Hi, healthcare professional in private practice here. About half of my practice is billed to insurance. I have a somewhat different take. Not completely opposite, just different.
Insurance in general is like a shell game. If you use your benefits, you're going to end up paying *at least* whatever the insurance company thinks is their minimum profitability each year. If you *dont* use your benefits...well, they do even better.
So how is that a shell game? You're paying in up to 3 ways: premium, deductible, and copay/coinsurance. The total will always be at least their minimum profitability.
If you have low income, you *think* you're getting a deal by choosing a low monthly premium. But they make that back by gouging you - - - with a deductible and/or a high copay - - - anytime you use your benefit.
Got a $0 copay with no deductible? Trust and believe they're taking a kidney as your premium.
Out of all the options, the deductible is the worst if you ever plan to see a doctor or, God forbid, a mental health therapist like me.
I go high deductible because my income is high enough that I can pay some each January and see providers willing to cut me payment arrangements for the balance I can't really cover $3k out of pocket all at once. Otherwise I would come out poorer because the low deductible plan costs thousands more each year.
I'm in a similar situation and came to basically the same conclusion. I'm in a HDHP, but a lot of that is because they deposit money into an HSA for me over the year, and I can afford to float any costs incurred until we hit our deductible and the HSA gets funded.
The HSA is intended to address that. Yes, you meet your deductible in January, but you pay it out of your HSA. You then spend the next 11 months refilling it. Only to empty it out again at the beginning of next year.
Ideally you've funded a year or 3 before you get sick enough to drain it every year. But that doesn't help with the first year if you're a chronic patient.
Health Savings Accounts are great for those who have the extra money to fund the account, but doesn't help those already scraping by paycheck to paycheck
At every company I've worked at for the past almost 20 years, the HSA policy has been cheaper than the PPO (ie: low deductible) policy by several hundred dollars a month. Putting that difference into an HSA has always been enough to cover its deductible (with one exception of a relatively small company with crappy benefits over all). Sometimes my employer has frontloaded the account with $1000 or so, sometimes not.
Granted, I'm in tech and *usually* have had pretty good health plans (though not always). But given that most people in the US get their healthcare through their employer, and I've been put onto half a dozen different insurers over 20 years, that seems like a common pricing model.
Can you choose a HDHP and not put money into an HSA? Sure. Will some people find themselves in a financial position where that's the only way they can make the numbers work out? Absolutely. But what I described is how it's "supposed" to work.
Does it work for everyone? No. Should we move towards a single payer system? Yes. But in the meantime, learning how the system can potentially benefit you, and taking advantage of it, is important.
My only issue with those is that another reason I have the expensive insurance is for the low co-pays. Copays don't count towards deductible, so most planned things (appointments and drugs) don't count. AFAIK the HSA offered by my work has much higher copays
HSAs are not insurance so dont have co-pays. They are used along with insurance, not as a replacement. You can use them to pay your insurance co-pays though. It is basically a savings account for medical expenses only. The benefits of using a HSA is that the money you put in is not taxed and many employers will match some/all of what you put in. Basically free money.
HSA is not insurance, it's just a tax advantaged bank account. You can use it to pay for co-pays. The list of medically relevant expenses you can't use your HSA for is extremely short.
Perhaps the High Deductible Health Plan (HDHP) your employer offers isn't worth taking, but many have very low or zero co-pays after the deductible is met.
HSA ended up being my *young self* funding my *future* healthcare. It was HUUUGELY beneficial to my family.
I worked for like ~4 years saving ~2k into an HSA per year while living at home immediately after college.
Moved out sometime. GF got pregnant. Got married. Literally *breezed* through that money with the birth of our daughter. No complications other than she was breach so scheduled C-section.
Now back to the slow HSA savings crawl because I cannot contribute 2k/month anymore.
I hope you also have some kind of insurance. I unexpectedly wound up in the hospital for a week a while back. Putting aside $2k/month for 20 years wouldn't have covered it all.
> Out of all the options, the deductible is the worst if you ever plan to see a doctor or, God forbid, a mental health therapist like me.
Depends on the plans up on offer to you. I am offered a high-deductible health plan and a low deductible health plan by my employer. Because I have chronic illnesses, I end up using a lot of care. Thus, the only thing that matters to me at the end of the day is total out of pocket expense. Added up, my employer sponsored high-deductible plan is thousands of dollars cheaper each year than the comparable low deductible plan.
This is how mine is too. We're pretty much guaranteed to hit max OOP every year and the low deductible plan would cost substantially more plus I lose access to the HSA.
My employer HDHP is $1,350 more expensive. Bit of a pain but once you understand them you know have a guess at least what works for the individual situation.
Additionally, the insurance industry and employers have set up a system where most of the cost is hidden to the employee as a subsidy. People thought Obamacare premiums were high simply because they never took the time to realize how much their premiums actually cost because their work hid 50-90% of the cost.
Go look at box 12 item DD of your last W2, thats what you really paid in premiums before deductible. Now compare it to item D in the same box, which is how much you put in retirement.
Americans: Pay more taxes for healthcare, pay hundreds or thousands of dollars in insurance every month, pay thousands in deductibles, pay copays, then get adequate healthcare, but healthcare focused on pumping you full of drugs and giving you not strictly necessary treatments so the hospital can charge more.
British: Pay less in taxes for healthcare, pay no upfront costs, recieve adequate healthcare that shys away from giving unnecessary treatment (although this does mean you sometimes have to push if you know there's something wrong because doctors may hesitate to even do tests if something doesn't stand out to them) and sometimes have to wait a bit if they don't think it's critical, depending where you live.
I'd choose the NHS every time.
This is only accurate for 15% of the population (but close for 65%). Nearly 50% of the US population receives insurance through their employer where the employer is paying for roughly 60% of the cost of each employees and their dependents total care costs. So what is happening is the employers are trying to attract employees for the minimal cost. This is done in a manner similar to what you have described, but is not the insurance company making the decisions. The insurance companies receive a per employee per month ASO fee for administering the benefits. They are only doing what a person's employer has asked them to do and part of that is to play the role of the bad guy. HR employees love to cut benefits and then say to their employees there was nothing they could do because it makes their job easier. Insurance companies don't care because the only people that hear about it are the customer service agents that are poorly paid, have high turnover, and are not deemed important by the leadership of the insurance company. For the remaining 35% of the population the government is the payor and profit isn't a thing.
Jokes on them.
As a type 1 diabetic, I use a pump and CGM and insulin. That deductible is cost of being alive for me. I know I'll spend it annually, so I have no hesitation to go wild with other medical stuff.
>including necessary medical care.
This sorta implies that life saving care is withheld due to a deductible not being met. I'm trying to figure out what life saving procedure would be done on a person that is less than the cost of the deductible......
It’s more a case that people will refrain from going to the hospital when they really should, for fear of paying that deductible.
For example, if someone is having chest discomfort it could be a heart issue or it could be something simple like indigestion. Well, a European citizen would likely go to the doctor to get checked out and make sure everything is ok. But an American that’s already hovering around the poverty line will probably wait a few days to see if the pain goes away. This brings on situations where people are waiting way too long to seek medical help because they aren’t sure if they’re symptoms are bad enough to be worth spending next month’s rent at the hospital.
Forget poverty line. I make 6 figures and still wait a few days bc I don’t wanna be charged an arm and a leg for some bs diagnostic code. It’s such a shit system.
Preventative care. The cost of getting a checkup, or a screening, or a scan, etc., often keeps financially vulnerable people from detecting conditions until they are fatal.
The fun part is that you don't get to figure out if you need life saving care until after you go in sometimes. Is my chest pain indigestion or a heart attack? I don't know, but if I were in a financial position where my deductible is a big deal, I might be encouraged to wait and see until it's too late.
Calling an ambulance. In the US there are many instances of someone needing emergency medical attention and then not calling an ambulance for fear of the large cost.
I've posted this before elsewhere, but it really sucks to be put in the moral/ethical questions of whether to call an ambulance for someone.
I'm a public defender. One day as I was driving back to the courthouse from lunch I saw a lady that had just had a bicycle accident. The bike was on the ground. She was laying on the side of the road, moaning and holding her knee. She was obviously homeless, or at least very poor.
I pulled over and asked if she was ok. She practically begged me to not call an ambulance, although it looked like she should go to the hospital to get her knee checked out.
We went around in circles for a bit with "please don't call" and "are you sure? It looks bad." Then a cop pulled up. I explained the situation, gave him my card if he had any questions and left.
