Posted on 03/09/2017 9:50:03 AM PST by SeekAndFind
There is a near ubiquitous misunderstanding of the function of a deductible in insurance, and it is crippling our national debate on health care. A lot of people in positions of power don’t even know what insurance actually is in the first place, and the fear of the big deductible is a major element of this general confusion. Do not fear the big D. Embrace it.
Now why do I advocate for large deductibles? Easy, and it’s not because I’m some fat cat insurance CEO -- because I’m not. For years, I have criticized the abuse of large deductibles in the political discussion of health care, not to mention both the regulation and practice of health care under ObamaCare by bureaucrats and insurance companies alike. We have no argument there. In fact, all this inefficiency and corruption perverts the way a big deductible works in a freer market.
No, the reason I like them is that large deductibles are how the risk management industry can control premium costs, and by reducing paperwork, can reduce marginally the cost of the health care services itself. But this only happens in a somewhat free market. We must free the big deductible for it to work its magic.
How? It’s pretty easy really. There are several components that take money out of our pockets related to our health care, and they include our premium costs, our deductible and coinsurance costs, and any cash for goods or services we pay for items not covered under insurance.
Of those, the only cost we are guaranteed to incur in a year’s time is the premium. Some will say but wait, I don’t pay my premium, my employer does. Uh, no. I hate to break it to you, but your employer only collects your insurance premium,
(Excerpt) Read more at americanthinker.com ...
Health insurance should not be designed to cover routine or trivial medical costs. Only major or catastrophic costs.
Around fifteen years ago, I was sitting in a car insurance office and had a long chat with the lady....I wanted lower rates. So the lady finally suggested...a huge deductible. At the time, I think I had at $300. I ended up having it set at $1,500 (it was a fairly new car, I admit). Rates drastically went down.
I would not suggest this strategy with a car which is five or six years old.
I would be curious to know what the yearly health insurance would be....if my deductible was around $10,000.
A lot of people in positions of power have NO constitutional authority to meddle in healthcare and healthcare insurance in the first place.
Health insurance should not be designed to cover routine or trivial medical costs. Only major or catastrophic costs.
I agree, but you’ll never convince most people. For the typical user of insurance provided by an employer, he neither knows nor cares what it costs per month, and the value is entirely in how little he has to pay at the point of service for any healthcare transaction.
“Health insurance should not be designed to cover routine or trivial medical costs. Only major or catastrophic costs.”
You mean it should actually be “insurance”?? Let’s not go gettin’ crazy....
Yeah, and what would your premium be?
Extended warranties are available to cover routine maintenance but they’re expensive and most people know they’re mostly highly profitable (to the seller) rip offs.
“...I would not suggest this strategy with a car which is five or six years old....”
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On older cars in our family we traditionally DROPPED COLLISION COVERAGE entirely. Our only exceptions have been on cars which could be accessed by teen drivers,
The only authority I see that these DC idiots have is to ensure open market practices....which has yet to occur.
If people accept the idea that they can meddle with this...then why not complain about transmission-job costs, and have them meddle with that as well....or how about barber-shop haircuts, and ensure they can’t be more than $12.99.
>>Health insurance should not be designed to cover routine or trivial medical costs. Only major or catastrophic costs.
At $150 to see my doctor for a prescription refill for a drug I’ve been taking for 12 years, nothing is trivial.
When that same drug went from being so cheap that I didn’t even pay the full $7 co-pay to $90/month due the magic of “reformulation” nothing is trivial.
When my household income is 40% less (adjusted for CPI) than it was in 2007, nothing is trivial.
A lot of things need to change before we can start demanding that people pay thousands in deductibles.
Yeah. Now imagine the government FORCING you to buy it when, in fact, you have a perfectly good garage at home to do your own oil changes, brake jobs, etc.
I walk by the spectacular Humana building in downtown Louisville sometimes during lunch break. I’ll occasionally point to the building and say, “see that marble slab? That was paid for by using a loophole to deny a guy’s cancer treatment.”
Sure, it’s all tongue in cheek, but still...
If you are going to buy an insurance policy to cover every routine office visit, scratch, boo boo and pill, it’s going to be a very expensive policy for you.
The American public needs to be weaned off the $10 co-pay. HMO’s have ruined the health industry. Doctor visits for minor stuff should be out of pocket.
Ain’t none of us getting out of here alive. Prayers up for good health.
I elect a health care option where I elect to pay 100% of everything up to a certain dollar amount ($6000 a year for my wife and I). That keeps the monthly premium pretty reasonable. I then have a tax-free payroll deduction to build up that $6,000 each year which rolls into an HSA. I try not to use it because I get to keep and invest what I don't use.
But if anything serious catastrophic happened healthwise, I'd be covered 100% (after that initial $6,000 that I already saved up.)
That's what medical insurance should be used for. Not clogging up our medical system with routine and trivial nonsense because people would rather get that big-screen TV and Playstation than to pay for a doctor visit for Sally's runny nose.
Charge full price for routine doctor visits and that nonsense stops today. The only freebie I would support would be an annual checkup because that might prevent more expensive issues down the road. Preventive care is also a big factor in keeping future costs down.
Too many people don’t understand the feds constitutional limits and conversely their constitutionally protected freedoms. They think the “bill of rights” gives them their rights.
They need to go back and read the Declaration of Independence which is the presumption of the Constitutional source of our freedoms (hint - we are born with them because they come from God not man - they do NOT come from the first ten amendments - the first ten amendments are there to remind the feds of SOME of our basic rights and freedoms) and then they need to read the ninth and tenth amendments that confirm these constitutional presumptions.
I don’t understand why this is even a question.
An insurance company, ANY insurance company agrees to take on risk. In exchange, they require the payment of premiums. The premise of the ins co, just like ANY business that wants to stay in business, is that its collections must outweigh its payouts and its various admin expenses, eg; salaries, rents on premises, coffee in the break room, etc; etc; If and when the ins co has to pay a claim, they pay in, wait for it....MONEY. They do not replace your liver or your teeth or your eyes.
From their long experience and extensive statistical studies, what they charge for a policy is whatever their perception of risk plus a profit. In prior years, they have been able to invest excess premia that do not have to be paid out and earn interest coupon returns. That opportunity is diminished in recent years, of course.
Suppose 10 friends came to you and wished to buy an insurance policy against any or all of them getting a $100 speeding ticket during the next year? What should you charge them?
Well, maybe you would look at their driving records, maybe you would study what the general rate of getting speeding tickets is. Perhaps you come to the conclusion that 3.5 of them will get such tickets. So that means that you expect to pay out $350. If nobody gets a ticket or only one does, you get to keep some premium and build up your reserves. If 8 of them get speeding tickets, you goofed. At any rate, you figure that you had better collect maybe enough to pay for 5.75 tickets. The price of each such policy is thus $57.50. If that isn’t worth it, the 10 friends don’t buy it. If you have to pay out nearly $60 to avoid having to pay out $100 that scarcely seems worth it.
But if the ins co decides to insure against only $50 of speeding ticket fines, then they could cut the policy premium in half.
If the arrangement reduces the risk to the ins co, they can sell policies cheaper.
The ever-expanding notion of including every possible medical procedure in an “infinite coverage” regime is what drives up insurance costs.
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