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Ammo against PPACA? Medical discount cards

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With health care reforms taking root, employers increasingly are turning to medical discount cards as a way to boost benefits and employee spirits without hurting their bottom lines.

Conceived in Florida roughly three decades ago, discount cards at first were marketed as a way to help Medicare beneficiaries cover the cost of prescription drugs. The business for a time was one of the dark corners of the benefits world — unregulated and filled with shady operators.

Today, after a big push led by some of the more credible players to clean up their industry, discount medical card cover a range of services including vision, dental, chiropractic care and even 24/7 telemedicine.

Typically, small to mid-size employers pay an average of $16 per month per employee for the cards, on top of the average of $430 in health insurance premiums they pay.

“I was as skeptical as anybody,” said Craig Litman, co-owner and chief financial officer of Texas Recycling in Dallas. “I don’t want to spend money on stuff that people don’t use and doesn’t work.

“But our people tell us (the discount card program) is great. I’ve had a lot of different personal experiences with it, and I just love it. With health care benefits going up, there aren’t a whole lot of benefits that we can offer employees. But this is something that isn’t too costly.”

Texas Recycling has provided medical discount cards as an extra perk to its 65 employees for the past two years. Especially of value, Litman says, is the telemedicine feature, which provides round-the-clock access to doctors who can diagnose and even write  prescriptions for someone suffering from, say, a sinus infection.

Already, Litman says, he has seen a drop in absenteeism due to illness, co-pay savings, and lower health insurance claim tallies, which can reduce rates.

Michael Waldman, president of the employee benefits division of Dallas-based Waldman Bros., an independently owned brokerage, has been in business for more than 20 years but says he only sold his first discount card in October 2008.

“It’s just been gangbusters since then,” he said. “Discount cards have been a door-opener for us. We’ve been able to help clients utilize a variety of these benefits that not only increase value to the employee, but (the discount cards are) also used as a risk-management tool. They help reduce claims under their health benefits plans.”

Waldman estimates that roughly 60 percent of his clients now offer a discount card. He says they view it as a value-add complement to their health insurance plans, many of which include decreased benefits and higher deductibles.

Waldman said that in the past three years, as the economy has plodded along, health care costs continued to rise and the Patient Protection and Affordable  Care Act (PPACA) became a more widely accepted fact of life, more and more clients have familiarized themselves with discount card benefits and want to know what he can offer.

Industry estimates place discount card holders nationwide at about 50 million to 60 million people.

They weren’t always so common, or accepted, and “discount card” not so long ago raised a lot of skepticism.

Joel Ray, CEO of Dallas-based New Benefits, one of the country’s leading providers of discount medical benefits, started offering vision discounts in the late 1980s. His company now offers more than 20 medical benefits, along with 20 non-medical benefits such as roadside assistance and identify-theft protection.

For years, Ray recalled, the industry was largely unregulated, making it difficult for even legitimate companies to gain credibility.

The aim at first was to fill gaps in health insurance plans. Today, as more employers turn to high-deductible plans to save costs, helping workers fill those gaps is once more an urgent issue.

“Fifty or 60 years ago, when health insurance became an employer-based benefit, it was to cover catastrophic events. As with most industries, time goes by and it becomes more competitive. Products were added to the basic package, like vision and dental,” Ray said. “Now, the reverse is happening, and there is a decoupling of major medical insurance, along with double-digit premium increases and taxes involved with Obamacare.”

In the discount world, he said, there are no annual or lifetime maximums, no minimum time needed in the program before it becomes effective and one card covers the family.

And unlike health insurance coverage that is shrinking, Ray said his company continues to add discount services like telemedicine and medical health adviser, which bode well for anticipated trends in health care, particularly amid projections of fewer doctors.

Phil Recht, an attorney for the Consumer Health Alliance, said complaints against the discount card companies picked up when they expanded their offerings to physician and hospital services in the early 2000s.

All of a sudden, Recht says, fly-by-night operators entered the industry in an effort to make a quick buck off the backs of the burgeoning number of uninsured.

It was companies like New Benefits, and others including Chicago-based Coverdell and Frisco, Texas-based Careington, that then banded together to form the Alliance trade association and sought regulatory reform state-by-state.

Today, 34 states have medical discount program laws, and of those, 23 require licenses and registration.

“We’re really pleased that’s happened,” Recht said. “It’s forced bad actors out of the industry, brought enforcement action to the fly-by-nights and allowed the very legitimate companies to continue to offer very straightforward products for a very inexpensive price. The regulations have given people more confidence in the industry and what they are offering.”

PPACA will no doubt affect the industry, in part because vision and dental for adults will not be required insurance.

Those in the industry maintain PPACA will only strengthen their expanding position in the employer market. If current client satisfaction is any indication, Waldman said, the future looks promising.

“Once they implement it and everyone loves it so much, it never goes away,” he said. “We’ve never had anyone terminate the discount program.”

See also:

Questions vex PPACA pediatric vision benefits

PPACA may slow hiring at 41% of small businesses

Specialty drugs: What will sick people do?


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