Health Insurance Costs Too High? Alternative Not Pretty
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baratunde I hear this argument over and over and it's one of the things I'll debate until I'm blue in the face. "Health insurance is too expensive." Ok, I have to agree. But, at the age of 25 (I know, I know…people aren't supposed to get sick that young) I was diagnosed with a chronic illness and will stand behind my statement that "being sick is way more expensive than health insurance." No way around it. We are obviously not talking about the kind of sick a nasty cold brings. Fine, if you don't have insurance and have to go to the doctor for your cold, it’ll probably be $70 plus meds. But, if something worse happens, you are basically screwed. An ambulance ride is an easy $500. If they have to use sirens, count on an extra fee. If you need a biopsy of something, you not only have to pay the doctor but the lab and the shipping costs. Happen to need an antibiotic that works for a specific condition? It could cost you $500 for a 30-day supply (I know first-hand).
So, let's rethink this. First of all, I had insurance when I was diagnosed and my healthcare costs are still so outrageous you'd probably choke hearing about them. BUT, if I didn't have insurance at all, I'd for sure be bankrupt by now. Like, 3 times over.
One of the issues is eligibility. Because I have now been deemed "uninsurable," I appreciate my insurance much more than a lot of people. I have to pay a lot for it but I'm so glad that I had it when I got sick because now there would be no way I could qualify. I’m too big of a risk and insurance is a business so that leaves me in the dust. I often get the rebuttal line about having to pay for health insurance each month and then wasting it if you don’t have to use it. I say it’s the best thing you could ever hope to waste. It’s the point of insurance. You are transferring a risk. You don't get car insurance praying you'll get in a car accident so you get your money's worth, right? Same concept.
Now, there are a ton of things about healthcare we can complain about, and rightfully so. I mean, after seeing Michael Moore's SICKO, we can't help but be disgusted. The unlucky ones of us who have lived it weren't shocked at all. For everyone else, it was an important wake-up call. But, even though insurance is far less than perfect, it's still something. For instance, not long ago, I needed a $5,000 brain scan. I ended up having to pay $500 of it. So, some would bitch that I shouldn't have had to pay anything, that's what insurance is for, etc. But, I'd rather pay $500 than $5,000. It's a deal!
There is also the theory roaming about that if you got really sick and were really poor, the government would take care of you. Partially true. You could possibly qualify for medical care under social security if you were deemed totally and permanently disabled (after jumping through a million hoops and most likely having to hire a lawyer in the meantime). However, there is a two-year waiting period if you even get approved (which is not easy). Playing devil’s advocate, let’s say that is your back up plan. Very few ever go as far as to research if this is actually a good idea. Government care (at least in America) is not the same quality of care you'd get through private insurance. Pessimists will say that private insurance isn't exceptional care either, but let me assure you that if you feel that way, you wouldn't be happy on the government's plan at all. You wouldn't have to pay but remember as the old saying goes....you get what you pay for. Also, if you are getting it for free, good luck getting anyone in the system to hear your complaints.
If you have a job that offers insurance, don't leave until you have a new job that offers insurance. If you have a choice of an HMO or PPO, choose the PPO even if it costs more now (this will be an entirely different article). An HMO sounds like a good deal, until you are sick and waiting for the insurance company to decide when you get to see the doctor, who you will see, what tests you need and more. You really don't want someone in the business of saving money making those decisions for you.
After becoming disabled and unable to work, I qualified for COBRA (continuation coverage from my old employer's group through California) at a very high premium. It’s the same insurance as I got at no cost when I was working there which is what COBRA laws protect. But, it's the best money I spend every month. After all, there is nothing I'd rather spend my money on more in this world than getting well, or at the very least, not getting worse.
If you are one of the healthy (and lucky) ones, realize it's an amazing privilege to be insurable. And if something unfortunate happens, your less-than-perfect but still-something insurance company will be there to take care of you better than you could all on your own. I promise.
Note: For more information on COBRA, visit Department of Labor's FAQ.
[Editor's note: For more on Amy's healthcare story, check out Healthcare Hacks.]
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This is so timely with all the debate of "free" health care. It is important to realize that health care will never be free, someone will always have to pay for it, and that insurance (no matter how expensive) is still the best option to keeping your own personal costs low.
Thanks for giving us a different perspective on a very important topic.
