October 26, 2009

"MAKING SOMEONE ELSE PAY"

My husband and I have paid for car insurance for over seven years.  We have never once filed a claim.

My dental insurance costs about $140 per year.  I have never had any dental work done besides cleanings, twice a year at $70 each.

These two insurances work in remarkably different ways.  The dental insurance covers every time I walk in the door, even just to have some nice lady floss my teeth for me.  The car insurance doesn't cover anything routine and doesn't even cover some big things, like when my windshield broke last year. 

And yet, I think about the dental insurance so much more often, for some reason.  I am always irritated about breaking even.  I keep telling myself that it will pay off once we have kids, or once I need a root canal or something.  In the meantime, I get annoyed every time I break even.  I start to think that I could get by with one cleaning per year and save the remaining $70.  I want to feel more in control of that money, as if I am paying directly for a service instead of paying for insurance.

Maybe, with the car insurance, it's the fact that I don't have a choice to cancel it.  I don't often imagine all the money we threw down that hole, but it's a lot.  What if we could have it all back?

And don't even bring up all the money we've spent in life insurance...

But that's what insurance is: paying small amounts up front so that you will be eligible for the windfall payment at the end if bad luck strikes.  It's a gamble.  In the case of our vehicles, we have lost the gamble so far.  All the money we've paid in has gone to fix other people's cars for the past seven years.

Such is life.

Health insurance seems to be a misnomer then, because it doesn't seem to work like other insurances, at least not car or life insurance.  People seem to want to pay a small amount every month but get a large amount of benefit out every month too.  They want to pay $100 and get $300 worth of prescriptions.  That's not insurance, that's just redistribution.  That's just "making someone else pay", as Patrick McIlheran titled his recent article.  He explains why the proposed Obamacare system won't work:

Some companies noted last week that Congress' plans to mandate that everyone buy health insurance include only weak penalties. The plans also make insurers take on customers who are already sick. If you're young and daring, you pay the low penalty and go insurance-free until your doctor says you've got cancer. You then apply and pay $800-a-month premiums for $10,000-a-month care. Sweet, until the industry inevitably collapses, say insurers.

When stated so succinctly, it should be obvious that this system cannot work.  You cannot pay $800 for $10,000 worth of benefit without having someone else paying $800 for zero, for a long time.  That's how the gamble works in life insurance.

And while we all hate the stories of people who lose their jobs and then get cancer -- and trust me, I hate them pretty bad right now -- the solution, in my opinion, is not that insurers need to cover pre-existing conditions.  The solution is to have health insurance that is independent from your job, just as your car or life insurance is.  Then it doesn't matter when you get cancer; if you've paid in, you have "won" the gamble.

Mandatory insurance coverage is not, by definition, a gamble.  If you can wait to apply until after you have cancer, then why would you ever pay in beforehand?

It seems obvious to me that that system can't work.  So why are we trying to implement it?

Posted by: Sarah at 09:23 AM | Comments (13) | Add Comment
Post contains 639 words, total size 4 kb.

1 What amazes me is that many people aren't seeing the whole parallel here with the government forcing banks to give loans to those who they usually wouldn't (or in other cases the government taking the risk factor away, and banks become reckless in their loan practices) as a huge contributing factor to the crashing of the housing market. If insurance companies are forced to insure those they usually wouldn't insure, that will lead to insurance companies failing and leaving those who paid dutifully over the years without coverage later when they will most need it.

Posted by: CaliValleyGirl at October 26, 2009 10:00 AM (irIko)

2 I don't understand why we expect medical insurance to pay for non-emergency/non-catastrophic care. 

My car insurance doesn't kick in for my oil changes - why should my insurance kick in for my doctor's office visits?  It doesn't make sense for me.  Insurance is for emergencies - right?  Or at least, that's what I thought it was for. 

The same goes for dental insurance, I think.  Why is the insurance paying for "upkeep" like cleaning?  Fillings, I get.  Root canals, braces, etc. all make sense.  But the cleanings you need to get done at a scheduled time?  Like an oil change?

In fact, we had to pay for our own baby delivery because TriCare didn't consider homebirth to be an "approved method" when we cranked out the last three.   And we were okay with that, because we knew what we wanted, and what it cost.  Kind of like getting your car detailed.  Expensive and certainly not covered by your policy, but worth it for some people. 

What is being called "insurance" isn't insurance.  Even without reform.


Posted by: airforcewife at October 26, 2009 10:34 AM (uE3SA)

3 AFW, I honestly irks me that healthcare isn't an option as an employment benefit. Like, you could opt for healthcare coverage, or you could cash out. Because if you get healthcare coverage, but you can't choose how you are going to get your healthcare, might as well not have to "pay" for that coverage as part of your employee benefits.

Posted by: CaliValleyGirl at October 26, 2009 11:48 AM (irIko)

4 I'd argue that braces aren't even really that unexpected or catastrophic.  They're kinda the norm these days, so that means many people are getting a benefit without paying for it.

