Urgent Care by Minda Wilson: Involved in automobile accident you pay upfront first

Involved in automobile accident you pay upfront before your medical insurance does well if the courts agree that is...

Could This Really Be True?

Sarah (her name has been changed) got an EOB, explanation of benefits, saying that Blue Shield of California denied coverage for appointments related to her back injury because the doctor’s notes mentioned that the back injury was a result of a car accident.

Picture this: You are a passenger in a car driven by your friend. A drunk driver plows into you and you are seriously injured. You are taken from the accident site to the ER; treated for a concussion and injuries to your back and neck. It is clear you will need additional and ongoing treatment. You are referred to a neurologist for the head injury, an orthopedist for the back and neck injury, and a physical therapist.

In the old days, if you were the passenger, your insurance would pay for your medical bills, even though the insurance of the person that hit you would ultimately be responsible for paying those bills. Your insurance company would become a party to the lawsuit against the driver responsible and would attempt to recover monies advanced. If the person who hit you was found to be at fault, the insurance company would recover what they advanced. If the court ruled against them, they would recover nothing. Either way, Sarah would not be responsible for coming up with the money for paying bills that would otherwise be covered by her insurance.

The Blue Shield representative explained to Sarah that, in the case of an automobile accident, Blue Shield is no longer willing to put up the money in advance of a settlement. What this means is Sarah is the financially responsible party to the hospital, the doctors, the physical therapist, and any other party that provided medical treatment related to the accident. It also turns out, that since the insurance company is not responsible for these bills until the court says they are, the out of pocket payments you make are not counted towards your deductible.

The question is “Why?”

Blue Shield believes that they are in second position to the drunk driver’s insurance. Blue Shield is only responsible for paying what the primary insured does not pay. Both these statements are true. Based on these beliefs, Blue Shield has decided that they should no longer advance money to those who are injured in automobile accidents unless and until it is clear that Blue Shield is the party responsible for those payments. When they pay and it turns out they are not responsible Blue Shield risks that they won’t be able to recoup their payments.

Seems like a wise business decision.

This seems like just another step in the process to transfer financial risk for one’s healthcare away from insurance companies.

According to the Kaiser foundation, annual premiums for employer-sponsored family health coverage reached $17,545 in 2015, with workers on average paying $4,955 towards the cost of their coverage; individual policies cost more. Since 2015 these costs, have increased, on average, greater than 25%. This means that a company with 50 or more employees is likely to spend over a million dollars annually on health insurance. As a result of risk transfer, more of the costs for healthcare are being born by the employee. In addition to the $5,000 they pay for the premium, individual deductibles are averaging $2500 and family deductibles are $10,000. In California, the all in cost for a policy including deductibles and co-pays exceeds $30,000, if you don’t receive a subsidy. These increases are not economically sustainable.

In any other business, when one abuses one’s customers, they go elsewhere. New reform proposals focus on giving more power to insurance companies. Inter-state operations allows insurance companies to build operations in multiple states, but more overhead is required to manage a larger operation. In addition, except for federal benefits, regulations on policies in each state must still be met. There is no guarantee that cost savings will result. Tax breaks and subsidies may help ease the pain, but they to nothing to curb price increased that are expected to be passed onto the consumer.

There could be some price relief from disruptive product offerings coming from outside the insurance industry. Otherwise, the will continue to experience the abusive cycle of risk transfer, price increases, and declining benefits.

Minda Wilson

Author of Urgent Care