Monday, January 28, 2008

Why America is Worse Off: Part 3- Medical Insurance

In this installment of my 50 part series called: Why America is Worse Off, I discuss problems with medical insurance, and insurance in general.

The core reason that we have insurance is a good idea: we all pay a little to a company so that when a rare disaster strikes that company can pay for a replacement or get things fixed. It makes sense that I should have to pay insurance for a house so that if the home burns down I don't lose all my savings, and the bank doesn't lose money on my mortgage.

The problem is when we buy insurance for things that we really should be able to pay for. A good example is medical insurance. The reason that I say this is because we all at some point will need to use medical insurance (assuming that you have it). Since we all will use the insurance the insurance company has to charge us all more than what we would normally spend so that it can make money. Also, since we use medical insurance so much companies have started to include medical insurance as a benefit for working at the job. This causes another problem because now people who do not work at a place with medical insurance must pay for their own medical insurance. And why does everyone have to have medical insurance now? Because companies have raised the prices of the medicine and the services because the insurance will cover alot of the costs and people can afford to pay more.

So now people that do not have insurance are screwed twice, once because they are not covered for major and rare problems. And again because now everything costs so much because of the way that everyone else uses insurance. To make this problem even worse is that since we use medical insurance so much it costs alot to get it, so somebody who is looking to get medical insurance outside of a job has to pay so much that sometimes it is not worth it. And then they go uninsured.

So what is the solution? Well, some people have suggested having the government provide free health care. This is a bad idea except for cases of extreme poverty or an extraordinary need. The cost to the government would be way more than what is reasonable. If we have a problem with government spending now just wait for them to pay for our medical bills. Another problem that government based health care has had is that they can not keep up with everyone. It has gotten so bad in the UK that the doctors are talking about not taking smokers, obese, or even the elderly, to lighten the workload.

No, I think the solution is to not get insurance for things that we know we are going to use. For example, it is within reason to say that at some point I will need to use my auto insurance from being in a wreck. But for State Farm to make money from me I must pay them more money than I will get back from them. This is stupid. I probably already have paid enough for another car with just my insurance checks. If I didn't have insurance then I would have enough money now to buy another car when it is needed (plus I would get interest on the money now while it is in the bank). I know that sometimes insurance is for the "other guy" and that is ok, and it is also ok to have insurance for disasters. But really we need to stop having insurance for things that we know we are going to you the insurance for. It really doesn't make sense.

...Of course when I look at a job offer one with a good benefits package is always a plus... I'm not going to turn down free (or greatly reduced) insurance. :)


Tuba Queen said...

To go with why gov health insurance would be bad, services would become really crapy, there would be so many gov write offs with them paying that people would care anymore. Is that moraly right? no but it would happen.
A thought on the auto insurance, yes you are paying more than you would probably receive from the insurance company, but you are totaly correct, its for the other guy and you. PIP for instance, KS happens to be a no fault state, if you are an insured driver they will help pay for some med bills up to a certain amount. That helps alot. Or how about when some moron Hits your car and they don't have insurance and have no $ to pay for the damages and you have an outragious deductible cause you want lower premiums. That would suck. More on that another time.
Health insurance, yes it can get expensive, BUT the contractual write off with the ins companies is huge. When I had nicole they wrote off 18K because my the hospital was in network, I had to pay 2K, yes still alot of money for a student. But my Dr delivered my child safely, and without her I wouldn't have been able to have nicole with my circumstances. So was all the $ I payed into insurance worth it, Heck Yes and I'll do it again, and I am doing it again. again more on that another time

Irene said...

Interesting take on the subject. But you are forgetting. insurance companies are businesses, they have to make money to be there, they have to pay salary & overhead, continuing education, new technology, etc. You buy insurance for the unknown. You are correct that if you wind up never being in a car accident you 'wasted' all that premium over the years. but what if it were you or your wife or child in a devestating accident, or diagnosed with a long term illness or terminal cancer, one second changing your lives forever, especially financially, if you didnt have insurance. Hospital bills, cancer treatment, surgeries, could be in the 100's of thousands. your premiums you've paid are minimal compared to that. If insurance companies only charged what you would normally spend on doctor bills in a year, where would the money come from to pay for a catastrophic accident or illness? they would not be in business to offer you protection. So you buy insurance for yourself to protect your lifestyle for the 'what if's' There are SOOO many accidents & illnesses that most states require auto insurance. I say GOOD so that driver who hit me has to take care of my medical bills, my car replacement, my loss of earnings if I'm now disabled because of the accident. But if it was not intentional, it wont put them in the poorhouse either to do so. And if I'm found to need multiple surgery to save my life, I can go to whatever doctor I choose and know he will help me and get paid for taking his time to save my life. No I disagree, insurance is necessary. I could go on about how people are sue happy and try to get everyone to pay for things they dont need to with false malpractice claims, false injuries in car accidents etc, this is what needs to stop so malpractice insurance isn't 1/2 a doctors or hospitals income and can be used instead to buy updated equiptment, offer more charity care to those who cannot afford insurance and keep premiums down for those who do. Whew! I had alot to say didnt I :)

Ookami Snow said...

That is what I am saying, we need insurance for "disasters" (major accidents, major medical bills, loss of home, etc.) things that would devastate the normal person financially.

But we do not need to buy insurance for things that we expect to use, medicine, car repair, etc. Because the only way the companies can make money from that sort of thing is to charge more than we use of it. With disaster insurance the company makes money because it isn't used much so they don't have to charge people as much to come out ahead.

Tuba Queen said...

Yes but some peoples medicine is crazy expensive w/o ins because that paticular medicine is too new to hve a generic brand yet or it is just to hard to make. I don't have insurance for car repair though, I didn't know that had that besides when as accident occurs of some sort.

Irene said...

There IS insurance for just catastrophy. Since that is what cost the insurance companies the most, the premium is not much lower than insurance with coverage for more expected things. The money they make off the other insurance helps finance what they pay for people who do have catastrophy happen.

Irene said...

I guess this subject is important to me since I collect medical debt for a living. Seeing what unexpected medical debt can do to a family every day, hearing people tell me 'I didnt think I really needed insurance, I'm healthy' it can be very sad. I see and hear so many people who dont have medical coverage and even the normal medical services add up so quickly that they get overwhelmed and other expenses take precidence, then they come to us, get sued, get garnished and the cycle of financial problems continues. Health or Auto Insurance would have saved them from all of it.