I dunno, like, socialized medicine? Maybe?
I agree that the cost of insurance is nothing compared to the cost of being sick and uninsured. But there's also being insured and needed treatment that isn't covered - I've paid thousands over the past two years because my insurance refused to cover doctor visits for pre-existing conditions for the first year of coverage. I mean, zero coverage. Nada. My company was paying them about $400 a month for me, and they in turn covered not one doctor's visit.
It's not so much that insurance is expensive, as it is that insurance companies will do everything they can not to pay out.
Oh, and yeah, doctors charge too much. There. I went there.
Insurance is nothing more than a bottom-line business we participate in and they are in it to make money just like other businesses. It's sad but the truth.
My insurance doesn't cover so much of my particular illness's treatments (I just spent $25k for a treatment they didn't think was necessary) but I just kind of have to be thankful they cover what they do because it's more than I can.
Some real world solutions to the health insurance problem coming from a guy that has not had ANY isurance in 7, or is it 8 years. First, if you contract a major disease (I am most familiar with cancer). Go to India for treatments. (Think about how many Indian doctors are already in practice here.) Hotel stay, hospice, kemo treatments, radiation, food etc etc. will be about 10-20% of the total cost in the USA. (again I am most familiar with cancer especially Sloan-Kettering in NYC). If you need emergency room care, try a walk-in clinic. Avoid Ambulance rides. Usually they have x-ray, and/or diagnostic imageing facilities on hand. If they don't, then go to a smaller facility but avoid hospitals as they are only for the insured, wealthy, and illegal aliens getting free care. If there are any complications (ie. surgery, orthapedic, specialists etc.) and you can travel. Go to Canada. It is NOT free to non Canadian citizens, but there medical system has fixed price controls so you will save a bundle. Also, prescription drugs are cheaper there, if not go to Wal-Mart for $4.00 prescriptions. And last but not least. Eat a healthy diet and maintain a healthy weight. Unotherwords, eat like Western Europeans or better yet Asians and not like an American. An ounce of prevention is worth a pound of cure. Also, adopt the mind-set that the U.S. government will do nothing for you. And in most cases for working class legal Americans, it won't. Then and only then can you adopt a good game plan. This all comes from my first hand experience!
Just thought I should check before spending time responding.
BLC
There is a huge misconception that people are proposing socialized medicine. What most are proposing is national insurance coverage, you would still pick your private provided care.
Private insurance pulls 40% out of what we all pay in for profit and insane CEO salaries. This and cost controls would make the national insurance plan cheaper. Everyone would still by paying in, just less and through taxes rather than a premium taking out of your check. Oh and no more COBRA or lack of coverage.
But when your sick and have no coverage, anything, including VA care looks pretty great.
If your self-employed and your COBRA finally runs out... where did you get your "new" insurance from? I'm in that predicament and can't really afford health insurance if it gets more expensive than it already is. Sigh... but I'd probably still look and pay whatever in desperation of having to risk it.
When my COBRA ran out I was in dire straits because I considered uninsurable.... too high a risk due to Crohn's Disease and a variety of other "minor" things like high blood pressure & cholestral. My lifeline has been a mandatory state sponsered CHIPS program (comprehensive health insurance program. It's obscenely expensive (over 1/2 my income goes to my health insurance), but without it I'd be unable to receive the ongoing treatments I need. This program is in NE, but somthing similar may be available in your state.
Hi. I wasn't self-employed at the time. However, when my COBRA runs out, I can file for an extension of 11 months I believe because I'm deemed permanently disabled by social security. The premium is an extra 50% but I'll have to do it. After that, I believe I can get what's called a "conversion" plan but it might be something special because I'm disabled. Your insurance company could tell you if you are eligible for a conversion plan. Let me know if you need further help and if I know the details of your situation, I'll see what we can figure out. If you think you are insurable, call a good health insurance broker and tell them your situation. There is also another idea I can think of if you think you may be able to work at all by the time your COBRA runs out. Depending on your state, there are options.
Lucille, 40% is an awfully large profit margin. Where did you find that number? Picking a large health insurance company at random, Aetna has a 10% pre-tax profit margin and a 6% net profit margin. I really doubt the CEO gets 30% of their revenue as a paycheck. :)
I think there are a few easily solvable problems with health care that would make a big difference.
