This is not my field of expertise...not by a long shot. So maybe I am missing something obvious, but here is a portion of her letter to 0bama, with facts I find incomprehensible:
“Last year (2009) my insurance premium was increased over 25% even though I increased my deductible and out of pocket to the highest limits available. I paid out over $6075.24 in premiums, $2415.26 for medical care, $225 in co-pays and $1500 for prescriptions. I never reached my deductible of $2500 so the insurance company only paid out a total $935.32 to my providers.
I must repeat, in 2009 my insurance company received $6075.24 in premiums and paid out only $935.32!”
Would it not be more economical to have put that $6075.24 into some other account, where it would grow or be available for medical expenses? Would the expenses not have been even less if she’d been completely self-pay? (Every nurse I’ve ever discussed it with, said there’s a huge discount for cash on the barrelhead.)
Please pardon me if this is tangential (I'm taking the above as your comment, not the woman's comment) but if you have no applicable insurance and go in to a doctor's office and have to pay retail, how do you go about getting this "cash" discount when the bookkeeper isn't there and they just send you a bill? I've seen insurance benefit statements and they have tremendous leverage upon providers, sometimes getting them to settle for maybe a third of their retail prices.
We've paid thousands every month (from the first day we started working years ago) for health insurace and only used it for child birth. One of my kids came home with strep throat once, but we have a $200 deductable, so we paid cash for that anyway.
Had we banked our money, we'd be pretty rich right now.
Buy major medical and bank the rest. Most of the time you'll have to pay for other services with cash anyway. We learned that lesson the expensive way.
That’s the way insurance works. When you’re well and not running up a lot of medical bills it seems like an expensive waste of money. Once you get sick and it starts paying you realize what it’s worth. I have no sympathy for this woman;s financial plight. She caused it herself.
It would, if you could be sure you might never need the coverage. What insurance does is mitigate risk. You premiums are the reflection of the actual cost of claims payment for your type of policy, to your age group, in your location.
In most states (I am in California) health insurance companies are required to pay out a minimum of 70% of all premium collected in claims. The average profit margin for these companies are between 2 and 5%, which is in low. Medicare is less efficient, has much more fraud and waste, and pays your doctors, the hospitals and other providers much less than the actual cost of service.
Guess who has to make up the difference?
Risk is expensive. Especially some particular risks. That’s a free market operating, when you pay someone else to take your risk.