Utilizing routine services via your insurance will still be less expensive per use than purhcasing said service on your own as an uninsured. Why? This is due to the insurance company’s negotiating power and acquiring lower rates by volume for such things as medications and routine Dr appts. If you bore the true cost of these things it would be much more for you on your own, setting aside catostrophic events. You are buying access to their negotiated networks of drs, pharmacies, and hospitals. An individual just does not have that same power.
Now, the question of the presence of insurers shielding people from the true cost of health care driving up costs is valid, but probably a whole other thread. For now, most accept health insurance, car insurance, homeowners insurance, etc. as a nessessity of a responsible modern life, even if most think they will never need it (e.g. "I don’t plan to get in sick, be in a car accident, see my house burn down, etc.).
So drugs are only being manufactured in the US because there’s a free market (actually, the government is prohibited from negotiating prices). However, they are willing to sell those drugs to countries that subsidise the drugs. If the US subsidised those drugs with federal money, the manufacturers would either stop manufacturing or move to another country with a free market and healthcare would decline in the entire industrial world as a result (not to mention, the only reason other industrial countries have a better quality of life is because they subsidise American free market drugs).
It’s not a scam to me; I’m one of the people who come out ahead. With the high deductable plan I’m on, after $2200 everything is covered 100%. I cost over $1000 a month on prescription drugs so after February I can get sick all I want.
On top of that in 2012 we had a baby, I spend three days in the hospital which included an EEG and an MRI, and my wife had her gallbladder removed which led to an overnight stay. With our deductable we probably paid less than 10% of what our bill really was. I’m the reason health insurance is around. I say it’s not a scam, it’s a gamble.
(If you feel like you’re being cheated by health insurance don’t worry, I’m getting revenge for you.)
Well, that’s a nice attempt at an analogy, but it doesn’t work because I don’t come with parts that are designed to wear out, and there are no warranties covering any of the others.
This is deceptively simple, incisive and brilliant. It also serves as a good general guideline for which things one should seek to insure and which things one should budget for. Your subsequent posts add to its usefulness. Nicely said.
I think that for equivalence, you’d have to compare those who would buy health insurance the day before starting chemo and those who would buy auto insurance they day before the accident the know they are going to have.
I got two rates from my company. For a plan that basically covers everything (maternity, chemical dependency, mental health included, no lifetime maximum) for a 40 years old non-smoking male is $3600 per year for a $1000 deductable / $2000 out of pocket and $1300 per year for a $15,000 deductable and out-of-pocket. I don’t know what the overhead is for individual plans, but 10% is a nice and round, and a close number to what the number is companywide, so it’ll cost the average person $230 to have the insurance pay for non-catastrophic expenses rather than pay them themselves. (10% of the $2300 difference in premiums). Is non-catastrophic coverage a scam then? I don’t know. Some people can’t afford the $15000 loss. Some people will pay the $2300 even if they could afford a catastrophic loss just because they prefer the sure thing of at most $5600 in expensese rather than $16,300. Some small, for-profit HMOs can have up to 30% overhead, maybe that changes things.
Don’t come with parts that are designed to wear out? I’m guessing you aren’t as old as I am.
Which is the point, actually. Most people own their houses for decades and never file a fire insurance claim. It is very rare that you will never file a major health insurance claim. Only happens if you manage to die, quickly, at a fairly young age. Think how much we’d be paying in premiums if the insurance companies had to pay for the over-65 crowd too.
Which is what the mandate is all about. And you don’t have to buy it before chemo, you just start when you are old enough that the odds you are going to need it are good.
Your health insurance doesn’t cover aspirin, allergy medicine, and tissues either.
If not replacing the light bulb vastly increased the chance that your house will burn down, the insurance companies would start covering it.
In the long run you don’t know if you will ever cash in on your fire insurance. Most people don’t. In the long run you do know that you will cash in on your health insurance. That is a significant difference.
Obviously you don’t really get free doctors visits, since the cost comes out of your insurance premiums, which are higher. This one is a pretty well understood cost. You are right that you pay overhead for this privilege - on the other hand you also get the benefit of negotiated discounts, so it kind of like Costco. You also get more predictable payments, and you lack one disincentive to get a checkup, which contributes to the general health of the population.
