Discount Medical Plan Summary Comments

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Discount Medical PlanSummary Comments

• Seth M. Phelps, Assistant General Counsel
• 4800 Deerwood Campus Parkway,
• DCC1-7 Legal Affairs Department
• Jacksonville, Florida 32246-8273

August 25, 2006
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DMPO Comments

• The DMPO law and regulations adopted by the OIR
  have served an important purpose in regulating a
  market that was previously unregulated and
  subject to abuse.
• The prior DMPO marketplace needed regulation as
  certain market entrants misrepresented their
  offerings and took advantage of some Florida
  residents.
• The regulations have had a positive effect in
  significantly reducing the number of complaints
  received by the OIR.
• Anecdotally, I have observed a significant
  reduction in the number of misleading roadside
  and fax advertisements for DMPOs. No longer do
  we see as many signs advertising Discount medical
  plans with slogans like
• Affordable Health Care PlanPre-existing
  conditions? No problem!No Deductible or
  Co-paysThousands of providers in our PPO
  networkDiscounts up to 60

August 25, 2006
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DMPO Comments

• Despite the need for regulation, DMPOs are an
  important market segment and serve a limited
  purpose in the marketplace.
• Some DMPOs offer concrete benefits to their
  customers and, if purchased by an informed
  public, can benefit select segments of consumers.
  Particularly valuable in my opinion are two
  types of discount medical plans. Those Discount
  Medical Plans where consumers can determine
  upfront their actual cost for services versus the
  monthly cost for the discount plan. In addition,
  discount medical plans, coupled with true
  insurance policies, offer consumers the benefit
  of discounts on services not covered by insurance
  and the peace of mind that they are protected
  from truly catastrophic medical situations.
• However, DMPOs by themselves, are not a
  substitute for and cannot be rightly compared to
  comprehensive insurance coverage.
• In some respects the DMPO marketplace has been
  quicker to provide innovative solutions to
  limited consumer problems than the insurance
  marketplace.

August 25, 2006
4
DMPO Comments

• While additional regulation of the DMPO
  marketplace may be necessary, more education and
  awareness among consumers of the purpose and
  value offered by discount medical plans versus
  traditional insurance should be a key element in
  any analysis of the current state of the market.
  
• Given the push toward consumer directed health
  care (whether DMPOs or insurance) the most
  valuable tool in preventing abuse or fraud in the
  DMPO marketplace is an educated consumer segment
  that truly understands the differences between
  insurance and discount medical plans. Documents
  like the Federal Trade Commissions Consumer
  Alert entitled Medical Discount Plans Theyre
  Not Health Insurance released in October 2005 are
  a positive start in this regard.
• Since Discount Medical Plans are not insurance
  consumers need to understand certain realities.
  Here are two key concerns
• Discount Plans pay no actual benefits toward the
  cost of coverage. Thus, even with the discount,
  the consumer may still face a large bill,
  particularly with hospitalization or surgery.
• Discount Plans are not insurance as such if a
  person becomes sick while covered under such a
  discount plan, this may, in fact, make it
  difficult for the consumer to obtain actual
  insurance when they really need it. (At least in
  the case of individual coverage)
• Finally, additional regulation of this
  marketplace should not serve as a hindrance to
  innovation and specialized discount plans that
  have value to consumers.

August 25, 2006