Recently I have experienced some clients looking hard for that extra percentage off on their health insurance. I know how they feel.  I want to know how a financial planner can charge 1% and more for financial advice that costs me losses in my investment portfolio. Their conversation normally contains phrases like risk tolerance and keeping up with inflation. I totally understand the angst. The difference between managing investments and buying health insurance is pretty big.  When I help a client I get involved with a lot of unknown hazards. What if the client gets cancer? What if the client gets pregnant? What doctor do they want to see?  That is only the beginning of my service.  Although I am paid by the insurance company, I need my client to pick me as their agent/broker. If they want to change brokers they can do that with a simple letter.  Group insurance is particularly tenuous. Some bokers garner business by asking for broker of record letters. They don’t enroll anyone, they don’t propose any plans, they don’t save the client any money,  they just get a letter signed.  Most reputable brokers consider that unethical.  I want to remind anyone that if a broker asks for a letter like that and has done nothing to earn the business, should you trust them?

Another way brokers lose business is through association plans. Typically one broker negotiates a deeper discount for an industry group and is able to offer health insurance at a discount of about 1%. The insurance company asks for the exclusive offering to all association membrs. The client doesn’t really know what sort of customer care they will get down the road, they just want to save money.  Eventually those plans do cycle up in cost and the client needs to act on their own behalf for quotes, customer service and enrollment assistance.  Association plans offer one insurance carrier solution.  The client is on their own in making sure it is competitive.  Typically it works out just okay.  I recently asked a client why they stayed with my agency in the face of this choice. They told me that my service was worth it.  That made my day, week and year in an emotional  paycheck.

We are now facing a challenge that will cause many brokers to leave the business. Who can blame them? No money is made when advice is given and no contract is written. If the consumer is given the choice of picking a richer plan or a government option at a greater savings, they will.  That initial savings could be well over 15%.  I think this will ultimately happen for many. The best doctors will eventually take private insurance  plans if they stay in the business.  The cutting edge medicine and services will be offered privately. The average person will end up getting just average care. Unfortunately when your life depends on that newest innovation and pharmacy, it will not be offered to those who have a well priced government option. It will be quiet and unfair. Unfair access:  An expensive RA pharmacy  is NOT available to Ruematoid Arthritis patients in Japan. Since Japan’s government subsidizes  pharmacy it is not allowed in the country. Those who can afford the injections come to the US for their treatments.  This was told to me by a client who lived in Japan. You will not see that headline.

My advice to those who want the best for themselves and their family: Look at your budget. Realize that your life and health are number one priorities and set aside the money that will allow you to purchase the private option.

This entry was posted on Saturday, November 28th, 2009 at 11:51 am and is filed under General Interest. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.