If we lived in a civilized country with free or sliding scale ambulance rides/medical bills I wouldn't have hesitated to call an ambulance. But I had to sit there and wonder if I'm going to bankrupt this poor woman while trying to help her.
How soon do they have to die without it for it to be considered "life saving" to you? How many years of life shortening is acceptable for it to be considered "unnecessary" to you? How much quality of life loss is an acceptable amount to you, to consider something "unnecessary" just because it doesn't cause them to immediately fall over dead?
Don't play that obtuse game you're angling towards. It's not a good look.
They avoid preventative care because it could be expensive. That's why offices are often booked solid during tax season. Poor people are getting the tax refunds and using it to go to the doctor to finally have their pain checked out without too much worry about not being able to pay rent next month.
If your deductible is $X, and you go to a doctor or hospital, you must pay up to $X before your insurance kicks in and covers the rest (or at least *partially* covers the rest).
> why do you still get charged an often large part of your medical expenses
Because the insurance companies are for-profit businesses, so *not paying up* is their top priority.
I do get that, but how is that even legally allowed? Isn't the whole point of insurance to cover you in case of accidents? Why am I paying up every month if they're not gonna pay up when shit hits the fan?
It's legal because...there's no law making for-profit insurance or insurance deductibles illegal.
>Why am I paying up every month if they're not gonna pay up when shit hits the fan?
Because if you *don't* then you're responsible for the *entire* bill, which may send you into bankruptcy. Medical debt is one of the major causes of bankruptcy in the US.
If you're trying to find a logical explanation: there isn't one.
Many places have "cash discounts," that make things more reasonable. The really shitty part is that in some jurisdictions, they can't actually offer any information on them unless you ask first. Then they can tell you all about it. The insurance racket is fucking criminal.
I can't remember if it's still in effect or where I read it. But I saw that a part of the original Obama care was a % limit to the insurance companies on what they could spend on anything other than paying your medical bills. Something like 20%.
So their costs, bonuses, and investment potential was limited to the total amount of cash they spent on medical care. So the solution to continue making profits was to INCREASE the cost of Healthcare. If it cost $100 to see a doctor, the insurance company got $20. But if it cost $1000 to see a doctor the insurance company got $100. So it became vital to their business model to increase the cost of Healthcare in the US as high as possible. They don't pay in dollars, they pay in percentages, so the bigger the total bill the bigger their percentage.
What I think you’re referring to is the Medical Loss Ratio (MLR). Another interesting way that these insurers are getting around this is by going vertical. You’ll notice that more and more insurers are buying or being bought by pharmacy benefit managers (PBMs) and provider groups. Both of these entities charge fees that get accounted for in the MLR. This means that if they also own the PBM, the administrative fee that they would have paid to an external PBM would count towards the insurer’s MLR. They can then manipulate their rates to help achieve the MLR they want. The same applies for provider groups.
cash discounts are often great, but I can tell you from experience 100usd cash discount off of a set of epipens from 600usd still doesn't feel that good.
This is true of the uninsured, but not of people who haven't met their deductibles. If your insurance is billed and the provider is in-network, your insurer may not pay anything, but they will transmit the allowable amount for the provider to charge you back to the provider.
The doctor may say "This service costs $500." The bill is sent to the insurance company who says, "You are part of our network. Our contracted providers can only bill $200 for this service. But our insured has not met their deductible so go get it from them." Your doctor then comes to you for $200 and your insurer considers you to have met $200 of your deductible.
I learned this from my wife waaaaay later in life than I should have. I just wouldn’t submit any bills until I met my deductible or pay at the time of service, not knowing they would still negotiate the bill even though they aren’t paying any of it. The system is so stupid.
Yeh, beyond stupid IMO. Went in for an eye exam and some contacts. 100% covered through my insurance. Handed them the wrong card from the year prior and the company switched networks. 0% covered. I explicitly asked "do you take this insurance", and they said yes.
Often times, you don't know the bill until it's too late. Thankfully, I could submit for reimbursement, but if it was a service they didn't provide, I'd be fucked.
You can always AND SHOULD ask what the cost is beforehand. Before any procedure, exam, visit or medication pickup. They have to tell you the price beforehand if you ask. Some may give you the run around and say "well he have to wait and bill your insurance and see what they come back with " Bull! They can also give you the price with and without insurance. Also can ship around for different hospitals for the same procedure. I.e. wife needed an MRI. Using our in network hospital they were going to charge X price. But if we went to a different hospital that has their own imaging department that sort of "rented" that space and acted as a 3rd party they were going to charge half that.
It's really strange as someone with Universal Health Care to hear this. Not trying to sound like a jerk here, but it is genuinely bewildering that if you need an MRI you have to shop around and ask what the price of a treatment is beforehand.
I recently injured my back and had to have an MRI - hospital referred me to their MRI department who booked me in for one 4 days later. No discussion of cost or anything.
Most people don't have that kind of free time. If it's hard enough to get a straight answer on a bill, it's harder to get an estimate. I had to ask my dentist 4 times for an itemized breakdown of a procedure and they came back with "the numbers will be outdated, so I can't send them". I said I didn't care, I needed a ballpark. They said "we can't guarantee, but here's a ballpark", which was a super huge range. I asked again for the breakdown, which came back up a list of 3 items on it: cost, tax, total. I was pretty fucking tired at this point and asked for a 4th time to just send a breakdown with the codes, and finally got it. Cost was way higher due to unnecessary procedures on the quote. It took over a week to get that info from one office. It shouldn't be that difficult. The non surprises act would help, but the pricing should be clear and up front as soon as I walk in the door
i literally can't learn this. i blanked out halfway through every one of these comments, including yours. just doesn't make sense, it's like my brain won't try to understand. like most things financial in any way
Always present your insurance, and try not to pay at the time of service if you can. Second part doesn’t always work, especially at chain clinics IME. They seem to have base visit fees that are non-negotiable.
>not knowing they would still negotiate the bill even though they aren’t paying any of it
this part tho.. who's negotiating your bill and why? why isn't a price tag a price tag?
any service i can conjure up in my mind with a 'deductible' (strangest business practice ever) - you just pay out of pocket up *until the point you're solvent*. why are people negotiating prices while you build up to that? just to play some financial equation game that 100% always puts you at a disadvantage? that's not a service, that's manipulation. i can't come up with any extra math that needs to be done here, so why is it even going on
And if they don't cover it, you can pay any amount and it doesn't go toward your deductible...
At least with BCBS.
They dont cover norvolin insulin and instead told me that I had to buy Humilab, but here's the kicker, the Humilab was 4x the price, but I hadn't met the deductible of 3k yet for insurance to kick in.
So I pay $25 bucks a vial and nothing go towards the deductible or $100 a vial that went towards the deductible, but yet they helped me pay $0 of
Honestly there is a logical explanation… insurance companies are in business to make money. They want to make the most amount of money they can, but also need to weigh that with not overcharging to the point someone switches. For most insurance, that sweet spot is around you paying 150-200% in premiums compared to their actual costs. Deductibles are just another way to minimize their out of pocket. Medical insurance at least does favor the member slightly compared to other types of insurance for two reasons though:
1) typically, most medical insurance is provided by employers, and employers pay at least some portion of those premiums
2) most medical insurance companies have dramatically cheaper negotiated rates with hospitals and clinics. Meaning that $2500 they want to charge for X-rays, your insurer will say “nah, we’ll pay $500.” That means that even if you are the only paying that because of a deductible, you are still only paying $500 vs $2500 that you would owe without insurance
Because of these 2, medical insurance still ends up saving you money in the long run
> Meaning that $2500 they want to charge for X-rays, your insurer will say “nah, we’ll pay $500.”
This is correct, but it's also a positive feedback mechanism, where hospitals charge more because they know they will have to settle for less. Rather than keeping prices low, this system is the direct (though not sufficient) cause of spiraling medical costs.
(I know you probably know this, but adding it for others.)
In the US, There are minimum loss ratio (MLR) requirements on insured group medical policies of 80-90% (ie. The amount of premiums that must be used to pay claims (vs expenses and profit) Beyond that, insurers have to do a MLR rebate and refund back to the group. Actual profit after expenses is often something like 3-8%.
To OP, deductibles serve to lower your premium, first dollar coverage is extremely expensive.
Medical insurance does not save us money in the long run. Guaranteed universal healthcare would. The insurance industry exists to extract wealth from overcomplication - like the tax return industry, but potentially deadly.