1. Takes too long and costs too much to become a doctor. Like another commenter said, India produces very good doctors -- and guess what, they finish in like half the time as US doctors because they don't require a 4-year degree BEFORE medical school. That's a silly requirement we have that increases debt and time spent in school.
2. Medical school classes are TINY and the schools are incredibly selective. Maybe we need to expand enrollment and have tiers for doctors depending on how well they did school. After all, you don't need the best doctor in the world to check your sprained ankle or diagnose your case of strep throat. Save the best doctors for the challenging cases (and pay them more), and let mediocre doctors dispense penicillin, etc.
3. Too much regulation over medication. Medicine is definitely a component of the high cost of health care today, and it's ridiculous. By reducing regulation I don't mean lowering quality, but just simple things like allowing re-importation of drugs (not from poor developing countries, but why should we be subsidizing costs for rich European countries?). Also, more medicines should be available without prescription.
In response to your comment that it takes too long to become a Doctor in the USA, that is intentional behavior. The strategy of our Doctors and the USA medical profession in general is to keep the market of available Doctors small - thereby allowing the chosen few to get paid higher saleries. Simple supply and demand economics 101. Additionally, the extra time in college is part of our Doctor's "rationalization" for getting paid so handsomely. In India, as in most parts of Europe, Doctors make roughly one fourth of what Doctors here make. We need Doctors and medical professionals who are more concerned about helping patients and doing good than improving their own bottom line.
Thanks for addressing this issue. It's too scary and overwhelming for me to research, so I keep my head in the sand. Thanks for being so frank about this daunting situation.
Hi i agree with you the cost of health insurance in this country is
way to expensive,I work for myself out of my home and no longer have health insurance my employer used to provide.I think with all the resources in this country everyone should be insured I dont know if
universal health care is the answer but must be a better way
This is a serious issue that sadly many don't think about till it's too late. Unfortunately in this country the sick are generally deemed un-insurable--like you--despite being the ones most in need of healthcare.
Anyone can become sick and once they lost their work insurance or if they never had it to begin with, can be left in the dust. Ins. from soc. sec. as you said takes two years form the time you are approved, which can take months or years, *IF* you are approved at all. These are things that can happen to anyone at anytime.
One bad car accident can leave a person disabled. And even for the basically healthy, the costs are so high that many have to go without. Even wit insurance the deductibles and co-pays can be so high that many go into bankruptcy form one serious illness.
Things need to change, and fast, or soon no one but the very, very wealthy will be able to get by in this country. Who wants to watch a lifetime of savings be eaten away because they happened to have the misfortune of getting sick? And yet that is a reality that can and does happen in this country all the time. We need to work for a change in our system and demand it from those we elect.
There are many approaches and just because one way might not work or be perfect does not mean we cannot find some answer. People critique M. Moore's suggestions as a way to write off the whole idea. Well, guess what, his suggestion may not work or be perfect, but that doesn't mean there isn't something very wrong with our system and ways out there to improve it. If every other industrialized nation has come up with something (and why focus on just Canada, as many seem to do, when so many other nations have examples for us to view and learn from, not necessarily emulate in full, as well), why is it that the US is the only one that can't?
Just about any answer will be an improvement over what's happening now. Thanks for writing this important post! I will be writing on this topic soon on my blog as well.
**Even with insurance the deductibles and co-pays can be so high that many go into bankruptcy from one serious illness.**
You are correct. The problem is not entirely with the high price of insurance. Visiting the doctor, or even worse, the hospital can be financially devistating with or without insurance. Two people in my family had ER visits this year. I have insurance and my portion of the bills was still 20 percent of my annual income. For one visit the doctor alone charged $1000 just for her exam. I guess to her that's not too much considering she must make that 20 or 30 times for one shift in the ER. I'm now inclined to only seek medical help if it's a matter of life or death, and then I may even think twice for myself (not my family).
I am on the same boat. Even with my insurance because of the high cost i still have to pay, I only seek medical help when it is something serious. Health insurance and medical costs are way out of the reach of most people these days. This is a fact.
We Americans are the fattest, most obese, in the world with drug companies pumping out drugs for everything from snoring to... "Do you think you blink too often? Ask ur doctor what Blinktex can do for you?" And this is a prmiary factor in health costs.
