Dr. Wacasey’s Equation

There needs to be a simple way to compare the benefits of different plans when shopping for health insurance. I mean, I consider myself a healthcare expert, but even I get confused by all the different copays, percentages, and other options offered by health insurers.

I would submit that this is exactly what those companies want.

Look, they’re selling a product, right? They would be fools to pass up opportunities to up-sell customers by labeling highly profitable offerings with marketing terms like “BEST SELLER,” “Find Doctors,” or my favorite – “Platinum” plans.

But the most subtle, yet successful way that these companies sell overpriced, lucrative policies is through fear. Fear of how expensive healthcare must be, because we’ve had “the rising costs of healthcare” drilled into our minds for decades. Fear of racking up exorbitant healthcare bills if you or your family really get sick.

As I’ve pointed out again and again though, healthcare doesn’t have to be expensive.

So forget copays – and all the other smoke and mirrors – when comparing policies for a given year. There are only two terms you need to consider if you want to find the best deal:

  • The annual premium (P), and
  • The Out-of-Pocket maximum on healthcare costs (O)

Both of these variables are set by the insurer and should be easy to find in the policy details. You can add them up using this formula, called The Wacasey Equation:

  • P + O = W

Where W is the What you might have to spend on health insurance and healthcare, for any given year.

But what about the deductible?

Well, I’m sorry to say that, with the creation of out-of-pocket maximum, deductibles are now just marketing gimmicks designed to make insurers more money. Don’t believe me? I can prove it. Let’s re-examine the Wacasey Equation, and add the deductible (D) to see what we get:

  • P + [D + (O – D)] = W

But wait, by simplifying the [D + (O – D)] term, where the D’s cancel each other out, we get:

  • [D + (O – D)] = O

Therefore,

  • P + O = W

This stands to reason because in all health insurance policies the out-of-pocket maximum is either equal to, or in most cases, much more than, the deductible.

Of all the variables thrown at you by the health insurance companies, W is the number to focus on, because it represents the best way to compare the ultimate value of different health insurance plans. For example:

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Surprised to see how little difference there is in WHAT you might spend between the $6,000 and $1,000 deductible policies? Still think that a plan with a $12,700 deductible is so terrible compared to one with $3,000 instead?

And did you notice? The deductible doesn’t matter when it comes to shopping for health insurance. Instead, only two terms – the Premium and the Out of Pocket Maximum – are needed to give an idea of what you might have to spend if you were say, hit by a train in any given year.

Look at it this way: P represents what you will pay if you stay well, and O is the amount you might have to spend if you get really, really sick.

Try it for yourself, and I’ll bet that in most case you’ll find that, when it comes to health insurance, less really is more.

So leave the labels of Platinum, Gold, and Silver to Olympic Medals, or music awards. Get the best deal on your health insurance by using the Wacasey Equation.

Remember, It’s not the COSTS of healthcare that are outrageous…it’s the CHARGES.