably aren’t going to shoot well with it.

Third consideration is how easy and comfortable it is to carry concealed. A Desert Eagle or a Ruger CP100 with a 6-inch barrel might be tough to conceal — or maybe not, if you are a fairly large person who customarily wears baggy clothes.

Next comes stopping power. Typically, the larger the caliber, the more stopping power, but there is more to it than that. For instance, a .380, a .38, a 9mm, and .357 are all really the same caliber, but they vary dramatically in stopping power (and recoil).

But everything is a tradeoff. The hand-cannon you left at home because you can’t comfortably conceal it isn’t going to do you much good, and the “mouse-gun” you have with you is certainly more useful. Likewise, the “mouse-gun” you can shoot accurately is going to be worth more to you than the hand-cannon that hurts your hand every time you fire it, causing you to shoot poorly.

If your primary need for a firearm is to protect your home, then the best choice probably isn’t even a handgun. For most people, the best all-around home-defense firearm is a shotgun.

But back to handguns… Choosing a handgun can be tough, and I was recently at the Bullet Trap (one of the two remaining dedicated gun stores in Plano), and I learned of a program they have that may be the answer. For $150, they will let you shoot 16 different handguns under the supervision of an instructor. $150 is a drop in the bucket, and can give you the knowledge and experience to avoid much more costly mistakes. Oh, and by the way, if you take advantage of that program, please tell them I sent you. They won’t give me anything for that — I just want them to realize that one of their competitors is sending them business, and I get a little kick knowing that it actually irritates them a bit that they are getting that referral from someone who runs a highly-regarded CHL class that costs substantially less than theirs. For a little extra kick, ask them if their CHL course fee includes digital fingerprints (mine does).

If you are not from around Plano, Texas, then you might want to do some phone-shopping to see if you can find a similar deal in your area.

One of these days, when I have 16-20 different handguns to demo, I might compete with them on that, too.

P.S. When you pick out the two or three guns you like best, shop around for the best price. The Bullet Trap has some competition there, too. Two that come to mind are Gun Masters, and Academy Sporting Goods.