Medical cost-sharing is a crowdfunded model of peer-to-peer sharing of medical costs in a membership-based model. It’s being used by many as an alternative to mainstream health insurance.
A few years ago, health insurance was mandatory, which is the same thing as a tax disguised as a government-sponsored product.
Some know medical cost-sharing plans as health ministries. The concept is the same though the ethos differs.
The Anatomy of Medical Cost-Sharing Plans
1. Membership Costs
As a consumer, I pay $180 per month and have a deductible of $500. I get to see any clinician anywhere in the world.
CrowdHealth touts itself as a healthcare crowdfunding plan and offers a straightforward monthly membership plan based on your age.
If Brian breaks his arm and it costs $5,000, he commits to paying the first $500. The remaining $4,500 will be crowdfunded from the community.www.joincrowdhealth.com
Sedera offers different plans with lower monthly premiums if you’re willing to carry a higher deductible.
Sedera is not insurance. It is a cost-sharing membership and platform that shares large and unexpected medical expenses.www.sedera.com
2. Customer Deductible
The first $500 of any healthcare even is on you. If you go to the urgent care and pay cash for a laceration repair, you’ll pay that first $275 yourself.
If you go into the ER and are admitted for a GI bleed, you are still only liable for the first $500. The rest of the bill is divided among the fellow members.
3. Health Bill Negotiation
The backbone of many of these crowdfunded healthcare memberships relies on negotiating the final bill with the healthcare entity.
If I go into the ER for a URI and get a $5,000 bill, then CrowdHealth will negotiate it down to perhaps $1,500 before submitting it to all members.
4. Dividing the Cost Among Members
It’s not as messy as it seems. I am never expected to pay more than $180 per month. Only $50 of my monthly membership goes towards the business’s overhead, and the other $130 is available for paying someone else’s health bill.
A $250,000 cardiac intervention divided between 2,000 members would cost $125 per person.
5. Patient Selection
Medical cost-sharing, of course, works best when the membership pool is relatively healthy.
That is why many of these health-sharing businesses have a limit as to how much you can weigh or what medical conditions are covered.
Cost-Sharing as a Business Model
I discuss such a business model on Digital Nomad Physicians because it’s relevant to us. Health insurance stopped being an actual insurance product long ago. Healthcare consumers are looking for more viable options.
The cash-based clinic concept is taking off because there is transparency. Many educated consumers understand their healthcare needs and want to contract with the physician directly for their services.
The Future of Medical Healthshare Plans
Such medical healthshare plans will continue to exist unless the government strikes it down or health insurance seizes to be as corrupt.
I expect to see more partnering with clinicians who offer cash services. Read, this is a great place to advertise your cash services.
These will perhaps be more catastrophic health plans for many but as the risk pool grows there might be more affordable health plans available.