Premium Insurance

I have really been impressed with Keith Hennessey's blog. I just finished reading his three-part series on Third-Party Health Care. In the third installment, Hennessey came close to an argument that I have been making for years. Hennessey's argument: That third-party insurance acts as an incentive for the health care industry to pursue any and all technological advances, regardless of cost. This is because we demand it, and we demand it because out insurance policy covers the increased cost.

Hennessey is right about this, but he doesn't go far enough. Not only are we willing to pay any price for technology, we are willing to pay any price for anything. If your co-payment is $15, do you really care if the actual cost of your doctor visit is $50, $100, $150, or even $1000? And if your employer is paying the vast majority of your premium, do you really even care if your premium goes up? Sure, we all gripe about it when our contributions are increased, but we never see, and are therefore, in the end, accept.

A personal anecdote: Some time ago, my portion of the deductible for my employer paid health plan was over $600/mo. That meant that, had I opted for it, it would have cost me over $7,200/yr. - I opted out. For over two years, I was among the uninsured. During that time, I did need to see a doctor - once. It cost me $50 for the office visit, and another $20 for a prescription. Over the time that I went without insurance, I saved in excess of $14,000. Was I lucky? Perhaps. But I don't feel so much like I beat the odds as I feel that I didn't crap out. In the same situation, I'd do it again.

I'm not an economist, and I've never slept at a Holiday Inn Express, so take this with salt to taste, but let me explain my reasoning. Insurance companies are for-profit corporations. They need to show a profit to their shareholders. A simple (or simplistic, if you prefer) look at their expense sheet would reveal expenses of medical costs, infrastructure, agents, insurance adjusters, investigators, lawyers, and lobbyists (I am sure I am missing something). Against that is their income, your premiums. Their balance sheet needs to balance and still have profits to distribute to their shareholders. If you consider the exorbitant costs associated with major illness/injury, and the relative few of us that suffer from them, and I estimate that 95% of us pay more in premiums over our lifetimes than we receive in benefits.