Freedomain Radio

Can somebody explain to me why I shoiuld pay for healthcare. My problem is basically this: If I have insurance I necessarily pay about $550 a month, In a year I may never have a medical event larger than basic check-ups, a basic check-up would be maybe $150-$300. Now add a dentist visit of the same amount. Multiply that by 6 to include my kids and wife. I get $3600. Now, I'm surely going to pay at least $6600 for my insurance. If I didn't have insurance, for basic 'maintenance' I'd only pay $3600 and I'd be able to pay rent with out sweating. So, what am I actually paying the "extra" three grand for?? Not to mention I can always make payments after each visit so my monthly caost would be way lower and it wouldn't necessarily be a payment that had to be paid every month - if we all go to our doctor in January it might be paid off by June, for example - Thus no payments for the remaining 6 months.

So, why do I pay for insurance??

 I used to sell insurance and the first thing that I would always ask a client was , "how often do you actually go to the doctor?" The thing is, most people have a deductible that is way lower than it should be. If you rarely use more than just your preventive care, which with most insurance companies is covered by your premium and available for use at least once a year, then you have no business with a low deductible. In fact, the money that you save on a yearly basis on monthly premium for most people is usually enough to cover your deductible and co-insurance all the way up to your yearly maximum out of pocket. I have done the math for a bunch of people and shown that the average person could easily save enough to by a brand new Mercedes in less than a decade with the money they save on premiums alone. The only reason to have insurance really is to protect you from the rare but catastrophic occurrences. The kind of incidents that rarely happen but when they do they can destroy you physically and financially. It is always a good idea to at least carry a catastrophic plan. If it is available to you I would highly recommend a huge deductible. It may sound scary but all your basics are probably already covered. It really is the better choice if you rarely go to the doc.

So, what I'm actually paying for is not access to health care in general but, some kind of protection against a possibility? I'm reminded of the post-modern philosopher Chris Rock - "Insurance is for: just in case shit happens. If shit don't happen I should get my money back" Is that too simple of a way of thinking about it?

Code46:

Can somebody explain to me why I shoiuld pay for healthcare. My problem is basically this: If I have insurance I necessarily pay about $550 a month, In a year I may never have a medical event larger than basic check-ups, a basic check-up would be maybe $150-$300. Now add a dentist visit of the same amount. Multiply that by 6 to include my kids and wife. I get $3600. Now, I'm surely going to pay at least $6600 for my insurance. If I didn't have insurance, for basic 'maintenance' I'd only pay $3600 and I'd be able to pay rent with out sweating. So, what am I actually paying the "extra" three grand for?? Not to mention I can always make payments after each visit so my monthly caost would be way lower and it wouldn't necessarily be a payment that had to be paid every month - if we all go to our doctor in January it might be paid off by June, for example - Thus no payments for the remaining 6 months.

So, why do I pay for insurance??

Is the question "Why should I pay for health care?", or "Why do I pay for health care insurance?"

I don't pay for health care insurance (mostly because I can't afford it right now, along with a few other things I'd like to have, but don't), but if I DID have it, the reason would not so much be to cover the stuff I regularly incur like dental visits & check-ups, but for those things I'm NOT expecting to have happen, like broken bones, punctures & lacerations, removal of (kinda) non-vital organs like gall bladder, etc. Stuff like that could cost more than $3k. You might be able to make that money do or earn more for you if it were invested elsewhere, but how liquid would it be? How easily would you be able to access those funds in an emergency? You might use that money to invest in precious metals or some other commodity, at least then it would hold it's value and not be as subject to inflation.

Health care is a heavily regulated area of the economy, too, so if it weren't for that, the cost of health care would likely be lower, you'd have more options and similarly with insurance. Insurance companies are almost universally compelled to tailor their policies toward group needs rather than individual needs because of the benefits certain employers must provide by government mandate.

Code46:

So, what I'm actually paying for is not access to health care in general but, some kind of protection against a possibility? I'm reminded of the post-modern philosopher Chris Rock - "Insurance is for: just in case shit happens. If shit don't happen I should get my money back" Is that too simple of a way of thinking about it?

