Why on Earth do people want medical insurance to pay for every pill, every exam,etc.?

[Little-Acorn]

This is something I've never figured out.

The single biggest thing that keeps, say, car insurance affordable, is the deductible. You pay for the paint scratches or little bumper dings etc. The insurance pays for the big stuff.

The cost of a car insurance policy is a LOT higher for a low-deductible (like $50) policy than for a higher-deductible (like $500 or $1000) policy. And it's obvious why: The insurance co. doesn't have to pay for every little thing that comes up, only for the big bashes and totals, which are a lot more rare than the little dings.

Health insurance is no different. Why should it be? Insurance is insurance. Yet lots of people have policies that pay for every pill, every routine exam, every alcohol swab etc. And they complain that health insurance costs too much??? Well, guess why, dude!

When I was self-employed, I had a high-deductible medical insurance plan that I bought privately from BC/BS. No problem. $45/month. I had it only in case I came down with cancer or fell off a cliff or something. I paid for my own exams, aspirin, etc., which were pretty rare. Today I have United Health Care from my employer that pays for everything. If I quit my job, I can keep that policy, simply by paying the COBRA payments of about ***$600/month***!!! Holy shiite! Who on earth would buy that policy privately???

I've heard horror stories where an insurance company will simply drop you if you have a private policy with them and get really sick or injured. Anyone have any actual examples of that happening? Isn't that just a little illegal, breach of contract etc.?

Pre-existing conditions are a problem, I don't have an easy solution to.
Anybody? Anybody?

[Monkeybone]

I don't think that they can just straight drop you from the insurance. They have to have some sort of a reason. When the police department that my Dad worked for switched insurance companies we had to fight to get him on there with pre-exsiting conditions, even when they promised everyone that it would be a straight transfer. but then they saw Chemo treatments and wigged out. And because of that, they sent him to a Doctor three different time within a month to get eval'd to see if he was "able to do his duty". It was infuriating. Even the Doctor that they were sending him to was confused with what they wanted. Yah my dad was getting cancer treatments, but come on people. It was very taxing on my Dad.


And that is why they want the gov/us to pay for everything LA, so they can keep their money and have something to pass onto their children.

[MtnBiker]

Actually there are probably millions of people willing to buy health insurance that offers fewer choices in coverage, pay less for insurance, shop around and use cash and pay less for small procedures. However state legisitatures will not allow insurance companies to sell such policies or let insurance companies from out of state to compete.

[Little-Acorn]

I believe one of the roadblocks, is the fact that insurance offered thru your employer, is tax-deductible, while insurance you buy yourself is not.

This strange state of affairs started under FDR during WWII. FDR imposed strict wage controls for the duration of the war. Companies had huge problems hiring good people, partly because many had joined the armed forces and weren't available for civilian jobs. The companies couldn't offer higher wages to attract the people they wanted, it was forbidden by FDR's wage control laws. So they invented "benefits" as a way to entice good workers while technically not violating the wage-control laws. In-building cafeterias, covered parking... and health insurance, all for "free".

And since these things were not regulated by FDR's wage-control laws, that meant they weren't "wages", or any form of pay, even though they were clearly things of value given by employers to employees in return for the employee's work. And so they were not subject to income taxes!

This situation persists to this day.

So for those of you who wondered why someone would contract with Joe's Lawnmower And Landscaping to get his health insurance, instead of with Allstate or other insurance company, now you know.

And the employers offered more and more lavish insurance packages as they fought to get the employees they wanted, until they were offering policies that covered virtually everything.

And that situation persists to this day, as employees demand these (tax-exempt) policies with their employment.

If Congress would repeal the tax exemption - that is, declare that insurance given to employees by an employer for their work DO qualify as "wages" - I'll bet you'd see employer-paid insurance decline rapidly, as people found out there was no reason to get it. That they could be paid those high amounts directly and then choose their own insurance privately, that might cost a lot less.

The employer doesn't care who he pays those high amounts of money to, to get the employees to work there: The insurance company, or to the employee himself. It's the same amount paid out, either way.

Before this silliness came up under FDR, people paid for their own medical care, directly out of their own pockets. And many of them signed up for (private) insurance policies with various incurance companies, to protect themselves in case of devastating illnesses or injuries that could ruin them financially. And insurance made sense, much as car insurance makes sense today, as I described in an earlier post.

Get rid of the tax exemption for employer-provided insurance. Employers can still offer insurance if they want, and employees can accept it if they want. But when they find they can save money by signing up directly for policies that cover only major medical expenses, and go to their doctor only when they really need special attention... what do you know, medical insurance may start costing less!

[MtnBiker]

There is a lot of truth to that Little Acorn, however the unions will never go for it. In fact taxing benifits has been eyed as a revenue source for the government, but the unions demand an exemption for their members.