Why Health Insurance Feels Useless Even When You Pay for It

Imagine paying $30,000 a year for something you barely use.

That’s how health insurance works for many families in America.

You pay your premiums.

You pay your deductible.

And when you finally need help… you enter a confusing system of approvals, networks, and denied claims.

In this episode, I break down how the health insurance system actually works behind the scenes.

We talk about the difference between fully insured and self-funded plans, why employers struggle with healthcare costs, and how the Affordable Care Act changed the entire insurance landscape.

Most people think they understand their health insurance.

But the truth is… they’re missing the most important parts of the system.

In this episode, you’ll learn:

- Why many families pay thousands before insurance pays anything
- The confusing difference between self-funded and fully insured plans
- How major healthcare laws quietly reshaped the insurance industry

Connect With Talia Berkefeld: taliangmteam@gmail.com

Chapters:
00:01 – The $30,000 Health Insurance Problem
00:21 – Why Health Insurance Feels So Confusing
01:46 – Fully Insured vs Self-Funded Plans
03:06 – Who Actually Pays Your Medical Bills
04:18 – Why Employer Health Plans Keep Getting More Expensive
06:38 – The Role of Insurance Brokers
09:11 – How the Affordable Care Act Changed Insurance
12:23 – The Consolidation of the Healthcare Industry
14:17 – The 10 Essential Benefits Explained
16:12 – Why Insurance Covers the Wrong Things
17:10 – The Truth About High Deductible Plans and HSAs
21:33 – How Hospitals Write Off Medical Bills

Transcript

SPEAKER_02 0:00

Imagine it's January 1st and you're excited and you go out and you get a new Honda cord. You put it in your driveway, but you never actually take it off the driveway because it's expensive to maintain, it's confusing, the year ends, and it's gone. Next year, you buy another Honda Cord. This is exactly what healthcare insurance is in the United States. We're spending about $30,000 for premiums and deductibles for a family of four. You pay all that money before you get the first dollar coverage. But then when all that money is paid, it isn't that the insurance company starts paying all your bills. It's that you are now introduced to a very confusing world. There are co-pays, co-insurance, in-networks, out of networks, and then there's delays and denials. And it's extremely confusing. Nobody knows what to do. But today, we're gonna solve that riddle for you. I've got a great expert with us today. I've got Talia here, who's a licensed insurance agent in 21 states, works with multiple companies, and it's very resourceful. That's what I really like about Talia. She comes up with unique situations, unique solutions for everybody. And this podcast is educational only. It's not medical advice or it does not implore you to purchase goods or services. And you should always take the advice of a physician if you have any medical needs. Talia, thank you so much for being here.

SPEAKER_00 1:22

Well, thanks so much for having me, Dr. O'Leary. It's a real pleasure.

SPEAKER_02 1:26

Absolutely. And could you please tell us a little bit about insurance in terms of it's so confusing, health insurance, the self-insured, what fully insured means, because a lot of people don't know what those are.

SPEAKER_00 1:38

Sure. So fully insured, it basically means your employer pays the insurance company and the carrier takes the risk, right? So that's more like you using the ACA, right? You pay the insurance company, and after you're deductible, they take the risk. Um, but self-funded, uh, the employer is actually paying the employees' claims directly. So your the insurance company is basically just the network, or they're administering the monies for the uh city, state uh employer, whoever it is.

SPEAKER_02 2:14

And this is important because, for instance, if you're employed by a company that has a thousand employees and you have United Health as your insurance, you look at that and you say, okay, I have United Health. But if there's a problem, then you say, okay, you need then to figure out is it fully insured or self-insured? Because if it's fully insured, then the state regulates it. And if it's self-funded, then it's a federal government. And actually, if it's self-funded, you can go to the company because they, like you said, they pay the bills. They could work with you.

SPEAKER_00 2:46

Mm-hmm. So when it's self-funded, your HR benefits coordinator, whoever it is, is going to be the one you visit when you have certain claim issues, um, or something's not being paid, or you need a surgery and you need to figure out what to do with pre-authorizations. That's gonna be your go-to person. Where a fully funded, you just call the insurance company. So it kind of puts the burden back on the insurance company instead of the employer. Um, but what's great about self-funded plans is they're kind of customizable. So you can get a self-funded plan that you don't want to pay for, let's say pregnancy, right? Um even though you're mandated uh by some certain laws, that's just an example I'm using. So then that can reduce the premiums, or you don't have um high-grade pharmaceutical coverage, or uh it doesn't cover chiropractic, things like that, right? Um, so in those instances, if that self-funded group doesn't have those, you're fully out of pocket for it. And the person that would monitor your claims and help and make sure those get paid is the HR department or benefits coordinator.

