Browsing around Reddit this morning, we came across this thread (there is profanity). The initial sentiment in the title is no doubt one that has been expressed by a lot of people over the last few years, and the thousands of comments are testament to the fact that healthcare debate tends to get people fired up.
I agree that it’s ridiculous that a cream that sells for $70 in Canada (including shipping to the US) is $270 in the US – for a tube that’s half the size. I agree that healthcare in the US is too focused on profit. I agree that it’s scandalous that millions of Americans have no health insurance or realistic access to healthcare, and yet executives in healthcare industries earn millions of dollars a year.
But the person who started the thread on Reddit also wrote about how he’s paid about $13,000 in premiums for his health insurance over the past six years, and this is the first time he’s needed care beyond a simple doctor visit. If he had purchased the cream using his health insurance, it would have cost him $200. So instead, he bought it online and spent $70, without using his health insurance.
Although many of the points made in the original post are valid, it’s illogical to think that we should be getting out of our health insurance a similar amount to what we put in. That makes no sense, although it’s something we hear all the time. Your health insurance covers what it covers. The policy limits and coverage are stated when you enroll (things like the $250 prescription deductible, for example). The amount you’ve paid in premiums over the years has nothing to do with what you or the insurance carrier are responsible for if and when you have a claim. You only “get something out” of your health insurance if you have a major claim. Health insurance isn’t designed to focus on the small stuff (and even though it’s painful to have to pay $200 for a tube of cream, $200 is still small stuff when it comes to healthcare costs). You can come out ahead on your health insurance, but you probably don’t want to. Because the only way to do that is to have a somewhat major health problem.
Sometimes people think that if they haven’t had a major claim, the premiums they’ve paid have been “wasted” and they feel like they got a raw deal. But the fact remains that for the past six years, the insurance carrier in this case has been accepting the risk for any major illness or injury that could have befallen this person. And they’ll continue to do so as long as he keeps his policy in force. An example that comes to mind here is my mother. She has always had health insurance. Sometimes it was through an employer, but for the past ten years my parents paid the full cost for an individual policy for her. She never used her health insurance. All those years, she paid her premiums and never filed a claim for anything other than routine preventive care. But then last year, she was fixing something on the roof of their house and misjudged where the edge was. The resulting broken femur earned her a surgery to put pins and rods in her leg and a week-long stay in the hospital. When all was said and done, she paid her $5000 deductible and her health insurance carrier paid about $50,000. That one incident – in a very healthy, active person – made up for years of premiums that my mother had paid. And the fact remains that there is no way to know if or when a serious illness or accident could happen to any of us. I could get hit by a car while riding my bike to the store this afternoon. I could fall down the stairs and crack my skull. You just never know. And that’s why I have health insurance. I hope with all my might that we never “get back” the premiums we’ve paid over the years. I would much rather pay the insurance carrier to cover us in the event of a catastrophic health problem but not ever have that catastrophic health problem.
In case you think $55,000 for a broken femur isn’t a huge deal financially, I have another example in my family. My father was also healthy all his life and then developed Wegener’s Granulomatosis at age 54. It’s a rare autoimmune disease and it attacked his kidneys. He’s been on dialysis for ten years now, and several years ago he was hospitalized for four months due to complications. The bill for that came to half a million dollars. On top of the thousands of dollars a month for his dialysis. He has definitely come out ahead in terms of health insurance premiums paid in versus health insurance benefits paid out. But I doubt any of us want to be in his shoes.
Another way to think about it: Health insurance is designed to spread risk. We all pay in (ideally, anyway) and then the carriers pay out when someone has a claim. The premiums from those of us who have been fortunate enough to not have health problems are used to cover the healthcare costs of people who have serious illnesses or injuries. And we never know when we might find ourselves in that second category. If you’re complaining because you’ve paid $13,000 in premiums over six years and have have very little paid out in claims, would you take a similar position if you suddenly had a $500,000 claim? Would you want the carrier to say that you have to pay in what you get out? Reversing the scenario like that highlights the lack of logic on the part of people who get annoyed because they haven’t gotten as much out of their health insurance as they’ve paid in. And yet that sentiment is one that is constantly tossed around when people talk about their health insurance.
The fact that healthcare is so expensive is another issue all together, and one that we’ve addressed numerous times on this site. Should a broken femur cost $55,000 after the network discounts? Should a tube of rosacea cream cost $270? Should my father’s illness cost millions of dollars over a lifetime? We should all be questioning why healthcare is so much more expensive here than it is in the rest of the developed world. But even if the cost of healthcare were to drop 50% overnight and health insurance premiums followed suit, people who remain healthy would still pay far more in premiums than they get back in benefits.
To summarize: It will be a very bad day if and when you actually come out ahead financially with your health insurance. Please don’t wish for that day. Remind yourself that your health insurance is in place to protect you in the event of a medical catastrophe. Don’t buy a mini-med or a discount plan or any other type of coverage that won’t actually be there for you if you have a major health crisis. Get a policy that you’re confident will protect you if you have a major claim, and then be grateful if you’re one of the people who remains healthy enough to get less back in benefits than you pay in premiums.