You lost me at “insurance”

I’ve never really understood health insurance.

I pay State Farm $100 every month so that if I wreck my car I can afford to have it fixed. They take my premium and hope that either 1) I never have a claim, or 2) the amount of my claim is less than the money I put in.

And that’s how the business of insurance works. There’s a good chance that I’ll never use the money I pay in premiums. If I don’t, they can buy a new jet ski – or whatever insurance companies do with their loot.

One thing I don’t do is call them every time something happens. If I notice a scratch on the bumper, I don’t call State Farm to fix it – even though they would. First of all,  I have a deductible which leaves some of the responsibility on my shoulders and, secondly, I’m afraid that my premiums will rise if I use my coverage too much. I’m willing to foot the bill for some touch-up paint to keep my costs down.

My house is the same way. I have the insurance not to fix the gutters, but to save my investment from a catastrophic loss that would ruin me.

So I look at health insurance and see that it isn’t like my other policies at all.

Since I belong to a group, my premiums don’t rise no matter how much I use it, and I feel that if I don’t use it I’m wasting my money. “I’ll just go get it checked out, it’s free.”  This is the touch-up paint we’d normally pay from our own pocket.

I also don’t have a deductible, or if I do, I only pay it once a year. This means that I can just go in and, for a small fee (a fraction of the real cost) I can have a doctor tell me that it’s just a cold and I should drink some orange juice.

The most obvious difference between my health insurance and my homeowner’s policy is that my house probably won’t burn down. If it does, the company will pay me for it. Not just out of my premiums (which total less than the cost of a new house,) but also out of the premiums from those who don’t suffer a house fire.

Contrast that with health care. You can be sure that you will use it, and that the amount you use over your lifetime will probably exceed what you’ve paid in premiums.  But unlike other insurance, there are no non-users whose premiums cover your loss. Everyone who has health insurance will eventually use it.

So I have an essentially free service I end up overwhelming with the demand that my every symptom be checked out, and that leads to a shortage of supply driving up the cost. The insurance companies see this happening and realize that premiums must rise because I’m using more than I put in.  I can’t say I blame them.

Using the word ‘insurance’ might be skewing our perception of what it really does. It might be better if we call it pre-paid health care instead. At least then we can discuss the subject from the same definition. That being said, we really have only two options.

We can decide that those who have the sense, health, and money to buy coverage are protected while those who don’t are thrown to the wolves; or we can decide that everyone needs coverage, and we all agree to pay an equal share.

In 2009, the U.S. spent $2.5 trillion, so your portion is $673 per month. A family of four owes $2,692 every 30 days, and for that you guarantee coverage for all 310 million of us.

What we have now is the third option where some of us pay nothing, some pay something, but none of us pay the actual cost.

Here’s the part that bugs me. I’ve yet to meet someone demanding universal coverage who’s willing to pay $2,692/month for the privilege, nor have I met a privatization proponent who believes only the wealthy deserve health care.

Since both sides want an actual solution, let’s find the place our opinions first diverge – and I think it’s at the word “insurance.”

Categories: Economy/Politics