"Government care (at least in America) is not the same quality of care you'd get through private insurance"
I'm wondering what support you have for this statement?
My mother is permanently disabled and on Medicare and had a $100k surgery paid for by the government, at a cost to her of just $2k. This was a surgery directly related to improving her quality of life, in association with her disability. She had this surgery at the University of Pennsylvania hospital.
Subsequent to this, the government paid for her to go to the Princeton Drug Rehabilitation center to eliminate her dependency on pain killers she took for said disability. This cost her just $1k.
The quality of care she has received under the government tab is equal to the best care you can possibly receive in this nation. I'm afraid that you have not a clue to actual facts when you made this statement.
Having lived in the UK, there are 2 systems, the NHS [government system] and private insurance that anyone who can afford gets. Separately from this, the entire system is a post code lottery. The better hospitals are in the rich areas. Even still, these "rich" hospitals are nothing in comparison to even your mid-level hospitals in the US.
To get this sub-par system, the UK citizens are taxed at 11% [Medicare is at a rate of 1.45%].
I suspect you have absolutely no real idea of what a national healthcare system is, other than watching some lame, one sided movie.
Admittedly, I am conservatively leaning in my political views but even my most liberal friends who live here in the UK and Europe in general largely agree that a national healthcare system is NOT superior to the system we have in the US and is not the cure to the US's woes. Some simple internet searches will do more than prove this statement accurate.
I lived in France for five years and I can attest that the health system in France works pretty well. And in many cases better than the one in the U.S. Most people in France will never trade their health system for the one in the U.S. I heard other people from other European countries expressed similar ideas. The U.S. health care system is flawed and needs to be revamped. It is the worst health care system of any industrialized nation. By far!
"Private insurance pulls 40% out of what we all pay in for profit and insane CEO salaries. "
This is a lie, where is the support?
http://www.allbusiness.com/services/business-services/4552511-1.html
4% in 2006 - and this is the product, not inclusive of CEO salaries and all the junk that political pundits will tell you.
The 4% is largely due to better than expected underwriting [some companies have negative experience, some have positive] or from investment income derived by the timing of receipt of premiums and payment of claims.
Insurance is so high because (i) our administrative costs are almost 25%. Taiwan has a system where they put your medical history on a credit card and you use that - completely paperless and their admin costs are about 3%. and (ii) malpractice insurance is 10X more than our European counterparts. All doctors must carry this insurance. This gets passed on to the consumer eventually, through our premiums. Eliminate frivolous lawsuits, and you decrease your premiums substantially.
And that is the way I feel. Health insurance is not just expensive, health insurance is a big rip off. The writer seems to justify the high cost of insurance but the reality is that insurance companies are basically rip off organizations. I have paid a good chuck of money to my insurance company and with the super high deductible (otherwise I could not afford it) and never have seen any benefit. Now you would say if I were to get sick, that is when I would appreciate my insurance company. Well, I have no doubt as some of my friends found out when they got seriously sick, that I would still have to pay a good chunk of money and possibly even consider bankruptcy, even though I am insured. Insurance will not cover everything even after the deductible and I will still be left to pay quite a lot of money. The issue is not just the cost but the quality of our health insurance. Pharmaceutical companies, health insurance companies, medical services, is a huge rip off to all of us. Nothing like this happens in all other industrialized countries. The stories you hear that universal health insurance does not work is all false. We are left at the mercy of the big rip off insurance business lobby. Because of their greediness, our insurance costs will escalate even more and the services we receive will be less and less. There are so many exclusions in our insurance plans ... the whole thing is a big scam orchestrated by big business who do not give a damn except making profits. It is the quality, stupid! not just the cost!
Our health insurance system and health care is just terrible. Take a look at this article which appeared in the NY Times today (03/01/09): http://www.nytimes.com/2009/03/02/health/02scans.html?hp
It shows how bad even our hospital test equipment is. And it is not only the MRIs and the scanning machines. It is more than that. We pay so much for defective tests and scans done on poor machines. It is pathetic!
Also take a look at the chart by WHO. http://dll.umaine.edu/ble/U.S.%20HCweb.pdf
The US compared to other countries has one of the worst patient satisfaction, the highest infant mortality rate, one of the lowest expectancy rates when compared to other industrialized nations (24), and the most expensive health care system of any country! Not only that, the survey was done 10 years ago. Since then our health care system has gotten much worse to the point it is almost in a chaotic state.