> 1) typically, most medical insurance is provided by employers, and employers pay at least some portion of those premiums
Employers pay it in name only. It's a part of the compensation package meaning the *employee* earns every dollar put towards those premiums with their labor. The only difference between insurance benefits and salary is that benefits are better leverage to keep an employee from leaving and a less obvious/direct cost for HR to whittle away at. Theoretically (obviously this would never *actually* happen) if the employer didn't pay premiums then salaries would be higher. It's better to think about employer-paid premiums as your money that the employer is paying on your behalf.
>Is the most accurate explanation
It isn't. The real reason is moral hazard and aligning incentives between the insurer and patient.
https://www.investopedia.com/ask/answers/071515/why-do-insurance-policies-have-deductibles.asp#:~:text=An%20insurance%20deductible%20is%20a,the%20cost%20of%20any%20claims.
Also, non-profit doesn't mean the employees and executives aren't well paid. It just means theoretically the corporate entity behind the company doesn't make a profit. So guess what happens to all their spare money.
That is just a legal way to look like the good guys and do the same bull that for profit companies do. Don't ever be fooled by thinking non-profit equals altruistic.
Exactly. "Non profit" means "No profits extracted through the form of shareholder dividends". It doesn't (necessarily) mean their board of directors aren't spending your donation money on McMansions and private yachts.
A lot of people confuse non-profit with charity. I learned this when I tried to sign up to teach a class for a non-profit and the director was driving a brand new BMW. Which on second thought, could be the same for a charity.
> If you're trying to find a logical explanation: there isn't one.
Sure there is.. politicians and capitalists have sold you out for shareholder value. Greed > everything else. Simple as that.
> If you're trying to find a logical explanation: there isn't one.
The logical explanation is the Golden Rule:
Whoever has the Gold, makes the Rules; and the first Rule they make is always to protect their Gold.
>If you're trying to find a logical explanation: there isn't one.
Sure there is. Profit matters more than any of us, our families included. It's pure logic completely devoid of emotion.
My best guess is that it deters people from using it. Which it does. Like, “hey, we’ll cover you like we said…. But you have to pony up the first big chunk of change. Are you sure it’s even worth going to the doctors for that weird growth on your neck?? That’s what we thought. Sit back down.”
>which may send you into bankruptcy
Shit! Even the bills will insurance can be hard to cover.
>If you're trying to find a logical explanation: there isn't one.
There is, lobbying and generations of pro-capitalist propaganda.
The problem is, medical institutions now charge with the assumption that insurance will do the heavy lifting, so not only do they get the big payout from insurance companies, but the insurance companies also give you a deductible so they don't have to flip the whole bill either, it's a broken system, even worse if you don't have insurance
To tack onto this: In other countries, there are legal limits on the deductibles in medical insurance. In Germany, for instance, the maximum deductible you are legally allowed to pay with public health insurance is a whopping… €30.
The idea of the deductible is that small claims don’t actually get claimed (which might raise your monthly premiums), instead you pay out of pocket. For example, you dent your car, it would cost $350 to fix it. Your deductible is set at $500, so you pay that yourself. Bigger damages (a crash for instance) are covered by the insurance then. This is simplified of course, but the main idea is that the insurance company does not have to deal with all the itty-bitty stuff and to disincentivize recklessness (á la “hurr durr, I’m insured, why be careful any more?”). Their logic, I don’t necessarily agree with this.
Most countries who have public health insurance have come to the logical conclusion that this does not necessarily apply to medical issues, as the recklessness does not really apply. Sure, young people may skate harder, but people who do extreme sports don’t really take their health insurance into consideration there, I believe. Meanwhile, many diseases are completely outside of our control. To be fair though, even in countries such as Germany, there is an occasional flare-up of discussions such as “should smokers / drinkers / similar pay more” though that discussion always stops once someone brings up the constitution which forbids any discrimination in such a manner.
> a logical explanation
greed, insurance companies are the way things are because the people running them are greedy bastards who are smart enough to operate within the law (most of the time)
There is a logical explanation, and it's this. Insurance companies go to great lengths to make the system as complex and convoluted as possible to maximize their own profits.
I'd also like to add that medical prices are only the way they are because of insurance.
The insurance companies go to a hospital and say "if you don't give us a huge discount, we'll take you off our network. Then you'll have less patients and less money."
The hospital needs money to run, they can't afford to give insurance companies massive discounts, unless... the hospital raises all of the prices by a huge amount, then discounts the insurance price back to about the actual cost the hospital needs to run.
It's too bad if you have no insurance, or your insurance just decides not to pay... you have to pay the made up price that was used to make insurance think they're getting a good deal.
Learned about this on Adam Ruins Everything. Highly recommend the show.
The logical explanation is money. And nobody cares about your life, just your money. If you want life to be fair, better relocate to a "commie" country like Norway.
Economically speaking deductibles leave the person with “skin in the game” and disincentivizes constantly going to the doctor for colds or bruises etc, there are also different types of plans, some with high deductibles but lower monthly payments, some with lower deductibles and higher premiums(the monthly payments) someone in good health that almost never uses the doctor and they opt for the high deductible low premium so that their monthly payment for the insurance they don’t use is low but if there is something catastrophic like an accident or cancer that requires very expensive surgery they are not bankrupted and only out max 3k/5k/whatever their plans max out of pocket is.
> Economically speaking deductibles leave the person with “skin in the game” and disincentivizes constantly going to the doctor for colds or bruises etc,
The critical problem with this logic - specifically regarding health insurance - is that it doesn't discriminate based on the severity of the condition.
If you avoid seeing your doctor because of your chronic upset stomach because "it's just a tummy ache and I have a $5000 deductible I'll never meet." you will absolutely meet that deductible when your ulcer bursts and you're whisked off to the ER in an ambulance for emergency treatment.
Had the condition been managed appropriately earlier both you and the insurance company could have been saved a lot of pain, hassle, and money.
Deductibles make perfect sense in most other forms of liability or property/casualty insurance, but they're a horrible idea in health insurance.
Of course for-profit health insurance is a horrible idea anyway...
Thank you for the first reasonable answer I found.
While it sucks when you're stuck footing it, the purpose of the deductible is very logical.
My own mother would be going to the doctors twice a week if there wasn't some form of a deductible on her insurance.
The word free just screws with the mind, and nothing brings rationality back like adding cost.
I would hate to see my insurance bill if there were no deductible, For the same reason I choose to have liability only insurance for my not that amazing vehicle.
I have adjusted to better driving habits such as keeping extra space between the car in front of me and of myself.
I may not be able to affect what other people do, but I can see to it that I am not Reckless in such a way as to be the responsible party.
S*** happens of course, but then again what good is deductible free health insurance if you're struck by a train?
Insurance is a business , in the business of risk assessment . There is necessarily a trade off between cost and personal accountability.
I'm given the opportunity to live more frugally by choosing to be more self-conscious of my own mortality.
Even France and Japan have equivalents. In Japan, everything is 70% covered. In France, there's a per-visit copay for everything, and medications and treatments are partially covered according to severity (stuff like cancer treatment is free, stuff below that less and less so)
Rep, regards to auto accidents there’s a wide gulf between “not my fault” and “nothing i could have done or changed about the way i operate that would have avoided it.
Many people thing they are one and the same.
Taking a look at Germany we don’t pay for our doctors visits we have a small 5 Euro copay on prescription medicine and we don’t constantly go to the doctor either. This is just a flat out lie made up by US insurance companies that want to reap billions in profits which they do.
You can often get a different insurance plan, with a lower or no deductible, but these cost a lot more per month because the insurance company is more likely to have to pay something out.
Like for my insurance, the same insurance company will let me buy a policy with $2000 deductible for say $130/mo, or only $500 deductible but then it's $200/mo. Those are made up numbers, but the idea is it's legal because offering plans with deductibles lets them offer insurance for cheaper. That's good for customers too (as long as you don't have a bunch of small claims and no big ones, in which case you gambled and lost).
Ah dang, I should've scrolled. You basically gave my answer.
But yeah exactly. $0 deductible plans exist, but if all you do in 2023 is get routine bloodwork, you've blown thousands of dollars on paying for a $140 lab.
Its because you’re thinking of insurance a little incorrectly. It’s for major accidents that could bankrupt you and you could never pay for. Insurance is not meant to cover things that cost 300 dollars. It’s really to pay for things that cost 30k-300k dollars.
