Wading into too much health insurance is like wading into quicksand. Pretty soon, you’re in over your head.
Which is better: A high-deductible health insurance plan where you pay more before insurance actually kicks in, or a low-deductible plan with higher premiums? And, how do you choose?
Why do people pay for the “Cadillac” of insurance when they still end up having to pay out of pocket for medical care?
Insurance companies want to scare consumers into paying for premium plans. Why? Because it’s good for business.
Parsing Out Coverage Costs
The average cost of healthcare coverage is increasing for consumers. Rates are rising, and they’re rising fast. Per month. Per year. Per plan. All while covering less. In April, health insurance hit a five-year peak, spiking 10.7 percent over the previous 12 months and making it hard for consumers to keep up with the added expenses.
These days consumers are also increasingly in the dark as to what healthcare actually costs. Vague and discretionary pricing, especially in emergency rooms, which is where the majority of personal injury victims end up, makes it difficult for consumers to know what they’re being charged. This, coupled with constant health insurance updates, high deductibles, uncovered procedures or facilities that are out of network, and government regulations – tax penalties or no tax penalties – and it’s easy to see why it’s difficult for most people to stay up to date on health insurance coverage, let alone to understand what they’re actually getting out if it.
Finding appropriate insurance is a balancing act between deductibles, premiums, and what might happen. Insurance companies are hoping you’re expecting the worst.
Healthcare & Unanticipated Personal Injuries
Personal injuries are unexpected circumstances. No one has a calendar reminder set for an incident that is going to leave them injured, unable to work, and with hundreds of thousands of dollars in expensive medical bills.
Does the 1994 product liability lawsuit between Stella Liebeck and McDonald’s ring a bell (Liebeck v. McDonalds Restaurants)? This was the highly publicized “hot coffee” case. Liebeck, a 79-year-old woman in New Mexico, had no plans of spilling scalding hot coffee on her lap resulting in severe burns, hospitalization, and multiple skin graft surgeries. She was left with mounting medical bills and a corporation trying to dodge paying for any of it, which is why a court case ensued.
Why would anyone pay a pretty penny for health insurance with nominal coverage? Then again, why would anyone overpay to cover medical expenses they’re not expecting and may never need?
Two forms of coverage that are well worth the cost, in my opinion – and are actually part of your auto coverage, not healthcare coverage are Medical Payment Coverage (MedPay) and Uninsured/Underinsured Motorist Coverage (UM/UIM). MedPay covers the cost of injuries to you or your family members, no matter who causes the accident, while UM/UIM covers your medical expenses when you are injured by an uninsured or underinsured driver. Both are great options. (For more information on the two, I recommend giving this article a read: How to choose Medical Payments, Personal Injury Protection & Uninsured Motorists coverage.)
The Business of Insurance
Insurance and healthcare coverage are business models and they’re designed to be profitable. HMO. POS. PPO. EPO. These aren’t ticker symbols on the stock market, they’re healthcare coverage options for consumers, and instead of leaving people with peace of mind and optimal coverage, they’re leaving them broke.
Are these business models working when consumers are unable to afford the care they need? Insurance companies think so, since they’re the ones coming out on top.
Consumers expect health insurance to cover doctor visits, hospital stays, prescription drugs, and preventative care – it’s what they’re paying for after all. The reality is, health insurance is just like any other business model, so insurance must be priced higher than what a company actually ends up paying out. They make their money through underwriting profits (premiums minus payouts and expenses) and the income they collect on premiums. As a business, they have to cover their overhead costs: administrative expenses (the endless paper bills being sent back and forth), executive salaries, advertising (Superbowl ads are expensive) and rent for office space. But the model, for consumers anyways, is simply not working.
How Does Insurance Work for You?
Alternate insurance plans come at different costs. Depending on specific plans, some offer distinct services. Want more services and added flexibility? That will cost you. Is the individual seeking health insurance a smoker or a non-smoker? Family plans cost more than individual plans. Where you live and how old you are can also affect your rates.
It’s frustrating to pay high rates each month for health insurance coverage that doesn’t cover what you need when you actually need it.
Variables, like types of health insurance plans, the tier of the plan, the sub-divided tier of the plan (there are even metal tiers like Bronze, Silver, Gold, or Platinum) and a lower catastrophic tier, and an individual’s medical history, all affect the underlying costs. Platinum may sound like the best, but this coverage may not make sense for you or your family. It all just depends.