But that's just details...

You're right: why does United Concordia pay for someone else to floss my teeth?  That's not insurance, that's redistribution.

And why don't more people notice that distinction?

Posted by: Sarah at October 26, 2009 12:03 PM (gWUle)

5 I was going to say that it isn't insurance, it is rent.

I think that the argument used by most for visit coverage in insurance policies is two-fold:  1 - the visits are expensive and add up, and 2 - someone who can't help having a chronic condition should not have to pay for routine doctor visits. 

Which is redistribution.  No, it's not fair, but most of life isn't fair and we all make our choices.  That includes health care. 

I think I can use my dog for an example:  in the last month I noticed that Ike, my sweet dog that can usually have horrible things done to him (like Charlie ripping his toenail out) and not so much as whine at a person started acting weird.  He was showing teeth - not growling or snapping, but showing teeth and trying to get away from people.  That was weird, so I took him to the vet.  Now, we belong to the pet HMO at Banfield, so I didn't have to pay for his vet visit.  I did, however, have to pay for a urinalysis and for a blood panel.  Sure enough, nearly 450$ later, we found that Ike has a severe UTI (which was nearly entirely blocking his urethra, and could have killed him in short order) and he's been on Clavamox for the week, with one week left to go.  And the best part is that I have my dog back now! 

Here's the deal - that 450$ has to come from somewhere. I mean, it's not FAIR, right?  I shouldn't have to pay for my dog's medical emergencies!  Other people's dogs are healthy!  I should be able to have a dog and not have to cover these kinds of expenses!  Now I have to put off movies and going out to eat for the month of November while other people whose dogs are not so wimpy inside get to go to Applebees!  Life's not fair!  I want to go to Applebee's too! (PS:  I do not spend that much money on movies and going out to eat in a month, but that is just taking into account what we had budgeted for dog care and then the additional that the treatment cost.  Also, with four people hitting the theater, you can imagine how that adds up when we DO go out, even if we try to only go to 5$ Tuesday)

That's how I see a lot of the health care argument.  Life is NOT fair.  Some people never have to see the doctor.  Some people have to forgo Disney World because they have a chronic condition that requires significant resources to treat.  I'm sorry, but that's just the way life is.

Sarah - your house is WAY nicer than mine.  That's just the way life is - we had different resources to allocate because we had different conditions placed on our lives at the time we bought a house.  That's just the way it is.   I'm not owed a better house.  And you certainly shouldn't be forced into something not as nice to "be fair."

I think healthcare is the same thing, with a slight twist.  There are certain things we should work hard to change - catastrophic care should be available for everyone at a reasonable cost (one that reflects societal ability to pay and also allows hospitals and doctors to continue to provide coverage because they have enough funding!), but I don't think that means government insurance.  I think that means we need to rethink the way we've been doing business.  If all those celebrities spending money trying to gather support for Universal Healthcare coverage instead put that into seed money for a non-profit, non-work attached catastrophic coverage that would work something like the Fireman's Mutual Life Insurance (for example), we'd have another real option and more competition and impetus for change from within that is responsive to what people actually need.  And the money wouldn't be wasted as it is being now, but that's only my opinion.

//thesis off, for the moment.  But I reserve the right to re-visit this after CCD, swim team, and Girl Scouts this evening. 



Posted by: airforcewife at October 26, 2009 12:31 PM (uE3SA)

6 AFW -- Total agreement.

I had all the miscarriages and, had things worked differently, was getting ready to pay $12,000 out of my own pocket to try to have a baby.  Fair?  Hardly.  It's because of genetic scrambling done when I was conceived, not something I could control at all.  But normal people get to have a baby without $1000 in testing/prep like I had to do, and certainly without $12,000 fees.

Such is life.

Life ain't fair.

Oh, and I would also add...we've talked before and your house cost the exact same amount as my house did.  But yours is in a higher-cost area.  I could've only afforded what you have if I were in your area too.  When you are restricted to having to live somewhere based on where your husband is assigned, you have to buy based on that.  Trust me, if our next duty station pans out, you'll probably have more house than me again!

And I want to make that into an argument for being about to buy healthcare across state lines...but I'm too lazy to lay out the whole argument.  So go ahead and imagine it in your own head

P.S.  Glad Ike is feeling better...and glad you were observant enough to notice he was suffering.  Charlie misses him.

Posted by: Sarah at October 26, 2009 01:12 PM (gWUle)

7 One thing about car insurance, though, is that is it primarily not to protect YOU, but to protect those you might hurt.  At least in Texas, the only required coverage is liability.  Anything above that - to pay for damage I cause to me or my car - it extra.

Health insurance, on the other hand, is ONLY about protecting you.  If you don't have health insurance, it doesn't immediately affect anyone else (ignoring the potential that you go to the emergency room, and the taxpayer is stuck paying for it).

