In February, I discussed a cross border insurance plan that covers doctors visits, but not catastrophic medical issues. Now the No Insurance Club (NIC) offers similar coverage in the U.S. According to the firm’s press release, “patients receive up to 12 office visits per year that also include immunizations, $4 or less in-office prescriptions, and additional services including blood tests” with no deductibles and no co-pays. The site claims that there is no premium but the one-time “membership fee” of $480/year is in essence a premium.
Healthcare Economist’s Take
I am not sure why these plans would be popular. Since NIC does not cover catastrophic medical care, the enrollees do not receive the main benefit of insurance–protecting individuals against high cost, low probability events. Consumers may like these basic medical plans since they are in essence forced savings; individual must pay the annual fee and after that do not have to worry about paying for future’s doctor’s visits.
It is also possible that NIC negotiated lower rates with doctors. Instead of significant administrative costs inherent in the insurance claims systems, doctors may take a lower fee to receive a “retainer” from NIC. Thus, the plan may provide a significant cost advantages for the uninsured over just paying for doctors visits yourself. A final question is whether or not these doctors are of high quality.
Regardless of the merits of this type of insurance, it is nice to see new products emerging to meet consumers needs.
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In my mind, these plans do not make sense as a health insurance alternative. As you said, they do not protect against rare, catastrophic, and financially debilitating medical problems. Unless a patient plans on taking on all the financial responsibility (outside of routine checkups) inherent in the management of inevitable future medical problems, NIC (AKA ‘concierge medicine’, ‘direct care’) plans need some sort of supplemental coverage.
Sure, they cater to the price-sensitive health care consumer, but they still perpetuate the problem of adverse selection. I’m willing to bet that the majority of people utilizing NIC-like plans would try to jump onto a traditional health insurance plan if they were diagnosed with a chronic illness in order to cover their health care costs (adverse selection at its best…).
Yes, as runaway costs threaten to suffocate the American health care system, it is important to experiment with alternative (and cost-effective) methods for delivering care. However, NIC plans, when used as an alternative to health insurance, do not seem to be a viable alternative.
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Love your Blog! I would just like to put my 2 cents in about the healthcare situation. We have 4 kids, my husband works in the transportation field so he is away from home alot and for the longest time we depended on traditional health insurance which ended up putting us in a really bad situation. We were paying over $300/month then had about $20,000 worth of coinsurance and deductibles to meet each year before the insurance company would pay even 80%. That was when I got introduced to Consumer Driven Healthcare. This put us back in control and made it so we were not paying nearly so much out of pocket. No matter what President Obama puts into play this is the way my family is going. We are stress free and have more money in our pocket. Just my 2 cents on the issue.
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