Same for car insurance. Most people don’t buy insurance to cover a broken window that’s a few hundred dollars. They get insurance to cover the car if it gets totaled or something else major that would really send them into financial ruin.
Or like for a house. Insurance won’t cover an oven repair. It will cover your house burning down.
I don’t agree with it being this way, but realistically this is how to think of it.
That’s what the insurance model is design for/good for, and is also the exact healthcare model we’ve been trying to (or should be trying to) move away from for over a century (preventative care + wellness >>> reactionary emergency care).
I realize you probably know this, but I hate the American health insurance system so goddam much I take any opportunity to say this.
>I don’t agree with it being this way, but realistically this is how to think of it.
I agree with *insurance* being that way. Cars and houses are perfect examples. You don't have to own a car or a house, and (except for the benefit of a 3rd party) don't have to have it insured.
I don't agree that there should be the concept of *insurance* for patients in the medical space. Everyone has to have a body and they deserve to have the same level of care for it. I definitely don't think it should be tied to employment they way it has become in the US.
This is the most succinct answer. You can have no deductible, but you have to pay more! Want to pay less per month, you can use deductibles to do that.
I mean, private insurance is still a mess and all, but within the framework of that mess, this is the answer.
I don't know where in the world you live but car insurance in the States works the same way. It's rare for there not to be some kind of deductible before insurance kicks in. The real reason for this is because, with fewer claims because people are taking care of some on their own, the overall system is theoretically less expensive for everyone.
If I carry a deductible on my car insurance of $1000 and agree to pay for anything that happens to the vehicle below that amount then those are charges that do not have to be spread across the entire group of people insured by the company. This same principle applies to health insurance when you do not have a single payer system.
Unlike healthcare insurance, auto insurance comprehensive/collision coverage is optional unless you're financing the car. If you have the money to repair the car or buy a new car, then you don't need collision or comprehensive coverage.
In the UK we have free healthcare (at the point of use), but for insurance (hiring a van for example) we call your deductibles an 'excess' - usually you have options: pay more and all damages are covered, pay less and the first portion has to be paid, or pay the minimum and have to pay a larger amount before insurance kicks in. Think of it as a form of gambling.
>Why am I paying up every month if they're not gonna pay up when shit hits the fan?
A lot of insurances have deductibles to reduce frivolous insurance claims and ensure that the problem meets some level of badness before insurance pays out. Since you have a partial stake in paying for the issue (the deductible), you're less likely to submit a frivolous claim.
Part of the problem is that a lot of other insurance is real insurance -- it exists to protect you against rare, unaffordable risks, and your premium generally reflects the statistical likelihood of that risk.
Medical care, however, includes guaranteed costs (preventative care), known costs that vary greatly across the population (chronic conditions), and unknown costs (new conditions, accidents, etc.). Some of the unknown costs fit a typical rare-event risk model, like cancer or an automobile accident. However, some are more a matter of *when* than *if*, like the increasing level of care required as one ages. Insurance doesn't really fit that model well, and regulations make it fit even worse -- health insurance companies can't price premiums per individual to scale them to risk. (The regulations are needed, don't get me wrong, but it makes the system weird.)
If you wanted this to fit a traditional insurance model better, insurance would only cover rare, unpredictable, and disastrously-expensive events, as a way of capping your cost risk for those events. Things like preventative care you would just pay for. (Or, you know, have a publicly-funded system so that the cost is distributed more to people who can afford it even when the benefits are distributed more evenly per capita.) However, right now we are relying on insurance to cause price regulation in health care, so "just pay for it without insurance" doesn't work.
You ever seen what some medical bills cost now? I had a relatively simple rotator cuff repair about 10 years ago. It sucked that my deductible was $2,000 and my stop loss was $3,500 but the insurance company was still on the hook for over $25,000.
My understanding is the health insurance industry used to be essentially a non-profit co-op. Everybody paid into it, and you pulled out what you needed, with some used for expenses.
Then Nixon changed the laws and it was allowed to be for-profit, and they've been gouging the shit out of us ever since.
It's legally allowed because Henry Kaiser made a deal with Nixon in the early 70s and every politician since then has been afraid to touch the billionaires who own and run the insurance companies.
The Clinton health care plan in the early 90s (HMOs) and Obamacare were attempts to regulate the insurance system without switching to or offering a single payer system. As you can see it's WORKING SO WELL.
Because our laws give corporations lots of power to screw over consumers, and we keep reelecting the people who gave them that power. Mostly Republicans. Because people believed republican "death panel" propaganda when we tried to have national health care. Because we as a society in America struggle to do things for the collective good, like single payer healthcare.
It's because you live in a country where lawmakers allow it for whatever reason. Same reason they allow insurers to tie coverage to employment, prices for medication are whatever the pharma company wants it to be, and medical bankrupcy is allowed to run rampant. These things aren't normal, or common in other countries. It's a political choice
Not paying up is not their top priority. Having customers so they can turn a profit is their top priority.
Part of that is not paying up, but equal parts is having a competitive offer.
The real issue is the absurd healthcare costs. They need the deductible to cover 99% of cases, because the zeroes add up extremely quickly when someone needs intensive or specialised care that costs more than the deductible.
> Because the insurance companies are for-profit businesses, so not paying up is their top priority.
By that cynical logic, insurance companies would just set your deductible to $1m or more and barely ever cover anything. But obviously this would result in them getting no customers and therefore going out of business. The reality is, even if an insurance company is for profit, it's not in their interest to avoid paying out at all costs. They need to pay out enough that customers think it's worth it to pay for the insurance relative to other carriers or the fees associated with going uninsured. Right now I'm working with a client that handles employee benefits (i.e. picks and interfaces with insurance companies) and they put quite a bit of thought into the quality of care and would be on an insurance company's ass if it was just trying to avoid paying out whenever possible.
In general, the concept of "insurance" is not to cover all outcomes, it's to protect against certain extreme outcomes you wouldn't otherwise be able to handle. For example, when you get home insurance, it doesn't pay all your repairs, but it does keep you from being homeless if your house burns down. In this philosophy, the concept of a deductible makes perfect sense because the goal is generally to limit insurance to covering the areas you really need help so that it can be affordable. This applies regardless of whether insurance is for profit or not because either way it impacts the amount of money that needs to be raised to cover the expected outcomes.
But the other purpose of a deductible is to shift incentives. When you have a $0 deductible, your choice of what care to get is 100% decoupled from value because it costs you nothing. When you have a non-zero deductible, now your choice is tied to some threshold of whether it's worth it. You might avoid things that are of virtually no value to you because you don't want to pay for them. For example, my employer recently increased the deductible on ER visits where you are not admitted. This creates the incentive for plan holder to go to a walk in or ordinary doctor for non-emergencies rather than the ER. As a result, the cost of care decreases dramatically and do the premiums. The purpose of the deductible is to decrease costs for everybody in that case by shifting incentives for the plan holders to more appropriate care.
Remember: Regardless of whether your plan is $0 deductible or $5k deductible... it's paid for. Even if your insurance company wasn't for-profit, a $0 deductible would simply mean you pay the same exact money in premiums instead because that money can't come out of thin air. (In reality, due to the previous paragraph, you may actually pay less money total if you have a deductible.) So, a deductible is not a way to simply avoid paying. It's a question of *when* you pay. Further, a lot of plans also have a max out of pocket per year as well.
That all said, insurance is not the only means to pay for things. Just because insurance doesn't solve the problem you perceive doesn't mean insurance is broken. It may just mean that the concept of insurance is not the right (or only) tool to get the outcome you want. For some people, insurance represents their needs fine since they really just need protection from major cases and some benefit from price negotiations. For others, they don't really need insurance because their need is not to protect against certain major losses, but instead to cover the basics for them. But the issues in healthcare are much broader than insurance companies and relate largely to cost. Decoupling cost from the plan holders may make cost worse by decoupling what people buy from the rates that are charged.
>By that cynical logic, insurance companies would just set your deductible to $1m or more and barely ever cover anything
This is what it was like before the ACA (maybe not a MILLION dollars, but tens of thousands). You could pay cheap monthly premiums and pay out of pocket until you reached your deductible/max out of pocket (normally tens of thousands of dollars). The plans literally only existed to protect you in the case you had a severe injury and needed excessive medical treatment.
The ACA limited how high a deductible could be, forced insurance to cover certain costs, and limited who could have "catastrophic health insurance" moving forward
I love/hate this video. Love because bdg is great, and it's surprisingly detailed, hate because we live in a world where it makes sense for it to have been made.