 If you genuinely believe that nothing major can and will ever happen to you then I guess going without is an option. Personally I would rather have a ten or fifteen thousand dollar deductible and pay a pultry sum for insurance monthly and put away at least a portion of the savings in the bank to cover the deductible and just to acrue interest in general. Then if you need to pay a deductible you are covered. If not then fortunately you havn't paid in nearly as much as you would have alternatively. It's just a way of reducing risk and up front investment. And don't forget you are paying for a service. Nobody (at least not yet) is forcing you to pay for your own coverage.

Okay, I'm starting to feel a little bit better about monthly insurance fees. So, is it the cost of healthcare in general that makes health insurance so expensive or is it something intrinsic to the way health insurance works?

It's the gun held at the head of every consumer and provider of health care that makes the insurance so expensive.  It costs a lot to pay for people to hold guns at other people's heads.

I'd say it's the way healthcare and insurance work but I'm no expert.

Part of the problem is that it's almost always employer-provided in the US.  That means that employers have historically paid most of the cost and consumers are just recently starting to see the costs.  BTW I think this started after (or during?) WWII when employers were forbidden from raising wages to attract employees.  To set themselves apart they offered health insurance as an employee benefit because that's all the regulators allowed them to do.

When you don't pay for something you don't pay much attention to it.  So people don't make good decisions about how to use it.  If you zoom out a little, people make bad lifestyle decisions for the same reason.  If you knew you had to (visibly) pay a greater portion of your healthcare costs would you smoke, overeat, or regularly booze? 

Stolen from here (not that I know who this guy is or agree with anything else they say, I just googled "healthcare if groceries were free" so I could copy/paste):

"He asked the crowd to imagine [Download Audio: "The 'Free' Mindset" - 486kb] "if groceries were covered by your employer; if you had grocery insurance. So then when you go to the grocery store, you know, it's already paid for, so you would insist on caviar and Alaskan salmon... And if you were told, 'No, no, no, you can't have caviar," you'd say, "Oh, yes, I deserve caviar just like everyone else does.' And you would quit asking about the price, because it's already paid for.  And you would buy more than you need, because after all, if you don't use it, well, we'll just throw it away, it's already paid for.  You know what would happen over time?  Literally, within three or four months, supermarkets would quit putting prices on the products because the consumer wouldn't care about the price.  And if I were running the supermarket, I can tell you what I'd do to the price.  I'd raise it quite quickly 'cause, after all, no one cares what the price is.  And the consumption would grow rapidly and we would have in the grocery industry the same situation we have in health care.""

Code46:

Okay, I'm starting to feel a little bit better about monthly insurance fees. So, is it the cost of healthcare in general that makes health insurance so expensive or is it something intrinsic to the way health insurance works?

 It's a combination of the government and consumer's general lack of insurance knowledge.

Automatically the government is going to cause prices to go up because of the state and federal mandates placed on insurers to provide coverage to an ever broadening spectrum of standardly uninsurable clients. In other words, pre-existing conditions = massive loss and expense. Insurance companies are subsidized to this end and as Stef has said a thousand times, when the government subsidizes something it usually just makes things worse.

Then factor in the American medical unions and the effect they have on the abundance and general quality of health care. Any time you artificially create a deficit of anything, food, gas, healthcare, etc, you are going to drive up prices and lower quality since the few who are legaly sanctioned to provide said goods and services are practically guaranteed high paying customers no matter what level of service is provided. Hence, the 20 seconds you get to spend with a doctor during the average visit. This is a bit better in countries without nationalized health care but not by much.

Then there is the relative ignorance of the average insurance consumer. I don't mean this in a negative way, I simply mean that the average person doesn't really know that much about insurance. Almost every time I have told someone to take a higher deductible they looked at me like I had just pulled off my nose and handed it to them. This is something you just don't hear. But the fact is most people, especially those who qualify for individual health insurance, don't go to the doctor regularly. This means that if they have a low premium, 250 to 500 dollars being the average, that they are paying for the coverage of a profoundly sick person. It's over kill and completely unnecessary.

The point that Worger makes above is valid too. Most people are very spoiled by the group coverage they are accustomed to with thier employers. So when they are smacked with the actual cost of the coverage they have been recieving all along, which was excesive to begin with, they are amazed by the price. It happens all the time.