Part 4: Insurance

“Meet the new boss, same as the old boss”

-          Pete Townsend

Insurance for dentistry doesn’t make sense. Why do you buy insurance? To protect yourself against an unforeseen event that could result in expenses you can’t afford.  Automobile insurance is important because in the event you get into an accident and total your car, you may not be able to buy a new car that you need.

The only insurance that works for dentistry or healthcare in general would be catastrophic coverage.  Catastrophic coverage in medicine insures you against an unforeseen illness that could be very expensive to treat, like a heart attack.

When people try to “insure” themselves against things that are likely to occur it becomes impossible for an insurance company to make a profit when they know eventually they will have to pay out it this scenario.  To make it work from a business perspective the premiums would have to be very high and pay outs would have to be monitored and limited to make sure that the amount of money the company takes in remains higher than what they pay out.

Except for the rarity, people have to have dental treatment eventually, even if only a cleaning or a filling. And regular checkups are important to prevent bigger problems from occurring. But insuring yourself for these services that you will need on a regular basis becomes a conundrum economically. Back to the automobile insurance analogy, let’s say you were concerned about the high cost of tires, so you went to your insurer and said in addition to accident coverage, I want you to pay for new tires every 20,000 miles. Well the insurance company knows at 20,000 miles they will have to pay for new tires, so they would have to charge you at least the same as the cost of the tires to break even, and actually more if they want to make a profit (which they are in business to do). Makes no sense! To make it work basically you would be paying the insurance company to get tires for you and somehow they can make money and you can still get your tires. What usually happens is the middleman (the insurance company) makes money, the consumer (you) get an inferior tire or service and the seller (the tire company or garage) has to cut corners all so the middleman gets paid. For more on this see my previous blog about Dental insurance.

How does insurance raise the cost of dental care? Well, we added a middleman who needs to get paid. So now patients have dental bills and insurance bills. And even if your company is paying for a portion of the premium or for that matter the entire premium, money is being funneled out to the middleman resulting in less for you or the healthcare provider.  MetLife’s gross revenues last year were in excess of $70,000,000,000.00 (70 billion dollars). That’s some middleman!

On the level of the dental practice the costs are driven up by insurance because of the added administration necessary to process and get claims paid. Most offices now have a full time person (insurance coordinator) who spends all their time dealing with the insurance company. This additional salary, as well as the mailing, phone and computer costs is a completely new expense category created by insurance that impacts the fees healthcare providers must charge.  The Center for Information and Technology, a non-profit healthcare research group estimates the cost of just fighting denied claims is as much as 10 billion dollars a year in administrative expenses.