By Dr. Henry Kim D.M.D.
December 4, 2011
Your friends that work for big business have dental plans. You hear them talk about it paying for so much of their dental needs: crowns to make their front teeth pretty, and braces for their kids. You are self-employed, or work for a small family-owned business. It’s only natural to want the same great deal your friends have. Then you see a poster on a telephone pole, advertising a great family dental plan. It will cost only $20 a month, but supposedly save you 30, 40 or even 50 percent on the cost of dentistry. Should you bite?
First, it is interesting to note that dental “insurance” (a misnomer if there ever was one) was not invented as a cost-efficient way to make dental care more affordable. It was an animal birthed by labor unions in the late 1950s. They correctly saw that high progressive tax rates of the era would wipe out a lot of any wage increases they negotiated. So instead, they pushed for dental insurance, which let them shield wages from taxes.So corporate dental plans were really a clumsy and inefficient idea that were not well conceived. At least 30%, and sometimes up to 50%, of dental premium dollars is eaten up by claims administration. Not a good deal at all!
Once instituted, dental insurance became a sought-after employee benefit in the non-union sector as well. It offered the same tax-shielding benefits for non-union employees. Unfortunately, no one ever examined the efficiency or wisdom of the convoluted claims administration process employed by dental “insurance” carriers.
It is instructive to think of what “insurance” actually is. We appropriately use insurance to protect us against unpredictable occurrences that are financially catastrophic. Hurricanes, lightning strikes, car accidents, and heart attacks are all very expensive events that are unpredictable. It is hard to save for these possibilities. So we pool funds by buying insurance from large firms who are willing to manage the risk.
Having one’s teeth cleaned twice a year is not unpredictable. In fact, it is totally predictable. Having a root canal once in a while is not financially catastrophic like having a tree fall on your house. In fact, most dental policies have maximum yearly benefits of $1000 to $1500. They preclude catastrophic dental needs anyway!
So corporate dental plans were really a clumsy and inefficient idea that were not well conceived. At least 30%, and sometimes up to 50%, of dental premium dollars is eaten up by claims administration. Not a good deal at all! What makes them SEEM like a good deal is:
- The employer subsidizes the premium.
- In a given year, only 55% of the employees utilize the dental coverage. The employees who utilize the plan are being further subsidized by the employees who do not.
Now, knowing what an inefficient vehicle company dental insurance is, does it make more sense individually? Hardly!
- There is no employer to subsidize the premium.
- There are no fellow employees to not subsidize the plan. Insurers know that if you pay premiums for such a policy totally out of pocket, you will damn well file claims!
Then how can the plans you see advertised on telephone poles, as well as internet banner ads, save you money? In real practice, they can’t. In fact, utilizing dentists involved in such plans usually will cost you quite a bit more.
In this recession, most dentists are running an overhead 70% or greater. Even if they were willing to work for nothing, a 30% cut on fees would be the best they could do. The promise of sky-high discounts on individual dental plans is sheer fiction. If a dentist is able to discount this much, he or she must:
- “Upcode” procedures. For example, a simple extraction will be charged out as a surgical one, at twice the price. THEN, the dentist can afford to discount that higher fee.
- Charge for ancillary things usually included free. When doing crowns, I have seen guys who do the PPO discount plans bill the patient a big chunk for the temporary crown, and an outboard charge for the lab fee. Both are usually included in the price of a crown. In this way, they can offer a “discounted” crown fee that seems like a great deal.
- Overtreat patients. While a single filling at the discounted fee might be a money-loser, if they treatment plan replacement of all fillings in one corner of the mouth (needed or not) , they will turn a profit.
- For services supposedly “free” on the plan, they can ration the service or bait and switch. I have patients who have been told, “You would not want that silver filling that is ‘free’ on your plan. The laboratory porcelain inlay is the standard of care.” (For a cool $1000, this is then supposedly “discounted” to the dental plan participant.
And we have not even talked about the administrative cost built into your premium, which eats up a chunk of benefit dollars.
If not individual dental policies, then what?
It is a struggle for families during this recession to pay for dental expenses. As evidence, many dentists have bankrupted, and many more are under severe financial stress.
Dentistry is the most expensive profession to equip an office. Like medicine, it is very labor intensive. There is NOTHING government can do to reduce the cost, except lay off the stupid and expensive regulation.
What is a family to do? Here are some ideas.
· If your family business allows a FLEX spending plan, pay dental expenses out of that. If not, and you have a Health Savings Account, you may be able to fund dental expenses with that vehicle. Anything beats meeting the 7.5% threshold to deduct expenses on your income tax.
· I often advise families to get cleanings once a year at a local college that trains dental hygienists, and once a year at a regular family dentist. They can take the x-rays at the college cheaper, then forward them to your family dentist
· In most cases, taking kids to a pediatric dentists is unnecessary, and almost always more expensive. All general dentists were trained to treat kids while in dental school, and most do a great job at it.
· Find a general dentist who does most specialty work in house. These are typically older dentists, and ones who have served in the military. Generalist fees are almost always lower than specialists charge.
· Avoid dentists who advertise themselves as “cosmetic” dentists. There is actually no such recognized specialty. All it means is you will pay more.
· See what sort of labor you might be able to barter for dental treatment. I have had patients repair my autos, put a new roof on my garage, pull weeds in my brick sidewalk, and paint my house in exchange for dental treatment. No dentist wants to hear the sad story of “I have no money, but need treatment.” See how you may be useful. You may be surprised.
· Avoid chain clinics like the plague. These tend to be revolving doors for employee dentists, and seldom have out-of-the-ordinary materials and supplies for dentists to provide good service.
· Avoid “metal free” dental practices. Silver amalgams and metal crowns can save you a lot of money over short-lived posterior composite resins and pricey all-porcelain crowns on back teeth.
And finally, strike a better bargain with CASH, and I mean greenbacks. Dentists pay up to 2% on credit card processing costs, and are not likely to discount further. With CASH, you may be able to wrangle a 15% discount.
I hate to say it, but selecting dentists using individual dental plans is in actuality selecting dentists for poor ethics and young professionals with little experience and small patient bases. Your best bet, as with any service, is to seek a person with an honest reputation in dealing with the public. Forget dental plan affiliation. In dentistry, as with other occupations, the best service is usually rendered by an owner who actually works in his or her business. Such people have a vested interest in your long-term care and patronage.