SPEAKER_02 3:56

And I think a big misconception is that I think the employees don't understand how much the employers are paying in for the health insurance and how much they struggle with it. And you know, so I think they they they really want to do a good job with it, but it's hard for them as well.

SPEAKER_00 4:14

Yes, it's very hard because uh in a self-funded group, right, that pretty much in any group, your the health of the group is going to determine the premiums you pay. Um, so if you have a group that in year two of your two-year rate lock, let's say, you have um a huge claims for all of those two years, then your premiums will go up or your deductibles will.

SPEAKER_02 4:41

And the interesting thing is, you know, in talking to employers, even if you're fully insured and you say, Well, the insurance company's really taking the risk, they actually push it back on you in a sneaky way because when it's time to re-up, they're gonna say, Well, you cost us a lot of money, and they're gonna raise those rates.

SPEAKER_00 5:01

Yeah, it's it's a that's so right, right? Because um a lot of people don't think of insurance as risk, right? You think, okay, well, they need to pay for this, they need to pay for that, but really it's how risky are you or the group. So they take account into claims that were paid out uh last year, the health, the overall health of the group, and what employees don't understand is that um not just because you have group coverage doesn't mean everything is covered. And what is covered exactly, like what is coverage if I have a deductible. So I do think um there's a lot of misconceptions, and there's not enough people out there um that are available to the employers because as a broker you get kind of locked out. Um they think that you just want to make sales. So I do think that there's a lot of HR representatives that consider themselves expertise's experts, excuse me, in um insurance, but they're not. They're just a figurehead, somebody in between everything. Um, unless you have a licensed broker on hand uh that can offer you advice or clarity or even help with those claims, you're kind of shooting uh in the dark a little bit, in my opinion.

SPEAKER_02 6:16

So really it sounds like a a good insurance broker like yourself is really a great source of information for HR, somebody that they can go to and say, hey, you know, we're we're struggling, we're not sure how to work this policy, not sure how to get the best benefits for our employees. So it sounds like you're a great resource for them.

SPEAKER_00 6:37

Well, thanks. And I do think a lot of brokers get um, when you work for some of these bigger uh houses or brokerage firms, you're locked into whatever products that they have. So even if there was a better alternative for your employer and you know about it, you can't offer it to them because it's outside of the products you're able to offer. So being an independent broker, you take a lot of risk, you know, because you're nobody. So I do think that having a trusted person to speak to who knows about it, who's passionate about it is key. You know, I think that's where a lot of HR departments go wrong. They don't really sit down and talk about what it all means, they just look at the numbers.

SPEAKER_02 7:21

Absolutely. No, I think that's great. And I think for the fully insured, you can always call the state health commissioner if you're having a problem, it's not getting resolved by the insurance companies because you know, as a patient, it's very frustrating for all of us when we call the insurance companies. They're not the most helpful people, usually. You know, so it's nice you can do that.

SPEAKER_00 7:43

Yeah, I do think that it's so funny that they're when you're on in the inside of insurance, right? You you know all the stories. Like they don't want to pay the claims, like insurance is a business. They they're going to fight you tooth and nail to pay that claim if it's in a gray area. And they're always gonna side on the side of the insurance company because that's what they do. They're in they're in a business, right? It's not um a charity. So I do think looking at the benefits you pay for and the what you get out of it is always important. And um, I'm I'm a broker that sometimes advocates for people like if you're relatively healthy, like go without. It's not pay for your doctor's visits, get an accident plan. There's so many different ways to skin a cat, so to speak, in in the insurance world, everyone just locks into these um major medical policies that a lot of times people aren't using. Like, why are you paying for pregnancy if you're a 50-year-old man?

SPEAKER_02 8:49

Right. And could you explain how the ACA changed things, the Affordable Care Act or Obamacare, as it's commonly known? How did that change the health insurance world?

SPEAKER_00 8:59

How much time do we have again?

SPEAKER_02 9:01

As much as we need.

