Health Discount Plans of California
California regulators are cracking down on health discount plans that are marketing
themselves as health insurance or dental insurance.
The theory is that the discount plan companies negotiate with providers to lower their
price for cash customers in these plans. The problem is that consumers often do not
realize that most providers do not honor health discount cards, including doctors they are
Health discount plans should not to be confused with health insurance plans that happen
to pay poorly. For example, if a plan pays $100 for a surgery that costs $30,000 after the
deductible, it's still a health insurance plan even though it does nothing to prevent a
financial catastrophe from medical expenses. Real health insurance makes payments for
medical services while discount plans helps lower the cash price for those without
In Santa Clara County where unemployment is 11.2% as of December 2009, many
residents are having a hard time regaining access to medical care that was once provided
by Silicon Valley employers. Many of the unemployed may resort to health discount
plans as a way to gain affordable access to medical care. Unfortunately, many residents
have found that the number of providers that take the discount card in the area may be
Not all discount plans. Santa Clara County offers a free prescription to any resident
within the county. They are honored at many pharmacies around Santa Clara Valley and
do result in an average of 22% discount for prescription drugs.
According to the Los Angeles Times, California's Department of Managed Health
announced today that it is cracking down on unlicensed health discount plans marketing
themselves as health insurance, and are considering additional regulations that would
require plans to verify discounts, file reports about member grievances, and clearly state
that a health discount plan is not health insurance.