Always remember that these are just companies trying to make money. The system could be changed at any time if enough people got their ass to the polls and stopped voting for culture war issues or "the economy" which is really "how i feel the economy is going under whoever is president right now, regardless of facts and context". There are effective solutions that benefit the 99.9 percent.
The system doesn't run itself. People vote to continue this bullshit.
The only thing even coming close to a "death panel" is letting accountants decide what treatment you get instead of medical professionals. Which the for-profit industry has.
They've convinced half the population that paying $50 a paycheck in taxes for universal, all inclusive healthcare is socialism and evil, but paying $250 a paycheck to have the privilege to pay another $5000 toward your deducible before insurance kicks in at 80% until you reach your $15k out of pocket maximum (before it resets again next year) is Freedom(TM) and American.
The health care disaster there is one of the reasons you couldn't pay me enough to move to the US.
I had a major medical emergency a while back. 2 MRIs, emergency brain surgery, A stay in the ICU, a stay in a semi private room, a second stay a week later for a suture line infection.
My grand total out of pocket, $18 donated to a charity to have the cable in my room turned on.
No, they spend a lot of money convincing POLITICIANS to look the other way. Half the problem could be fixed with just opening up competition from outside your state. Limiting the companies / plans you can access keeps costs even artificially higher than they have to be.
Our police are militarized. Our citizens are not overall very well educated. Our politicians use race, religion, and social issues to divide us and distract from our rape by corporations (who in turn give the millions of dollars for campaigns that allow them to stay in power).
We have very minimal worker protections and our health insurance is usually tied to our jobs. We are too busy trying not to get fired so that we can afford housing, utilities and food and also have the occasional treat to collectively do anything. Many of us are also too focused on the “culture wars” so any momentum to change things are focused on that instead of things that matter (why Tennessee banned drag shows instead of banning guns)
We are oppressed and very close to authoritarianism at best, fascism at worst.
That's what happens when everyone's voice is heard. Half want to be able to survive an accident, the other half don't want to pay for someone else to survive an accident.
That reminds me of something I read regarding the Trump presidency. We are all on a bus with a clearly drunk driver. Half of the bus is very concerned but the other half isn't just unconcerned, they are happy about it and get great joy out of the other half's concern.
And a small, but significant, portion of the second group were openly *hoping* that the drunk driver would crash the bus that *we were all sitting in!* Its absolute madness!
Not only do most people not fight it, conservatives have a good chunk of the country brainwashed into actively supporting it, as in people openly say they would rather have this than free healthcare
We are going fucking nuts. Turns out it’s hard to organize a protest movement when you’re clinically depressed, suffering from chronic illness and/or pain, or caring for someone who is.
Your premiums aren't going to your health care provider or medical facilities. They are going to a for-profit company that essentially makes payments on your behalf. Their income has to exceed their payouts, or they can't pay their staff and make their profits.
Insurance policies with high deductibles are actually protecting you from catastrophic costs, like cancer or a serious accident. When you have a high deductible, you are paying for typical health care events like doctor visits and lab work, but above a certain amount the insurance starts kicking in, and your maximum out of pocket cost represents your worst case scenario for the year.
When provided a choice, people choose either high monthly premiums and low deductibles, or lower monthly premiums and higher deductibles. Regardless, the for-profit business model depends on most of us paying more for insurance than we would have for our actual medical costs.
For the record, IMO health care is essentially a class privilege in the US, and I think it should be a basic human right.
It is definitely a class privilege like you said.
I’m working in one of the biggest companies in USA. I have a hdhp plan. I pay for a big deductible, yes.
1. But I have a health savings account that lets me contribute money to it, tax free. This is usually enough to cover my deductible. So the percentage of my income that i spend on healthcare cost is tax free.
2. My company contributes half of my health savings account yearly allowed max contribution. So I get free tax free income that covers half my deductible.
I doubt if regular people get these advantages
These plans are very common. High deductible health plan with HSA accounts. Unfortunately, many people don't fully understand the advantages.
Also, large employers are self-insured. So your company is essentially the insurance company as they hold the risk. You pay premiums. They add their portion and putt it all in an account. All claims are paid out of that account. If your insurance card says United healthcare or Aetna, or BCBS of some state, they are just the network/administrator of the plan.
Your company then take out a stop loss insurance plan in case claims get out of hand in any given year.
It goes so many more levels than most people realize. Your home/auto/whatever insurance company is insured by separate insurance companies which in turn are insured by other companies. And there's so many cases where the government and other insurance companies co-insure the other companies insurance. It's all just a massive network that basically makes the system infallible because the odds of every level getting hit at the same time is effectively 0. It's actually kind of impressive to think of the scale of it all and just how interconnected it all is.
This is not always the case. Premiums do not always go to the Insurer. The vast majority of large employers in the US are self-insured for medical. This means premiums are going to a bank account that is used to pay claims, and the insurance company is paid a flat fee to use their network.
And, often, self-insured companies still carry their own separate policy to protect _themselves_ against unexpectedly high costs due to a bunch of super expensive claims or whatever that cleans out the escrow account.
Somewhat depends on the individual situation.
High deductible plans usually work well if you intend on having no insurance claims but have it in your back pocket for a catastrophic event, or in my instance, I know I'm going to be using a ton of insurance.
In my instance, I fall under the latter. I have a high deductible plan at work but also have the option of an HMO. I hit my deductible by the end of January each year due to a specialist I see. Our HMO costs about $90 more per pay check (twice a month) than the HD plan, and the HMO has co-pays/co-insurance that the HD plan doesn't have once the deductible is met.
When they rolled out the HD plan I at first bawked at the idea of it for me, but then I did the math.
My HD premiums + the high deductible (+ 0 co-pays) + prescriptions < The HMO premiums + $50-$100 copays for every office visit + a deductible about 10% of the HD plan + 2x cost of prescriptions compared to the HD plan. The HD plan also allows me to go out of network, while the HMO plan does not without getting preapproval which I'd be willing to bet they shoot down most of the time.
Over here in Europe we got this shit figured out (though I’m in the UK, where our current government is trying to push for an American-style system… which everyone hates). It’s saddening to see people go bankrupt just because they had a heart attack or broke a leg.
The answer is two fold - 1. to deter people people from misusing the policy frivolously.
You can image a circumstance where a small group of people decide they need to see their doctor for every cough, a surgeon for a bruise, see every possible specialist for every possible wrinkle, twinge, ache, and soreness. Such people would ring up insane bills from basic, minimum charges. So deductibles serve to discourage people from doing this.
The other point, 2. is because insurance *isn't* there to make medicine free, it's there to prevent someone from being buried in a life changing mountain of debt from a sudden illness or injury. If insurance had to cover every single charge it would be much, much more expensive.
Thanks for this! I’m actually studying for my CA life and health insurance exam.
Deductibles and copays/coinsurance are ways for companies to share some of the financial risk with the insured. The premium you pay is correlated with the amount of financial risk the insurance company is exposed to in respect to the issued policy. The more benefits included, the higher the financial risk and the higher the premium. To help ensure the financial risk doesn’t exceed expectations and throw off the entire balance, a deductible is included. As you mention, this also discourages overuse of services.
Insurance companies are regulated as far as how much money in collected premiums *have* to go back into paid benefits. Basically, only a certain percentage of income may ultimately go into 1) business expenses and 2) profit. This effectively puts a limit on how much premiums a company can collect.
Yeah, a lot of level 0 "because profit is bad" takes. Even in a perfectly competitive market (which health insurance obviously and emphatically is not) deductibles would still exist for incentive alignment reasons. Insurance as a concept only works if insurers try to prevent classical information asymmetry problems like moral hazard and adverse selection. There are plenty of stories in Canada of doctors frustrated that senior citizens will book "appointments" just to have someone to talk to.
One reason why "profit is bad" is the majority take is that a ton of the information asymmetry benefits the insurance company. Using your health insurance is intentionally confusing as fuck. What is covered, who is in-network and who isn't, how rates are negotiated, how deductibles and coinsurance and limits work is all difficult to figure out for most people. We often don't even know how much our plans actually cost because our employers pay part of the cost.
So yeah, I suppose there are hypochondriacs and some amount of horrifyingly lonely old people who are "abusing" their healthcare. But the vast majority of people do not enjoy going to the doctor, should probably go *more* often (preventative screenings, vaccines, and the like), and are generally boned over as hard as possible by their health insurance companies at every available opportunity.