SPEAKER_00 9:43

So you had a good few-year period there where people were paying fines or going and exiting to the ACA. So then they were able to conglomerate different hospitals, different health units. Um, so now your insurance companies determine the prices and you pay them, if that makes any sense. They determine the price uh for everything everything. There's no real hand of the market involved right now. It's all just preset prices. And if you don't like it, um, don't use don't use your insurance. It it's astronomical the amount you can save if you cash pay, or you you have some sort of indemnity that will give you a fixed benefit uh for that play in. So it changed it in a way that it made everything less affordable, like everything. The labs, prescription drugs, doctors' visits, hospitalization, it made everything just more expensive. And it left the middle class really uh burdened because if you are unhealthy in America, your max out of pocket is a lot of times $10,000. If you're having a hard time paying your premiums, where the heck are you gonna come up with that $10,000? So then the solution is to take more from my paycheck to put into a savings account that I have all these rules for. So it's just it is a nightmare. It is like navigating a really long maze, and it changed it fundamentally, I think. And it just made people less trusting of this of doctors and hospitals, and it just stuffed the system full of people who are unnecessary to the system to work. You really only need the doctor and a nurse. I don't need, you know, 50 HR reps for the business or 70 administrators making $80,000 a year. That's where all the healthcare costs are, in in my opinion.

SPEAKER_02 11:44

No, and those are great points.

SPEAKER_00 11:48

Um is what is what really did it. Because now only five, let's say five companies own eighty-nine percent of the system. It's just it's so insane. It's really crazy.

SPEAKER_02 12:01

It did really consolidate the system. And I was reading that there's there's seven large healthcare companies, insurance companies that control all the market, essentially. And that includes both government and private, you know, commercial, so all those. And in 2024, they had $1.7 trillion in revenue. That was up $175 billion from the year before, so from 25 to 24. So 10% increase. But here's the kicker: they covered 10 million less people. So this is what they do. You know, they're a whole, like you said, they have to, when they're publicly traded, they're on Wall Street. The only way your stock price goes up is if your earnings go up. And the only way you can get earnings up is by charge more and give less. There's no other way. So what we get every year is we get charge more, we get less service. And people are frustrated and they said, wait a minute, I thought this was supposed to be affordable. It's in the name. And one thing I will tell everybody listening whatever is in the name of a bill, it's always the opposite. If it's Inflation Reduction Act, it's going to increase inflation. If it's affordable care, it's going to increase it's just the way it is, unfortunately. And and you're right that it really consolidated the industry and encouraged it. And all of a sudden, now you have the insurance companies own the pharmacy benefit managers who are middlemen in the pharmacy business, and they own pharmacies, they own physicians. And the ironic thing is there's a recent hearing in Congress, and all of these politicians were bemoaning the vertical integration that they caused with the passage of Obamacare. I'm like, you're the reason this happened. And you know, that that's why it happened, really. And but the other thing, could you talk about the 10 essential benefits and how that plays in the under Obamacare and how that affects the market?

SPEAKER_00 13:56

Well, sure. Um, the 10 essential benefits are essentially that it has to um in there cover, right? So we are using coverage as it has to offer something in network, right? And it has to offer you some sort of discount or benefit towards it. So it's not that it's essential that you absolutely need it, right? Like they probably should cover, like, I don't know, a holistic doctor for everybody. So you know, but no, it is ER, hospitalizations, maternity, uh, prescription drugs, preventative pediatrics have to be covered, mental health, right? So if you're a person who doesn't have depression, don't deal with substance abuse issues, you you are relatively strong-minded. Why are you paying for something you're never, ever, ever going to use, which is inpatient treatment for substance abuse? Because a lot of times it's not gonna cover um outpatient stuff under uh that will be covered under your doctor's visits. And other it's just the laws and the the way they write these policies are so insane when you get into the weeds with them that um some of these things are not essential. There's no reason why a 62-year-old man needs to pay for maternity. There's he doesn't need that in his plan. What he needs is end of like Alzheimer's care, things like that, you know, specialty stuff.

SPEAKER_02 15:23

No, that makes lots of sense. And it's different than all the other insurance we buy, you know, for instance, auto insurance, home insurance. You can choose options. You you know, you can choose your deductibles, you can choose what kind of coverage you want, replacement cover. You have lots of options, which keeps it more affordable, unless you live in Florida. But other, you know, it does make it a lot more affordable, and it is a challenge for health insurance. And I think the other thing that happened, and this happened before the Affordable Care Act happened really in 1973 with the HMO Act, is yeah, insurance used to cover major medical things, things that would you want to transfer risk with insurance. So you want to transfer risk for things that would bankrupt you, major hospitalization, something that would cost $100,000. But now all of a sudden they're called they're covering all the medical services. So we're transferring risk for a $6 prescription. That doesn't make sense because you're gonna pay lots more than that six dollars. And transferring risk for a doctor's office, which cost the same if you went out with your wife for a nice meal at a good restaurant. So all of a sudden, we're transferring risk for things that make no sense, but you're forced into that. And that's right, and the government forced us into this, you know, and this is what happens. And then they sit there and say, Boy, you know, what's going on with that? And could you tell us about how the high deductible health plans work and the HSAs?

