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Lee Schafer: Cost-sharing pools don't solve the real problem in health care

Lee Schafer, Star Tribune (Minneapolis) on

Published in Business News

A short video entitled "How Does Sedera's Medical Cost Sharing Work?" on the website of Sedera Health leaves at least one big question unanswered -- and that's how it actually works.

Sedera is an example of cost-sharing, a still unusual but growing way to finance healthcare. It means other people are going to pay part of a member's medical costs, that seemed clear from its video. And members "typically save 30 to 60 %" compared to other health care payment systems.

Beats me how.

A clearer explanation appeared in text elsewhere on the website for Texas-based Sedera. Sedera members apparently contribute a fixed amount every month to pay someone's bills, then can get some or all of their own medical bills paid.

The thing is, an organization set up to have everybody pay into a pot of money to share equally in the risk of healthcare costs for the group's members looks an awful lot like a traditional insurance company. Turns out, though, it's only an uncanny resemblance. And consumers had better understand the difference.

Here's one marketing claim of a cost-sharing firm called Knew Health: "It's not insurance. It's reassurance."

 

That alone should make people at least a little nervous.

As this line suggests, though, the cost sharing operations may not do a good job of explaining what they are but at least a few of them deserve credit for clearly getting across what they are not.

"There is no pooling of funds as practiced by insurance groups," is how Christian Care Ministry described its Medi-Share service. "Christian Care Ministry and the Medi-Share program are not registered or licensed by any insurance entity, nor are we required to be. We do not collect premiums, make promise of payment, or guarantee that your medical bills will be paid. Sharing of medical bills is completely voluntary."

Just to be clear about this, nobody at big Minnesota health plan companies like Medica or HealthPartners think claims for the people they've taken on as members are obligations they have the option of not paying.

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