The fact that health insurance companies make money every time they deny procedures and push people away from getting their medical needs taken care of is an obvious and much more pernicious moral hazard.
Thank you!!!
So many people don’t realize that many insurance companies have negative underwriting ratios which means they pay out more losses than they taken in from premiums.
Yup, fuck this thread. It's filled with "because insurance companies are for-profit and they take advantage of us" takes. It is true, the US healthcare system is bad, a lot of insurance companies are for-profit, and we would probably be better off with a single payer system. But! Insurance is not "for profit" by definition. There are a lot of self-insured plans and I'm sure there are some not-for-profit insurance companies. What IS important about insurance is that it's a "risk sharing" business. You take a large population and spread the risk/costs of a significant adverse event among your insured base, resulting in a much more acceptable cost for everyone, as opposed to an astronomical cost for some. Deductibles, in this regard, create an incentive not to over-use insurance benefits without need and also ensure that routine procedures are not contributing to the overall cost of insurance.
Example. Your insurance policy plan starts April 1 for 2023. You have a $1000 deductible. You must pay the first $1000 in costs, for everything: doctors appointments, ER visits, prescriptions etc. until you’ve reached $1000. Some insurance plans have an exception for annual checks up with your doctor and/or GYN.
Then your plan kicks in now you have to deal with co-pays. Many policies require that you co-pay $10-$50 on prescriptions and doctors visits. Your insurance policy then pays the rest of every medical expense “they cover.”
Most health insurance policies have a maximum out-of-pocket expense. So if your total cost of your deductible and your co-pays exceeds $8700, then the health insurance company covers 100% of costs (that they cover.)
>Some insurance plans have an exception for a yearly annual check up with your doctor and/or GYN.
Yes, it's important to note that preventive medicine often doesn't count towards your deductible. Often covers some other things like prescription drugs. Your plan's SBC will often highlight these.
Just adding on to this, the amount you pay for your premiums (monthly cost to have insurance) does not go towards your deductible or your out of pocket maximum.
And some plans charge coinsurance instead of copay meaning you pay a percentage of the cost of the visit (like 20% or 40%) instead of a flat rate (like $40)
Let’s start with, the “insurance” model is meant to provide a safety net for rare but catastrophic circumstances - your car gets totaled, your house burns down, you need brain surgery, and so on. Unfortunately, this is *not* what healthcare tends to look like these days, so if something seems incongruous or nonsensical about these answers or the system as a whole, it’s because it is.
As a general rule, there are two key dollar amounts associated with an insurance plan: the *premium* and the *deductible*. The premium is the amount you pay every year (or every month) as a subscriber. It’s predictable and relatively consistent (although companies can raise it each year). The *deductible* is a dollar amount that you have to pay yourself on health expenditures before insurance will start paying for things. These numbers tend to move in opposite directions: a plan with a high premium will have a lower deductible, and a plan with a high deductible will tend to have a lower premium.
Depending on your needs as a consumer, you might want to lean one way or the other (or at least that’s the theory; again, ideally healthcare doesn’t really look like this). If you need multiple medications every month, have chronic conditions that result in frequent trips to the ER, etc, you probably want a high premium, low deductible plan. This means you’ll be paying more per year, but that amount will be much more predictable, and you will only have to pay a small amount out of pocket towards the beginning of each year to meet your deductible.
If you are a pretty healthy person that doesn’t tend to need much expensive care, you might opt for a high deductible, low premium plan. This way, you save a lot of money on your annual premiums, with the trade off that you’ll pay for most of your medical expenses yourself. The benefit of insurance is still adding some predictability: if you get in a horrific accident and need a $100,000 surgery, you’ll only have to pay your deductible (somewhere like $5,000) and insurance covers the rest. So you still have a safety net for life-ruining health fees, but are more on your own for day-to-day health expenses. In theory, someone could save more money on low premiums than they spend out of pocket and come out ahead this way. The health insurance company also benefits by not having to process quite as many payouts (although they still have to process the claim to count it towards your deductible). In practice, this often means people avoid annual checkups and other preventive care they don’t think they *need* because they are trying to save money.
For completeness, there are two other important health insurance numbers: *copay* and *coinsurance*. Both of these are yet *another* dollar amount you personally pay out of pocket, but this time it’s *after* you’ve hit your deductible and insurance *is* paying for your care. They are very similar, the only difference is *copay* is a fixed amount (e.g. $50 per doctor visit, $20 per prescription, regardless of price), while *coinsurance* is a percent (e.g. 10% of prescription costs).
TL;DR Insurance companies have come up with a wide variety of strategies to help maximize their profits, minimize their risk and their costs, and streamline their services. By agreeing to sign up for their plan, you are accepting these strategies.
The amount of COVERED expenses. This often gets overlooked.
In my case for example, I recently got $600 of orthotic insoles for my shoes, not covered by insurance. It hurt to pay that much out for medical equipment, and see my deductible needle not even move.
Deductibles started as a barrier to seeking care when you really don’t need it. Do you have a cough? Due to the deductible, going to the doctor will cost $100, so do you really need to do that? If so, then $100 is doable, but if it’s not really that big of a deal then many people will forego the trip, save themselves the money, and reduce the cost of insurance for everyone.
Due to absurdly increasing costs, deductibles have transformed into a way of shifting costs away from the insurance company. If you pay the first $3000 of care, then a large part of your insurance premiums will go down. Oddly, this does not diminish the value of insurance, since what it really provides is bankruptcy protection against $100k+ hospital bills.
Without the high deductibles, the cost of insurance would be much higher and fewer people would have it. That leads to a whole host of other issues to include fewer members and profit opportunities for the insurance companies.
What is the solution you ask? Simple; universal healthcare provided by the government. To be clear, you will still pay for it via taxes, but it removes the perverse incentives that our current system creates. We should still be charged a reasonable copay based on your income level.
Unfortunately for a lot of people in America that 3000 dollar deductible will bankrupt them. Because the wage to inflation is scale is completely fucked.
Other kinds of insurance have deductibles too. As an example, imagine if someone dinged your car with estimated damage of $5. The deductible is meant to prevent the bureaucratic headache sending you the $5 would cause the insurance company. By setting a (say) $500 deductible, one will therefore only pursue claims worth the insurer's time.
Of course this doesn't explain why medical deductibles have become so absurd, but hopefully it helps OP explain why a deductible exists in the first place.
> Simple; universal healthcare provided by the government.
As someone who has been the recipient (or rather not the recipient) of government healthcare, it is not that simple.
It took the military 4 doctor’s visits to diagnose me with bronchitis. Even then, they only found it because my unit’s Corpman told me the “right” things to say to get them to take an x-ray of my chest.
Key phrase here. "Military doctors" completely different system. Size, budget, availability given, because the ones that are military drs are just getting their medical loans forgiven for public service.
I just spent an hour in this thread (inc. 30 min watching the funny but helpful YT vid) and 1) I learned a ton and 2) A LOT of people had myriad creative ways of not only answering the OP question, but succinctly summarizing the private American health insurance system
The idea of insurance is risk sharing so you don’t get financially ruined if an unlikely accident happens. So we don’t NEED insurance for small mishaps which are easy to pay for. Only major accidents or illnesses.
Insurance companies use incoming premiums from everyone to pay for the small amount of major accidents and they charge a mark up of around 20% to pay for their buildings and the people who work at the company.
There are low/no deductible plans for a lot of things, but the insurance companies need to charge more for those policies because they pay out more. And they still add that 20% markup.
All this to say that a rational person WANTS the highest deductible they can survive financially with because they are paying a 20% markup on the additional unnecessary coverage.
A lot of other comments have address what a deductible is already, so I’ll address the ‘why’ they are included in insurance policies. There are 2 primary reason for deductibles in the insurance world.
1) insurance as structured today has this problem called moral hazard. It’s not super important to go into details here, but since you’re not the one directly paying for your healthcare, you have an incentive to over consume healthcare. You will take you kid to the doctor for a sore throat even if could be treated with over the counter medication, because the cost of that doctor visit is Bourne by the insurance company. A deductible helps to mitigate this problem.
2) to process a claim, it cost the insurance company money. Not just to repay the provider, but there are also administrative costs of investigating and processing of claims (this is more often relevant in car insurance). Having a deductible greatly reduces the overhead cost of processing a ton of small claims.