The person who wrote the original article is a fool thinking we have a fair or OK system as she seems to imply. Our health care system is in shambles.
I am also a victim of the health care system. One third of my income goes to pay for health insurance even though I am healthy 50 year old man. And the worse is that even when I need to visit a doctor, I endup having to pay almost for everything from my own pocket due to my $7,000 deductible. It is big scam. I agree!
Forgot to tell you that NO! You are screwed in this country regardless if you have insurance or not. If you have insurance and your have a catastrophic disease, expect to file Chapter 7 or 11 because you are going to pay tons of money anyhow. Your insurance company will screw you any ways.
This is all well and good, but it does nothing for a lot of people like me. I don't make much money (though just having a job is a blessing nowadays). My children (all 6 of them) are on medicaid, but I have nothing. Insurance - through my employer - for me and my wife would cost over $600 per month plus a $2500 deductible. Literally impossible for me to pay. Not difficult; not a sacrifice; impossible! BUT (and this is the big catch) since healthcare insurance is offered through my work, we are ineligible for government assistance.
We have no choice but to be uninsured.
Interesting viewpoint, but I would argue that we shouldn't be grateful for having to pay a lot instead of going bankrupt, but instead should be figuring out why it costs $500 for an ambulance ride? Why does it cost $5,000 for a brain scan? Why does healthcare cost so much less in other countries than our own? Why does the average person in this country utilize twice as much health care cost as any other country and yet it seems we get so much less, as our infant mortality rate is higher than most other countries? If doctors had a menu with prices, would they charge the same price as they do now? I highly doubt it. Insurers are part of the problem as they increase rates and record record profits. Doctors are partly to blame as their rates are extremely high given the amount of time they spend with the patient. Going to a doctor and having them spend 10 minutes with you and getting them to write you a prescription on something you knew you needed is pointless...did they earn that $150 fee? That works out to $900 an hour. The patients, as far as patients on cadilac plans and medicare or medicaid goes are to blame as well, as they will not shop around for cheaper care. Finally the drug companies, lessen the time before drugs can go generic. The answer is making medical costs more transparent and forcing everyone on a high deductible plan and those making less get more tax benefits. That would make it a free market and would truly force everyone to lower prices. I personally will not be satisfied with just squeaking by and not going bankrupt, and I wonder why everyone doesn't feel that way.
The solution to healthcare is to socialize it period. After all, it's our freakin health we are talking about! Do we complain about the military, fire and police department? And yet these are social programs that we all pay into and never do we complain about it.
Imagine if we were denied these social services because it would be too costly for the freakin stockholders and would look bad on their earning reports? It's sounds so damned stupid and ridiculous, and yet this is exactly what is happening with our health, we are letting a bunch of assholes on Wall Street decide if we are worth spending money on because it might damage there earning reports!
What did Amy do when her COBRA period ran out? I am facing the same scenario as her, I am deemed uninsureable and the COBRA premium is more than 30 percent of my current small income each month and will run out, it's not forever...
Well, it sounds like if not everyone in the U.S then lets say almost everyone is dissatified with the insurance companies. I wonder though, why are they getting away with it?
Maybe, just maybe, it is time that hard working citizens got together and matched to the insurance generals office and demanded change. America has alot of opportunities, but it is a money hungry country.
A band aid shouldn't cost 100$ no matter who puts it on
Get rid of these scam artist insurance companies and make healthcare affordable. Cut out the middle man(insurance company). I can hardly afford to take my family to the doctor for streph throat.$85 per person is bs.its so much money that I have to make payments. America is a mess and the insurance companies and politicians all benefit from it. While the middle class suffer and pay the consequences of leaches that abuse government assistance for health care.im appalled with the way or health care system is ran.
What amazes me is that no one mentions the real problem. Cost of health care...the reason insurers cost what they do is due to a single month's medication costing $500. A outpatient surgery performed by a "specialist" being billed to insurance at $20000. Universities put doctors into debt for 20+ years, and medical companies sell that scalpel for $300 dollars...get my drift? Put a cap on what a doctor can charge...maybe we wont see $500 premiums plus another 6k out of pocket for a 40 year old male...