"Health Insurance" isn't insurance

While the Democrats are desperately trying to ram Obamacare through a vote before the electorate wakes up, a lot of sloppy language is being tossed around.

Words like “Uninsured” or “Health Insurance” are repeatedly misused.

What most people think of as health insurance, really isn’t insurance. It’s just someone else paying your medical bills. That’s not insurance.

So when Pelosi et al. stand up in Congress and bemoan millions of uninsured people in the US, what they’re really saying is that there are a lot of people who have to pay their own medical bills.

Why shouldn’t people pay their own medical bills?

Just like you pay your rent, grocery bill and other living expenses, medical bills are just a cost of staying alive.

The current fashion of employer paid medical “insurance” comes from the wage freezes during World War II. Companies needed to offer something to attract talent so when they couldn’t offer more money they offered benefits like paid vacation, paid sick time and medical coverage.

Real medical insurance, sometimes called catastrophic care or hospitalization insurance, covers hospital stays and real emergencies. You’re making a wager with the insurance company. The insurance company is betting that on average the medical bills of all their covered will be less than the sum of the premiums they take in. You as the insured are using the risk pool provided by the insurance company as a hedge against unforeseen medical costs.

Unforeseen is the key word. If you KNOW you’re gonna have expenses, you save money and budget for them. It’s part of being a responsible adult. As responsible adults we buy insurance to protect us against unforeseen expenses. Fire and flood insurance for your house. Collision insurance for your car. Life insurance in case you die unexpectedly. All these types of insurance cover unexpected expenses.

No one buys food insurance or rent insurance or car payment insurance. Those are predictable expenses. So is a visit to the doctor. Unless you’re one of the rare people that never get sick you know you’re going to visit a doctor. You know you’re going to visit a dentist. You know you’re going to have to buy some pills to cure an infection or lower your blood pressure.

No one should pay for your predictable medical costs any more than someone should pay for your rent or your groceries.

My company offers a medical benefit. I can pay almost $10K a year for the dubious privilege of only having to pay a $30 copay for each doctor visit.

How’s that math work out again? Unless I or a family member is hospitalized, there’s no way I’m gonna have $10K in medical bills. Historically we’ve averaged a couple of thousand dollars for the whole family and that includes doctor visits and prescriptions. I can get hospitalization insurance for the family at a pretty cheap rate. The deductible is high, but I can plan for that and pay it out of savings.

Having someone else pay your medical bills is a bad idea and it doesn’t make a bit of difference if that third party is your employer or your government. It introduces price distortions and overuse.

Say no to the government paying your medical bills and while you’re at it, say no to your employer paying them as well. I’d rather have that money in my savings account anyway.

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0 Responses to "Health Insurance" isn't insurance

  1. B Woodman says:

    Or your own private medical savings account (cross between a bank savings account & a 401K?)

  2. Borepatch says:


    “Food insurance” – I’m going to steal that one …

  3. Hey, if most people actually paid their medical bills, they’d have a handle on the rule-of-thumb metrics like “ERs generally cost a thousand an hour” and quit clogging the place with their not so sick toddler, or their search for more painkillers, and stop using the $900 taxi with the awesome men in the back to get there. (EMTs rock so hard. Everything from the thoughtful touch of making sure the morphine kicked in before moving me onto the backboard to the friendly chatter to make the time pass on the way to the ER after they got diverted – those guys are truly incredibly awesome.)

    Heck, the cost might even go down with the wait times! That would be really cool.

    Being actually uninsured, without hospitilization coverage or health care benefits, I not only saved my money like a responsible adult, I was highly motivated to get back to work as soon as possible, and to find everything I could do with limited capacity to convince my employer that it was better to keep me than get a fully-abled person hired and trained. I also found out that when you flat run out of money, the medical billers are pretty cool about working with you on payment plans, as long as you are making an honest effort to pay them off.

    As much as there could be a positive outcome, everybody won except the government (lower income taxes), the insurance companies (they didn’t get any money), and the idiot driver who hit me (and she got off with a $75 fine, darn those legal and moral restrictions on eye for an eye and lower body for a lower body.)

  4. It’s hard to save up money when you’re living paycheck to paycheck, though. My insurance costs me less than $50 per month, and I pay a $10 co-pay for office visits. I would not have been able to afford the surgery I had last year without insurance.

  5. Weer'd Beard says:

    Also I don’t use my car insurance to cover an oil change, or putting new breaks on…hell I didn’t even use it when I had to drop some serious change when my clutch went bad.

    Same with my home owner’s insurance. I won’t use it to paint my house, or to replace old windows or to buy grass seed to fill in a bare patch in my lawn.

    Yet we expect silly and inexpensive things like booster shots, teeth cleanings, and checkups, as well as blood tests to be covered.

    And because we expect not to pay for such services, and the people rendering the services don’t get their fee up-front, it drives prices up and makes paying for it out-of-pocket more unreasonable than it would naturally have to be.

    If you want to see what healthcare would be like without insurance industry paying for every little thing one just needs to look at cosmetic surgery as well as holistic medicine.

    They aren’t covered by insurance, so they advertise to bring in new buisness, they have specials, and they compete with other service providers. Heck it’s the same with the auto repair world.

    That’s the direction we need to go. Change “Insurance” to ALWAYS mean catastrophic insurance, and suddenly the problem will shrink inside of a year.