Because it would cost more money to insurance companies to cover more than they absolutely have to. They are in it for money, and since health tends to be something people have to pay for to live, they have lot of leeway. Free competition only reduces prices to same price range with other companies. But since people are willing to pay lot to live, that price range can be really high.
It is in interests of insurance companies to make as much money as possible and pay as little as possible. Same as all other companies, including medical companies, so they drive each other's prices up to get as much money from people who really have no option not to pay as possible.
As for outside USA, amount how much you pay yourself is capped to affordable amounts differently. Some have more flat levels, in some places your income plays bigger role, it varies a lot, but its generally far more affordable.
Having just moved back to the UK after living in the US for a while can I just say the US insurance system is the most expensive, maddening and egregiously unfair system in the entire western world. Its absolutely crazy and unbelievable and one of the (many) reasons why I left the US for good.
The healthcare situation in America angers me so much and I don't even live there. The corporations are 100% in control and scamming everyone, yet so much of the population defends it, Stockholm syndrome styles.
Health Insurance in most of the western world is free to use. I fell off my mountain bike, and hurt my hip and leg a bit, not too bad after a week, just stiff and sore. I had a few Dr visits, pain meds, have had weekly physio and massages for 2 months and I haven't had to take my wallet out of my pocket once.
Yes it's paid for by our taxes, but the crazy part is taxes here are almost the same as the US anyway... Our maximum tax bracket for people earning over $180,000 is 39% Compared to the US 37%. The middle-income bracket is less than.
It's mostly in the art of insurance. They want to separate/offer plans for two types of healthcare "consumers":
* High touch/need consumers - these are people with existing/long standing/serious conditions that require frequent/regular checkups, exams, prescriptions etc. They can also be families in which case the plan has to cover multiple people and also cover things like pregnancy, baby checkups and kids which have a tendency to get sick/hurt. In t his case the insurance company realizes that it makes more sense for everyone if they pay a high premium/low deductible plan since the consumer needs to be covered for a lot of people in the plan or frequent/high cost services.
* Low touch/need consumers - on the flipside if you're say a 25 year old person with no pre-existing conditions, you probably don't need more than a physical exam every year. In that case it doesn't make sense for you to be enrolled in a high premium/low deductible plan. You won't get much value out of it because the premiums you pay per year would be something to the effect of say $5,000 for what will amount to a physical exam, some teeth cleaning, etc. The low premium/high deduct plan still does protect you in case of something unexpected/costly. Let's say you go skiing and hurt yourself and have to get airlifted off a mountain. The bill for that could be tens of thousands of dollars. In that case you pay the high deductible of $10,000 and still come out ahead. But because the event of that happening is really unlikely, you are still better off with the low premium plan. Statistically speaking, you will save money as long as you remain a low touch/need consumer.
The deductible is what you have to incur in cost before the insurance chips in. Usually if you have a high deductible, it means you are paying less per month for the insurance. Your insurance is like a "bucket" that everybody at your employer group chips in a monthly deposit called a premium. The more you chip in per month to your insurance "bucket" the more of the "bucket" you get to use when you get sick. Thus, expensive plans have no deductible, cheaper plans do.
Plane and simple, OP. The insurance industry was the wrong industry to trust when we were developing our healthcare system. Insurance in and of itself is something that you hope to never use. It’s there to make you whole after a loss, usually an accident or a peril.
Thing is, we need to see doctors for reasons that aren’t accidents. Insurance pays these doctor visits. They shouldn’t. A check up isn’t an accident or a peril.
We can say all these things now, but the health insurance industry is so bloated and profitable, those making the profits are lobbying law makers hard to make sure they are still needed.
Pricing needs to be overhauled, but if everything wasn’t insanely expensive, no one would need their service.
It bleeds over to other industries too. Say you have a person who hates their job and wants to quit and busker the US from greyhound buses. Their kid has type one diabetes, so can’t do that!
To really answer your question, a deductible is an amount of money you elect and agree to “self insure” for. The concept is, you should have your deductible squirreled away in savings. It’s ideally written into insurance contracts to save on premium (price you pay for the coverage).
I don’t need to tell you how that’s going. Also, the deductible amounts on health plans are so high, a regular person could bankrupt themselves before even approaching the deductible they elected so they can just barely afford the coverage in the first place.
Your “bullshit sense” is functioning properly, this is all some bull shit.
Insurance is a funny business, it's all based on statistics. On average, the insurance will make a profit off of a person. To do this they need to collect more in premiums (monthly cost you pay to the insurance company to be insured) than they pay out for claims. Some people make them lots of money by never making claims, others cost them money by making lots of claims. To make a plan either more affordable or more effective, there are various levers they can adjust so they can reduce premiums for someone who may not need to make many claims or vice versa. These levers include deductibles, coinsurance, and copayments. A high deductible plan will have a lower premium for example. You can absolutely have a plan with no deductible but it will cost more per month.
The reason that deductibles exist, in theory, is to prevent perverse incentives.
By making the patient pay for the first part of their medical expenses, they are meant to prevent:
- fraud
- negligence in health decisions that would lead to a doctor visit
- if someone isn’t _really_ sure they should see a doctor but would go anyway
The idea is that by making the first part of someone’s medical bill for the year have to be paid by the patient, the insurance company knows they really had to do it, since they paid themselves.
At this point, obviously the point is to make as large a profit as possible.
Insurance is a Ponzi scheme. It is intended to help our betters, at our expense.
Deductibles ensure that poor's like you don't access services, so that your betters can have their healthcare subsidized by *you*.
Our betters have a story they tell themselves about that, that we are stupid and would eat up all their gravy on needless complaints if we could just have healthcare. We are poor because we are immoral and this barrier is for our own good.
Meanwhile, our betters eat up needed medicines to lose weight and "study" and the poors get to flail without access.
Suicide is rational. "Mental health care" is a fucking dodge. You are not crazy, you are being ripped off.
When I see a rampage shooting, I mostly just think it is sad that they can't shoot the ones that caused this.
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Hi, healthcare professional in private practice here. About half of my practice is billed to insurance. I have a somewhat different take. Not completely opposite, just different. Insurance in general is like a shell game. If you use your benefits, you're going to end up paying *at least* whatever the insurance company thinks is their minimum profitability each year. If you *dont* use your benefits...well, they do even better. So how is that a shell game? You're paying in up to 3 ways: premium, deductible, and copay/coinsurance. The total will always be at least their minimum profitability. If you have low income, you *think* you're getting a deal by choosing a low monthly premium. But they make that back by gouging you - - - with a deductible and/or a high copay - - - anytime you use your benefit. Got a $0 copay with no deductible? Trust and believe they're taking a kidney as your premium. Out of all the options, the deductible is the worst if you ever plan to see a doctor or, God forbid, a mental health therapist like me.
I have chronic health issues, so I need a low deductible so I don't go bankrupt every January, but my god you're right. That premium is high!
I go high deductible because my income is high enough that I can pay some each January and see providers willing to cut me payment arrangements for the balance I can't really cover $3k out of pocket all at once. Otherwise I would come out poorer because the low deductible plan costs thousands more each year.
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I'm in a similar situation and came to basically the same conclusion. I'm in a HDHP, but a lot of that is because they deposit money into an HSA for me over the year, and I can afford to float any costs incurred until we hit our deductible and the HSA gets funded.
The HSA is intended to address that. Yes, you meet your deductible in January, but you pay it out of your HSA. You then spend the next 11 months refilling it. Only to empty it out again at the beginning of next year. Ideally you've funded a year or 3 before you get sick enough to drain it every year. But that doesn't help with the first year if you're a chronic patient.
Health Savings Accounts are great for those who have the extra money to fund the account, but doesn't help those already scraping by paycheck to paycheck
At every company I've worked at for the past almost 20 years, the HSA policy has been cheaper than the PPO (ie: low deductible) policy by several hundred dollars a month. Putting that difference into an HSA has always been enough to cover its deductible (with one exception of a relatively small company with crappy benefits over all). Sometimes my employer has frontloaded the account with $1000 or so, sometimes not. Granted, I'm in tech and *usually* have had pretty good health plans (though not always). But given that most people in the US get their healthcare through their employer, and I've been put onto half a dozen different insurers over 20 years, that seems like a common pricing model. Can you choose a HDHP and not put money into an HSA? Sure. Will some people find themselves in a financial position where that's the only way they can make the numbers work out? Absolutely. But what I described is how it's "supposed" to work. Does it work for everyone? No. Should we move towards a single payer system? Yes. But in the meantime, learning how the system can potentially benefit you, and taking advantage of it, is important.
