Health Insurance Articles

Why does health insurance cost so much?

Insurance works best when it's used infrequently. That's why life, automobile and homeowners' insurance are all affordable. Death, thank goodness, only occurs once and we make every effort to avoid it. Auto insurance isn't designed to reimburse us for oil changes, gasoline, car washes or tires and we can't use our homeowners' insurance to pay for light bulbs, lawn maintenance, cleaning people or paint. Shouldn’t health insurance work the same way?

Ordinary health maintenance should not be treated as an event that triggers insurance coverage. Health maintenance should be encouraged, but not financed by an insurance company. Insurance should be limited to unpredictable and expensive medical events that seldom occur - the way that all other types of insurance perform.

Deductibles that are too low, doctor visit copays and first dollar coverage for prescription drugs encourage people to overuse health care services. They also cause monthly insurance premiums to skyrocket to a level completely beyond the value of any benefits received. Insurance companies are in the business to make money, remember? And, as we all agree, they're quite good at it.

Your premiums are designed to exceed the cost of any benefits that are likely to be paid out. You would need to run to the doctor every other week in order to justify the additional cost of having a copay benefit! Realistically, have you every been that sick? Prescription drug copay coverage can account for as much as 25% of the cost of insurance, and over 95% of the population is better off just paying cash at the pharmacy!

In fact, the term "medical insurance" has become a bit of a misnomer. The general definition of an "insurable event" - whether a traffic accident, tornado, heart attack or broken neck - is something that is first, unlikely to happen; second, will occur without warning; third, is not something that the insured person wants to happen; and fourth, would create a severe financial hardship if paid for out-of-pocket. This definition applies to catastrophic health events - serious illness and injuries. It does not apply to routine health maintenance, does it?

Homeowners' insurance covers fires, trees collapsing and destroying roofs and other costly events. Automobile insurance covers major damage and total wrecks. But what passes as health insurance has expanded to include just about everything, including the routine, the predictable, and the easily affordable. And, as you know, there's no such thing as a free lunch.

Most health insurance plans use copays as the method of cost sharing. Copays became a standard part of drug-benefit and doctor-visit coverage during the managed care revolution of the 1990's. However, they are not consistent with any rational health plan design. When something is free or costs very little, there is an overwhelming tendency to consume as much of it as possible, right? That's just out nature. If there is very little cost to see the doctor, why not try to schedule a visit every week? What the heck, why not pop the latest, greatest pill?

Copays are fueling the health insurance crisis in America. The overuse and abuse of coverage is what drives annual double-digit cost increases. In response, insurance companies are forced to either pass on the costs in the form of massive rate increases or to reduce coverage - often in areas that can bring about financial devastation at claim time! So, ironically, the reason that health insurance has become so expensive is because copay medical care is so cheap! Again, no free lunch.

The Solution

Health insurance is needed to protect against large medical expenses. We encourage all of out clients to select high-deductible insurance for true medical emergencies and to "self insure" for doctor visits and prescription drugs. Doctors are often quite willing to offer deep discounts to those who are willing to pay in full by cash or check at the time of the visit because they rid themselves of the time spent coding and filing insurance claims. And most insurance companies offer prescription drug discount programs - free of charge!

This returns health insurance to its original purpose and reduces administrative expenses for small claims. Invariably, even for the least healthy among us, as health insurance premiums drop through the floor, those savings will more than offset any additional out-of-pocket expenses. Makes sense, doesn't it?

For more information please contact us either by phone or email to also learn how to practically help eliminate your high deductible and even have a plan that pays you upon diagnosis of a critical illness to help supplement your income while you are not working!

For a customized quote please call 708-715-3118 or click here.