Why Lousy Health Insurance is Better than None at All

Generally speaking, even lousy health insurance is better than none at all. Millions of people are going without health insurance coverage right now. Some are forced to go without it due to health conditions that render them uninsurable, or will cover them at such a high cost that they can?t afford it.

But health insurance can be expensive even for the healthiest among us, and many more are doing without for this reason. They?re taking a chance that nothing major will go wrong with them. While that may be doable when you?re young and healthy, the minute something goes wrong the whole situation changes.

Even if you have lousy health insurance it’s much better than none at all. Here are at least some of the reasons why.

ID card for hospital admission

Why Lousy Health Insurance is Better than None at All
Why Lousy Health Insurance is Better than None at All

Last night, my wife tripped and banged her head on a curb at strip mall. It was a bad fall, and her face was scraped and swollen. The EMT’s came and recommended going to the hospital for evaluation and ex-rays, so off we went to the emergency room on a Sunday evening. Upon arriving, she was immediately taken into care, with business questions asked during breaks in between. The staff never asked for payment; once we presented our health insurance ID card the hosptital knew they’d be paid.

One of the best reasons for having at least some kind of health insurance is for the identification (ID) card it provides. Hospitals can?t refuse to treat you if you show up in the emergency room, but having an ID card makes the whole process easier.

Like any other business, hospitals want to know how they?ll get paid for the services they provide. An ID card removes that question. It says you?re part of a plan and they?ll get paid at least something.

It also can eliminate a lot of paperwork. The insurance company has you on file, and that makes you ?official? with the hospital.

Network discounts

Medical providers have at least two different price structures, their regular price, and another for network health plans they participate in. In order to participate in a network, the provider must discount its prices to members of the network. Each network has its own discount, so the amount of the discount will vary from one network to another.

The discounts can be substantial, ranging from 30% to 70% of the full price charged for a given procedure or therapy. If for example, you undergo treatment with a medical provider for $1,000, and the provider is in your network, and the network requires a 40% discount, you and your insurance company will only be responsible for $600, not $1,000.

That?s a substantial savings, and one you wouldn?t get if you had the same procedure done without a health insurance plan.

What if you have a high deductible, or catastrophic plan? You still get the discount. Let?s say you have an insurance plan with a $5,000 deductible that you haven?t met yet?a $1,000 procedure means you?ll have to pay out of pocket. Since you have the insurance coverage and the provider is in your network, they still have to discount the cost of the procedure, charging you only $600 rather than $1,000.

You?ll pay less for direct healthcare just for having insurance coverage, even if the insurance company doesn?t pay any part of the claim.

Coverage for the big stuff

Medical costs can easily exceed $10,000 for a relatively simple procedure, and $100,000 for anything remotely complex. While you might be able to cover expenses in the hundreds, or even a few thousand dollars, trying to handle major medical expenses can cause a financial disaster.

For this reason alone it?s worth having some sort of health insurance at least to cover the biggest medical situations. Even a policy with a $10,000 deductible?though you?d still be paying most of your medical costs out of pocket?would be worth it?s weight in gold on a single procedure that runs well above $10,000.

There are two factors with high deducible (?catastrophic?) health insurance plans that work in your favor. The first is cost. The higher the deductible, the lower the monthly premium, and the difference is substantial. As an example, a plan for a family of four with both parents age 40 and non-smokers and with a $2,000 deductible would be $424 per month with a major insurance carrier. But if the deductible is raised to $5,000, the premium falls to $271 per month. With a $10,000 deductible it drops to $197 per month.

The second factor is eligibility. Many people don?t have health insurance because they can?t qualify based on pre-existing health conditions. But many health insurers will provide coverage to the same people with a higher deductible. They consider this because the higher deductible means they?ll have to pay fewer claims. It doesn?t work in all cases, but it?s always worth a try.

Creating options

One of the biggest benefits to having health insurance is that it opens up options when a real medical problem develops. Simply put, if you have a serious medical situation and you don?t have any insurance, your treatment options are limited by the amount of your financial resources. With what healthcare costs today, those options will be exhausted pretty quickly.

With insurance coverage, even if it has a high deductible, you have treatment options you won?t have going it alone. In fact, the closer you get to your deductible, the greater your options will become. Once you hit your deductible?and let?s say it?s $10,000?you can actually increase your care level because your insurance company will handle most of the costs beyond that point.

(Please see the updated 20 Part-time Jobs With Health Insurance post for the most current list of employers who offer health coverage for their part-time staff.)

Getting at least minimal health insurance coverage

Get into some kind of health insurance plan any way you can; as you can see there are benefits to having it even if it isn?t the level of coverage that you want or think it should be. No plan will ever be perfect, nor perfectly affordable. Look for a plan with a deductible high enough that you can afford the policy, even if that deductible is $10,000 or higher.

Many people are going without health insurance coverage because they can?t afford it. But maybe the better question is, can you afford to be without it? Even lousy health insurance can be better than none at all, and you can find that out pretty quickly with one major health claim.

What are you doing to manage the high cost of health insurance?

( Photo from Flickr by Rosser321 )

4 Responses to Why Lousy Health Insurance is Better than None at All

  1. High deductible is the way to go unless someone else is paying your premiums.

    If you can’t cover the rare $5,000 bill, then you can’t afford the certainty of high monthly payments of a low or zero deductible plan.

  2. Hi Jeremy–One way to deal with the $5,000 deductible is to have an equivalent amount in an emergency fund, that way you’ll be covered if the worst should happen. But even if you don’t have, most health care providers will set up a payment plan.

  3. Thanks mc, she’s fine. It looked like a really bad accident, but all the tests have come back clear, and she’s back to a normal schedule.

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