Could Health Care Cost-Sharing Be the Answer to Insurance?

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Health insurance has always been a pain, but for many people, it’s become worse. Though some have found affordable heath care plans thanks to the Affordable Care Act, many others have found themselves shelling out even more, or having their insurance plans canceled. Even worse off are the people who fall in the gap where they make too much to get Medicare and too little to afford insurance premiums and copays.

Fortunately, there’s an alternative. And it’s been around for decades.

About a year and a half ago, as Tom Blue was thinking about just how much he was paying for insurance, he stumbled upon the medical cost-sharing movement. He was almost immediately sold, just from the cost-savings perspective:

“I went from spending at least $800 a month with a $12,000 in-network deductible — my out-of-network deductible was something like $30,000 — to paying $449 a month with an annual, unshared amount of $1,500 and no network to keep track of at all,” said Blue. “It’s an enormous cost savings.”

So, what is health care cost-sharing?

Exactly what it sounds like. A group of people share the cost of someone’s health care expenses. People pay an annual coverage sum that’s broken down into a monthly share. That money goes into a pool of tens of thousands or hundreds of thousands of people, and once you reach your annual shared amount, in essence a deductible, the organization steps in and pays additional expenses.

Blue is now the program director for one of these organizations, Liberty Direct. He says that from the customer’s end, it’s not much different from traditional insurance. Members carry cards that they present to their doctors. The cards include contact numbers for doctors to use to submit bills and get paid.

If the doctor’s office doesn’t accept Liberty Direct, the patient pays out of pocket, then submits the bill to Liberty Direct for reimbursement.

There’s an even better perk: no networks.

“[Liberty Direct] does not contemplate the concept of in and out of network,” Blue said. “People don’t have to use a Liberty Direct-affiliated physician if they don’t want to. If they do have one, then Liberty Direct will subsidize the monthly membership fee. It in no way limits the physicians or the facilities that people can use.”

On the administrative side, though, things look radically different from insurance.

“Liberty Direct never actually takes possession of your money,” Blue said. “You put money into what’s called a share box account that’s administered online. You authorize Liberty, on months when you don’t have a medical expense, to move money from your share box to another member’s share box who does have a medical expense. Then, that member has authorized them to pay their doctor bill. It’s a very hands-off process for the member, but works very differently than the administrative side of an insurance company.”

According to Blue, by law, cost-sharing is a 501c3 nonprofit, so Liberty Direct doesn’t spend much on marketing or broker commissions, and has no reason to delay payment to doctors.

That may sound all well and good, but what happens if someone gets cancer or another costly, catastrophic illness?

“The way the Liberty Direct program works, is that your medical expenses are shareable up to $1 million per incident or medical diagnosis with no lifetime limit,” Blue said. “It’s very robust in that sense. That’s unfortunately not an uncommon scenario.”

Though Liberty Direct covers a host of traditionally uncovered treatments, including homeopathic care, it does not cover mental health, contraception, abortions or sex-change operations. Liberty Direct and other health cost-sharing programs are exempted from the Affordable Care Act, meaning you won’t be fined for non-compliance by not having insurance.

Blue says that the concept is nothing new and, in some ways, is a precursor to some of the newest services that have become ingrained in American culture.

“In many ways, I think this is just maybe one of the earliest examples of this sharing economy that we now enjoy with things like Airbnb and Uber. It’s really just another instance of that that happens to have been in existence in the analogue world for decades.”

To find out more about Liberty Direct and the health care cost-sharing movement, check out LibertyDirect.org.

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