Wednesday, October 25, 2006

Insurance Racket

I had to deal with changing health insurance today with the business office at the womens clinic that Laura goes to in preparation for our new baby. That gave me the opportunity to review prices for their services. I discovered something very disappointing. In the last year, with insurance through my work, I have paid as much in premiums (not counting what the company was supposedly paying toward the premiums) as the clinic would charge an insurance company. The only money I saved by having insurance, even with the large medical expense of having a baby, is that I am not being charged the higher prices that they charge those who don't have insurance. I don't quite understand that policy. Why should they charge more to those people who can't afford insurance? Isn't that like kicking a person while they're down?

Anyway, that's the insurance racket. My portion of the price of insurance every year is enough to pay for a major medical procedure, like 9 months of prenatal care plus delivery and a hospital stay.If we weren't having kids I'd be throwing away a new car every year in insurance premiums - and that's when the company is paying the bulk of the costs. If I were to pay for that insurance myself for three years I would have paid for a major injury - like being seriously hit by a car. If I put that money into my house instead of my insurance I would have the house paid off in 11 years from the time I bought it.

2 comments:

Jason said...

Two things:

First - I highly recommend looking into a Health Savings Account. We're saving more than $6,000 per year in premiums, and building a savings account to draw on for medical expenses in future years. HSAs are only available with high deductible medical insurance plans - another plus in my opinion, as it gives the consumer greater control over his own medical expenses.

Second - A little reasoning behind the insurance racket. Pretend for the moment that medical care is an ordinary commodity. If I run a business where I can sell my homemade widgets to private consumers (one widget per customer, generally) or to large retailers who will buy widgets by the thousands, I'm likely to give the large buyers a discount in order to seal a large order. That's typical business practice. Any time you can move large inventories, a lower price benefits both seller and buyer. Now back to medical care. As a medical practitioner, I can sell my services to individual clients, or I can sell my services for a discount to large buyers - insurance companies. This is why those without insurance pay more - they haven't worked out special deals with the practitioners, so they pay retail. Insurance companies buy at wholesale and pass part of the savings on to their clients.

That said, it irritates me too. But I understand why it's done.

David said...

I understood the principles of why they do it, but I had never realized how stark the difference was. Also I had not realized what a lousy deal I was getting on insurance through my last job.

Thanks for the info on HSA's. I'll have to look into that.