SPEAKER_00 16:49

Oh, um we we were talking about this the other day. HDHP. Um, you it's uh it means like high deductible um health policy, but I always call it high deductible or high premium because there's no difference.

SPEAKER_01 17:04

That's true.

SPEAKER_00 17:06

And then the only people it benefits really are your C-suite, right? Because they can pay that premium and then take $10,000, $5,000, whatever they want, and deposit it in that savings account tax-free. So everyday people, a health savings account is it does not benefit, and you have to pair it with a high deductible um health plan. You can't get uh HSA with you know a no-deductible health plan. So I would have to show if I wanted to go to my bank and open one or someone contacts me, I have to show proof that they have a high deductible plan, and I have to show proof at the beginning of the year and the end of the year. Um, so for me, I feel like unless you're you know very well off and you can afford it without um taking it from your family's resources for the month, then you're just putting it into account that you may one day use, you know. It's great for thinking of retirement, right? Or because Medicare is not the greatest now, anyways. There's a lot of stuff that's not covered for our seniors, which is insane. It should operate more like Medicaid, Medicare, and have everything covered for the elderly instead of them having to pay, you know, $120 a month or whatever for correct access. But I do think the HSAs for me, if I sit in front of a family and they're like, um I know that their health insurance premium went up $200 a month, and I don't really have a good conversation with them about should they do they need the HSA. I'm I'm not I'm not doing my job because I'm supposed to give you financial advice regarding your health. And if you're having a hard time making your premium, which is the case with most people, you know, you're talking about $1,300 a month for a family in Florida on what a $60,000 salary? That's a that's a lot of money out of your pocket. It is so it's stupid. I I just feel like you can use that money now. It worst comes to worst, you can always get on the ACA, you can you can apply for assistance. There are so many tips and tricks with high bills um that people just aren't a prevy to because no one's told them. So I just for me, HSA, it should be safe for whether when you're in your 40s, if you're making good money, and then you can say, well, I can use this if I need um Alzheimer's care or dementia care or cancer really runs in my family. But then you there's just so many other alternatives that I would choose before an HSA personally, and I do think the other thing is the limits are fairly low for an individual.

SPEAKER_02 19:52

I think it's 4500 this this year in that range, you know, for an individual. And I've seen some great things on social media, and I think the best thing that I saw about HSAs is they should be like an IRA. You should be able to open them separate from health insurance, so not say it has to be a high deductible health plan. And I would say just and I don't like the government makes things complicated. I would say let's make IRAs and HSAs the same. You could put $10,000 a year in it, make it easy. And then if you could put $10,000 a year, all of a sudden, you know, when you start to work, you could put that away and then really invest that. And over time, you'd have lots of money available if you did have an Alzheimer's, you needed long-term care. You essentially you'd be running your own insurance policy, is what you would be doing. Yeah. So that would be really cool. That would be very powerful. And unfortunately, you know, those are the things that they don't do. And I I think that there's too much complexity, unfortunately, with all these plans. They need to make them very simple so people can use them, make them powerful for them. And I think that's a difficulty with that. But the other one is out there, which is part of the Obamacare, is the 501R, that the hospitals that the uh nonprofit hospitals have to offer financial assistance. And can you speak about that a little bit?

SPEAKER_00 21:20

Um no, I to be honest with you, I think that the nonprofit hospitals like your Baptist hospitals here, St. Joseph in Tampa does a really good job, they'll offer care. I mean, you can't get turned away turned away from the hospital, right? That you just can't.

SPEAKER_02 21:35

Right.

SPEAKER_00 21:35

So if you have a high bill, it they can't really take your house anymore. What what they can do is is harass you and put a lien and all kinds of stuff, right? But if you call these hospitals, a lot of those charity hospitals, and you say, Hey, I have $500 towards this bill, they will apply that $500 and write off. Rest. You just have to have some kind of good faith conversation. And to be honest with you, that's with a lot of hospitals. I mean, I have a customer who um it was going to cost them $15,000 for treatment a month at a local hospital, and it's not on the five that those kinds of plans. So I called down there, um, and based on her income, which she is a mother, she has a family, there's five of them, and um their income is a hundred thousand dollars. They wrote off the entire thing and they called it continuity of care.