One of my old employers did a "self-insurance".  We, the employees, were the only ones contributing to the pool that care was paid from.  Guess what?  Every year, we were told we "had a bad plan year", and our premiums would go up.  They NEVER went down.  A couple of women have babies, or someone has to have major surgery, and me, who only really ever went in for an annual and the other people who weren't ever needing real medical care, were picking up the tab.  That's what insurance companies do, on a larger scale.  It's just easier to see when you work at a company with only 10s of employees (no more than 200, I'd say, and not all of them would have been eligible for coverage, if they weren't full-time, regular employees).  Yeah, it's great when someone has a baby, or they get a surgery that saves a life or makes life easier, but why should I have to help pay for it?

Posted by: Miss Ladybug at October 27, 2009 12:36 AM (paOhf)

8 Paying a flat rate for medical care might make sense. I pay a flat rate for Internet access, for example. But it's not insurance. Insurance by definition can only be for things that are unlikely to happen. The way you turn medical insurance into real insurance is to have a high deductible. Not too complicated - but exactly the opposite of what's being proposed in Congress. National insurance for catastrophic illness would be MUCH cheaper than what's now being proposed, and would answer most people's real fears. 

Posted by: David Boxenhorn at October 27, 2009 05:04 AM (RIeXu)

9

@Airforcewife. Please please please take your dog to someplace other than Banfield. I work for Petsmart as a trainer, I NEVER recommend them and always tell people to go to an independent pet insurer. It's cheaper and they actually cover things. Banfield is corporate vet medicine. When my old roomate was waiting to hear about jobs right as she was graduating in May I said "you can always work for Banfield for a year if what you want doesn't pan out" She said she would rather go back work as a Vet tech rather than work as a Vet for them.

I pay for really good insurance out of my own pocket with a policy with a really high deductible. If I meet it then for the rest of the year everything is covered 100%. I want a choice to do that.

I think the problems lie in the fact that Dr.'s have to pay so much for malpractice insurance and the drug companies can jack up their prices while spending money of golf trips for the Docs they are trying to get to use their products.

We need insurance reform and tort reform. Not national healthcare.

Posted by: Mare at October 27, 2009 08:25 AM (HUa8I)

10 Miss Ladybug -- My family has some experience with that, only on the flip side.  My mom is the expensive one, with many prescriptions and a chronic disease.  She and one other wife have always been the one to make insurance at my dad's office expensive for everyone else.  And she feels bad about it.

Man, this reminds me of The Twentieth Century Motor Company...

Posted by: Sarah at October 27, 2009 08:34 AM (gWUle)

11 Sarah~

My point is, what the Democrats/Obama is proposing just isn't affordable.  Costs for EVERYONE keep going up.  Personally, I'd like to be able to get some kind of catastrophic coverage, then pay for everything else as I need it.  Right now, I am uninsured because I am single and do not have full-time regular employment, and with the debt I incurred going back to school and the very unexpectedly long period of underemployment, I cannot afford to buy insurance on my own.  I have had to go to the doctor since I became uninsured (again - I temporarily got student insurance when I was in school, but that has been expired for more than 2 years now), but I don't make the taxpayer pay for it by going to the ER.  I go to a local walk-in clinic and pay for it myself, either out-of-pocket immediately or on credit, depending on what I was bringing in at the time.  I ask for generics, letting doctor know I'm having to pay whatever the going price is.  Having that direct financial impact I know makes a difference in the medical choices I make.  Insurance removes that direct impact and allows people to forget what it REALLY costs, and that many times translates into making choices that cost everyone eventually because insurance companies have to cover their costs.

Posted by: Miss Ladybug at October 27, 2009 05:13 PM (paOhf)

12

Someone I know made an interesting point to me this morning. If they legalize marijuana and tax the hell out of it, it would pay for health care for everyone.

A munchie tax? Persoanlly I'd call it the 'if you're going to be a dumbass' tax

Posted by: Mare at October 28, 2009 09:04 AM (HUa8I)

13 I don't know about the legalized marijuana tax being such a solution.  When have tax revenues EVER been what they were predicted to be?  People find ways around them. 

Not to say there wouldn't be tax revenue realized on pot, just that I highly doubt it would be anything near predictions.

I mean, seriously - if it's legal, it can be a house plant.  I can see old ladies switching their ferns out and spray bottle spritzing cannabis.

On the bright side, there might be an upsurge in FFA registrations, as teenagers join to learn all the newest techniques. 

Posted by: airforcewife at October 28, 2009 09:38 AM (uE3SA)

Hide Comments | Add Comment

Comments are disabled. Post is locked.
61kb generated in CPU 0.04, elapsed 0.2091 seconds.
49 queries taking 0.1782 seconds, 210 records returned.
Powered by Minx 1.1.6c-pink.