The purpose of insurance, of any kind, is to spread out the cost of risk; not to cover every undesirable and/or planned incident. Auto insurance covers the costs incurred from having a collision, not oil changes or flat tires. Home-owner's insurance pays for the loss of your residence to fire or other catastrophic events, not to fix peeling paint. Likewise, health insurance's proper role in our lives is to cover catastrophic and unpredictable events, like cancer. It is not intended to cover minor or planned events like doctor's visits, checkups, or prescriptions. If you want to pay a third-party to turn around and pay your doctor for you, of course it's going to be not only more expensive than insurance, but more expensive than just paying for these things yourself.
by Nick Coons
We mistakenly use the terms "health insurance" and "health coverage" interchangeably, but they are very different. Health insurance, in spite of all of the problems mentioned in the previous sections, is still quite affordable for most people. A quick search for health insurance for myself (a 30-year-old male in good health) that covers catastrophic events (anything over $5,000) is $46/month. That's less than cable television.
But people keep wanting "health coverage" and looking at those plans. They want everything, or most everything, covered. With this idea of coverage, of course purchasing it will be like taking out a second mortgage!
And it gets worse. When it's not your money, you have no thoughts and no concern for the cost. If you don't care, then neither does the provider. They will recommend and consume unnecessary resources because you're not paying. Instead, they send the bill to your insurance company, which must then increase their premiums to afford the costs, making your costs go up.
Lastly, there's the claim that insurance companies are raping consumers and making extreme profits. But health insurance companies do not make extreme profits. In fact, their profit margins are razor thin at 2%-4% (11), far lower than many other industries that bring in profits exceeding 15% or even 20%.
The real problem is the misunderstanding between health insurance and health coverage, and expecting that we can pay a monthly fee for some sort of resort-like membership where we can consume without regard for cost. That sort of delusion is never sustainable.
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