Lacking health insurance isn't just a side-effect of being out of work or impoverished. Millions of Americans who hold full-time jobs are uninsured, and out-of-pocket costs have grown so large that a growing number of workers decline available coverage from their firms.
In California, for instance, 43% of residents who hold moderately paying full-time jobs lack health insurance, according to the Health Insurance Policy Program, Los Angeles.
With the federal government having failed so far to adequately address the problem of the uninsured, the private sector is slowly beginning to pick up the slack, with the core concept borrowed from the mega-retailers.
A variety of companies that have cropped up in the past three years are calling their effort a "price club" for healthcare. Styled after the Price/Costco wholesaler, these companies sell membership cards that entitle individuals who buy them to discounts of 20% or more from healthcare providers ranging from physicians to acupuncturists.
For employer payers, the concept comes with little risk, because the premiums are paid entirely by the employee. The company appears to be offering an alternative to costly insurance.
The idea is to allow people with jobs but no healthcare benefits to have access to affordable healthcare. Those offering the service tap provider discounts, a little-known option. Even if providers reduce their fees 30% or 40%, they typically get more than what they would have received from a discount-minded HMO or Medicare.
Although few statistics have been gathered about these so-called phantom PPOs, healthcare experts agree they're getting increasing attention from a jaded patient population.
"They're proliferating but in a very niche, targeted group, often for specific services that Medicare or workers' compensation won't pay for," says Richard Cowart, chairman of the healthcare law practice at the Jackson, Miss.-based firm Baker, Donelson, Bearman and Caldwell.
"There's a lot more consumer awareness and direct marketing in healthcare, so this is the kind of thing that can build its own audience," says John Tiscornia, Seattle-based Pacific region healthcare director for the accounting and consulting firm Arthur Andersen.
But there are many obstacles to overcome. Consumers often confuse membership cards with genuine healthcare insurance, according to some operators. And there are no guidelines for patient referrals or follow-up care.
Steve Richter, Los Angeles-based healthcare practice leader for the Watson Wyatt Worldwide consulting firm, fears that discount cardholders might not receive proper preventive care.
Few if any of these firms have reached that level of sophistication, and most remain regional operators. No formal statistics have been compiled on this industry, although healthcare experts estimate there are 20 to 25 scattered throughout the country.
Some of the clubs focus on basic medical services, while others provide alternative-care benefits, such as acupuncture, massage therapy or chiropractic services, which are not covered by most health plans.
Only a handful offer the full gamut of services. Grandview, Mo.-based HealthCore Medical Solutions is one of the few discount card firms with a national network of participating providers, claiming about 300,000 medical and 150,000 ancillary providers, along with discounted mail-order prescriptions. Members pay $89 a year for discounted services from either medical or ancillary providers. For $139 a year, they can access either type of provider.
Late last year, the company inked a pact with Kenco Insurance Agency, the benefits manager for the KFC and Taco Bell restaurant chains, to provide membership to their combined 200,000 employees. For a weekly payroll deduction of $2, workers can get provider discounts ranging from 5% to 60%, according to HealthCore spokeswoman Sharon Polk.
Polk said HealthCore's product is aimed at three markets: people without health insurance, those who have access to coverage from their employer but can't afford it for their family members, and those with basic benefits who lack eye-care and other ancillary coverage.
Daly City, Calif.-based Edward Price Co., which specializes in managing the benefits disbursed by pension plans, launched the Bodyguard Card in February. It focuses purely on ancillary benefits, such as prescriptions, hearing aids, podiatry and chiropractic, which are offered through a nationwide network of 75,000 providers. The annual fee is $69 for individuals, $79 for a couple and $89 for a three-member family. Networkwide discounts average about 20%.
Edward Price President Cliff Price says the card was introduced to ease access to additional benefits for the retiree population it manages, but a wider audience was quickly found.
Optimistic as he is about Bodyguard's potential growth, Price is also wary about its largest potential obstacle: confusion. "It's very difficult to market because it's hard to differentiate from insurance," he says.