I assume you must work for a drug company, otherwise I can’t imagine why you think that those of us in the glorious free market being ripped off is a good thing. If drug companies had to negotiate with the US government they would no doubt decrease our prices and increase those charged to Canada somewhat.
The US government, through NIH, already subsidizes drug companies in that they don’t have to pay for high risk fundamental research. This is good. In any case, they spend more on marketing convincing me that I have to worry about the scourge of toenail fungus than on R&D. I believe that drug companies cannot advertise prescription drugs in some European countries.
Drug companies have this big advantage. If I don’t buy an iPad, I’ll be just fine. If I don’t buy my heart medicine, I can wind up dead. They should be able to squeeze out a profit in this kind of a market.
We can buy plenty of drugs that are in the order of rewiring your switch. But more extensive electrical work requires a permit and a license, just as more extensive medical work requires a permit and a license. I take drugs that do odd things to my heart’s electrical system - I don’t really want to risk figuring that out myself.
Ooh - death panels! While I agree, this has little to do with private health insurance. It would be nice if it were politically feasible to have this discussion, but you remember that Palin’s death panel lie wasn’t about this, but about paying to have an end of life discussion with your doctor.
here in the UK we have the National Health Service.
By prepaying through taxes, I’m covered for everything (until I’m 65, I pay towards prescriptions.)
As I work at a Private School, I can also join a private health scheme (which costs me something as it’s a taxable benefit.)
Why I buy insurance:
Whenever I travel to the US, I take out $1,000,000 of private health insurance.
My government advises me to and the reason is to avoid going bankrupt if I have a medical emergency over there.
Good advice. On the other hand, when my daughter went to Germany for a year, she was able to buy insurance for some trivial amount a month - far less than she could get it here, despite being young and healthy.
That’s loaded with assumption. I’m a 40 year old woman. “Preventative” care for me isn’t just an annual physical, but a physical with bloodwork including glucose and cholesterol screening, a ob/gyn exam with pap smear, a mammogram, an ophthalmological exam with dilation and glaucoma screen. That would be about $1,500, roughly, not a “couple of hundred bucks” and more like an entire month’s take home pay for an individual earning around the median personal income.
Rational economic actors look to maximize the value of their spending and limit their costs as possible, which is why, within our vastly imbalanced and unjust system, rational economic actors buy health insurance when they can.
People who are “barely making ends meet” won’t spend $50 on tests once, let alone annually, even if they know they need them because it’s never just tests. Tests lead to a diagnosis. A diagnosis leads to treatment. Treatment costs money. If you don’t have money or insurance, why even go down that road. (Especially since until ACA, and maybe once again, an official diagnosis can stand in the way of ever getting insurance in the future.)
I was trying to show how even the make people pay for the cheap physical exam case wouldn’t work, but I agree with both your points. Exams costing more (as they do when we get older) is going to make it even less likely for people to get them. I went to my doctor to get a note saying that it was okay for me to donate blood, and before I knew it I was getting my heart rebooted.
Perhaps people who’ve never been through the experience don’t realize that medical care is not bi-modal, either cheap or catastrophic. Even treatments that fall under the deductible can wipe out your finances. What I seem to get from opponents of ACA is it is all my fault for being 60 and your fault for being 40 and a woman. And it is the fault of those without enough money to afford health care.
The insurance companies get paid for helping us distribute the costs evenly (as possible) among all of us. The healthy pay more and collect less -generally until later in their life, when they begin to collect more than they pay. All other things being equal, we should all benefit from this process, given that there is value in the freedom from worry about health care expenses. Hope this helps! (I’m also eager to hear from others on this.)…
I question whether the amount paid by a health insurance company on your behalf is the same as the amount you would pay for that same service without health insurance. I believe that insurance companies negotiate fees with providers and that these fees are lower than you would pay on your own.
Without any cites, I suspect you would pay considerably more for doctor and, certainly, hospital costs if you had no insurance.