SPEAKER_02 22:35

That's great.

SPEAKER_00 22:35

And I think if you communicate with people some of these systems, they want to deliver good health care, sure, right? So if you catch a good person or call your broker who's a shark, um you can negotiate any everything's negotiable. So the the fact that people think that health care operates outside of that system is has always been insane to me.

SPEAKER_02 23:04

No, you're no, that's a great point. And I think the first part is when you go in the hospital, you know, don't sign the patient responsibility form as written because it says you're responsible for all bills, whatever bill they will give you. You know, so you want to put down there all reasonable bills, you know, or you know, something to that effect. So then right away you're setting up a negotiation. And I read one thing which is fascinating. When hospitals sell their medical debt, it's bought at 1%. So one cent on the dollar. So there is lots of room to negotiate. Yeah, and just like you said. So I mean, you know, and you you just don't want to agree to something. You don't want to agree to whatever deal they're gonna offer you first, and just say, you know what, we need to look at this. And you know, you need to get some comparisons, what what's a reasonable, and there's nice benchmarks out there. There's essentially blue books for hospital costs per the bill. And I would say, you know, get an itemized bill, make sure they give you an itemized bill, and there's great services out there that will break that down for you and say in your zip code, what's the average and what does Medicare pay? And I think that's important to say, hey, you know what? And work like you said, you know, work with them and say, you know, I want to pay you what I can afford, but I need to work with you because I can't pay you what you're charging.

SPEAKER_00 24:27

And because it's not, um you're not you're usually not supposed to charge over three times the Medicare schedule rate for anything, right? You're there's certain they're never adhered to or followed through on, but you're really not supposed to be doing that and then be able to accept Medicare. That so if you go to a hospital that accepts Medicare, you're not supposed to be charging more than three times what you would charge a Medicare patient, right? So a lot of doctors' offices, surgery facilities, they like kind of know this rule, but nobody else really does. So when you call up there and you're like, hey, um, this is like five times the Medicare scheduled rate. And um, I should, I don't want to have to call Medicare and let them know you're doing that to us kind of customers. That might look bad on you, you know, a little encouragement, a little encouragement there, but they usually are like, you know what? You're right. This must have been a billing era. It must have been absolutely so if you call and talk to people, I think everyone is always discouraged from doing that for themselves and advocating because it's a pain in the butt to call your doctor's office. And a lot of times they don't really the people that answer the phone don't really know anything about anything. But if you speak to the billing manager, you can usually get stopped and negotiated down. Same thing goes for hospitals. Like the they have programs where you offer your income because they're subsidized from the federal government. So they're getting paid no matter what, they don't care who pays them, right? So I think knowing these kinds of tricks, um, or calling, sending me an email or a broker, whatever. Hey, what do you think about this? Um can really open your eyes. I I save some clients thousands of dollars. I've had people get checks in the mail, you know, from heart attacks, strokes. It's really rewarding to kind of stick it to the system.

SPEAKER_02 26:31

No, absolutely. Absolutely.

SPEAKER_00 26:34

Like, wow, helping if I got the right plan, it really does actually work when I need it. And I'm not stuck with, you know, $15,000, $20,000 worth of bills. Because on insurances, you'll have a stop loss, but it depends on you can go to a hospital and the hospital will be a network, but the surgeon and the anesthesiologist aren't.

SPEAKER_02 26:54

Absolutely. No, and that that's really common. And I would say for that 501 hour plan, if you're less than two, if your income is less than 200% of the federal policy uh poverty limit, and you can just do that by zip code, you can look that up. And if you go to a nonprofit hospital, usually they're gonna write it off, but they may not tell you that. You have to ask them about that. And if they are not right in between two, absolutely, yes, in between two and 400% of the federal poverty level, they're gonna usually give you significant discounts. And again, they're not gonna tell you that necessarily, they're supposed to make it obvious to you, but that can just be a sign in the ER that you don't see. So it's something worth you know knowing if you hit those limits. If you do, have a very nice conversation with them. And, you know, if you ask them about it, they'll tell you. And usually that's gonna help you out quite a bit. So it's really all about educating yourself. What I'm gonna do right now is I'm gonna wind this up and we're gonna have a part two. So I'm gonna have everybody come on back for that part and we're gonna talk about our solutions. And I really thank all my viewers for listening, making it this far. Thank you. Please like and follow for more. Please leave any comments, and we'll be happy to answer any questions that you have. Thank you so much.