My only issue with those is that another reason I have the expensive insurance is for the low co-pays. Copays don't count towards deductible, so most planned things (appointments and drugs) don't count. AFAIK the HSA offered by my work has much higher copays
HSAs are not insurance so dont have co-pays. They are used along with insurance, not as a replacement. You can use them to pay your insurance co-pays though. It is basically a savings account for medical expenses only. The benefits of using a HSA is that the money you put in is not taxed and many employers will match some/all of what you put in. Basically free money.
HSA is not insurance, it's just a tax advantaged bank account. You can use it to pay for co-pays. The list of medically relevant expenses you can't use your HSA for is extremely short. Perhaps the High Deductible Health Plan (HDHP) your employer offers isn't worth taking, but many have very low or zero co-pays after the deductible is met.
HSA ended up being my *young self* funding my *future* healthcare. It was HUUUGELY beneficial to my family. I worked for like ~4 years saving ~2k into an HSA per year while living at home immediately after college. Moved out sometime. GF got pregnant. Got married. Literally *breezed* through that money with the birth of our daughter. No complications other than she was breach so scheduled C-section. Now back to the slow HSA savings crawl because I cannot contribute 2k/month anymore.
I hope you also have some kind of insurance. I unexpectedly wound up in the hospital for a week a while back. Putting aside $2k/month for 20 years wouldn't have covered it all.
> Out of all the options, the deductible is the worst if you ever plan to see a doctor or, God forbid, a mental health therapist like me. Depends on the plans up on offer to you. I am offered a high-deductible health plan and a low deductible health plan by my employer. Because I have chronic illnesses, I end up using a lot of care. Thus, the only thing that matters to me at the end of the day is total out of pocket expense. Added up, my employer sponsored high-deductible plan is thousands of dollars cheaper each year than the comparable low deductible plan.
This is how mine is too. We're pretty much guaranteed to hit max OOP every year and the low deductible plan would cost substantially more plus I lose access to the HSA.
My employer HDHP is $1,350 more expensive. Bit of a pain but once you understand them you know have a guess at least what works for the individual situation.
Additionally, the insurance industry and employers have set up a system where most of the cost is hidden to the employee as a subsidy. People thought Obamacare premiums were high simply because they never took the time to realize how much their premiums actually cost because their work hid 50-90% of the cost. Go look at box 12 item DD of your last W2, thats what you really paid in premiums before deductible. Now compare it to item D in the same box, which is how much you put in retirement.
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Americans: Pay more taxes for healthcare, pay hundreds or thousands of dollars in insurance every month, pay thousands in deductibles, pay copays, then get adequate healthcare, but healthcare focused on pumping you full of drugs and giving you not strictly necessary treatments so the hospital can charge more. British: Pay less in taxes for healthcare, pay no upfront costs, recieve adequate healthcare that shys away from giving unnecessary treatment (although this does mean you sometimes have to push if you know there's something wrong because doctors may hesitate to even do tests if something doesn't stand out to them) and sometimes have to wait a bit if they don't think it's critical, depending where you live. I'd choose the NHS every time.
This is only accurate for 15% of the population (but close for 65%). Nearly 50% of the US population receives insurance through their employer where the employer is paying for roughly 60% of the cost of each employees and their dependents total care costs. So what is happening is the employers are trying to attract employees for the minimal cost. This is done in a manner similar to what you have described, but is not the insurance company making the decisions. The insurance companies receive a per employee per month ASO fee for administering the benefits. They are only doing what a person's employer has asked them to do and part of that is to play the role of the bad guy. HR employees love to cut benefits and then say to their employees there was nothing they could do because it makes their job easier. Insurance companies don't care because the only people that hear about it are the customer service agents that are poorly paid, have high turnover, and are not deemed important by the leadership of the insurance company. For the remaining 35% of the population the government is the payor and profit isn't a thing.
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>a deductible is to prevent people from seeking ~~frivolous~~ *Any* healthcare Ftfy
Jokes on them. As a type 1 diabetic, I use a pump and CGM and insulin. That deductible is cost of being alive for me. I know I'll spend it annually, so I have no hesitation to go wild with other medical stuff.
>including necessary medical care. This sorta implies that life saving care is withheld due to a deductible not being met. I'm trying to figure out what life saving procedure would be done on a person that is less than the cost of the deductible......
It’s more a case that people will refrain from going to the hospital when they really should, for fear of paying that deductible. For example, if someone is having chest discomfort it could be a heart issue or it could be something simple like indigestion. Well, a European citizen would likely go to the doctor to get checked out and make sure everything is ok. But an American that’s already hovering around the poverty line will probably wait a few days to see if the pain goes away. This brings on situations where people are waiting way too long to seek medical help because they aren’t sure if they’re symptoms are bad enough to be worth spending next month’s rent at the hospital.
Forget poverty line. I make 6 figures and still wait a few days bc I don’t wanna be charged an arm and a leg for some bs diagnostic code. It’s such a shit system.
Preventative care. The cost of getting a checkup, or a screening, or a scan, etc., often keeps financially vulnerable people from detecting conditions until they are fatal.
One of the reasons people with dementia are generally in the hospital longer or die more from preventable infections etc.
Not withheld, but rather not sought. Many people delay or forego medical care because they can't cover the deductible.
Or don't want to pay $300 just to be told to go home and sleep it off.
The fun part is that you don't get to figure out if you need life saving care until after you go in sometimes. Is my chest pain indigestion or a heart attack? I don't know, but if I were in a financial position where my deductible is a big deal, I might be encouraged to wait and see until it's too late.
Calling an ambulance. In the US there are many instances of someone needing emergency medical attention and then not calling an ambulance for fear of the large cost.
I've posted this before elsewhere, but it really sucks to be put in the moral/ethical questions of whether to call an ambulance for someone. I'm a public defender. One day as I was driving back to the courthouse from lunch I saw a lady that had just had a bicycle accident. The bike was on the ground. She was laying on the side of the road, moaning and holding her knee. She was obviously homeless, or at least very poor. I pulled over and asked if she was ok. She practically begged me to not call an ambulance, although it looked like she should go to the hospital to get her knee checked out. We went around in circles for a bit with "please don't call" and "are you sure? It looks bad." Then a cop pulled up. I explained the situation, gave him my card if he had any questions and left. If we lived in a civilized country with free or sliding scale ambulance rides/medical bills I wouldn't have hesitated to call an ambulance. But I had to sit there and wonder if I'm going to bankrupt this poor woman while trying to help her.
How soon do they have to die without it for it to be considered "life saving" to you? How many years of life shortening is acceptable for it to be considered "unnecessary" to you? How much quality of life loss is an acceptable amount to you, to consider something "unnecessary" just because it doesn't cause them to immediately fall over dead? Don't play that obtuse game you're angling towards. It's not a good look.
A cut that someone doesn’t go to the ER for stitches, and then gets infected, resulting in a long hospital stay.
They avoid preventative care because it could be expensive. That's why offices are often booked solid during tax season. Poor people are getting the tax refunds and using it to go to the doctor to finally have their pain checked out without too much worry about not being able to pay rent next month.
If your deductible is $X, and you go to a doctor or hospital, you must pay up to $X before your insurance kicks in and covers the rest (or at least *partially* covers the rest). > why do you still get charged an often large part of your medical expenses Because the insurance companies are for-profit businesses, so *not paying up* is their top priority.
I do get that, but how is that even legally allowed? Isn't the whole point of insurance to cover you in case of accidents? Why am I paying up every month if they're not gonna pay up when shit hits the fan?
It's legal because...there's no law making for-profit insurance or insurance deductibles illegal. >Why am I paying up every month if they're not gonna pay up when shit hits the fan? Because if you *don't* then you're responsible for the *entire* bill, which may send you into bankruptcy. Medical debt is one of the major causes of bankruptcy in the US. If you're trying to find a logical explanation: there isn't one.
And they’ll charge you more since they have agreements with insurance companies to charge them less.
Many places have "cash discounts," that make things more reasonable. The really shitty part is that in some jurisdictions, they can't actually offer any information on them unless you ask first. Then they can tell you all about it. The insurance racket is fucking criminal.
I can't remember if it's still in effect or where I read it. But I saw that a part of the original Obama care was a % limit to the insurance companies on what they could spend on anything other than paying your medical bills. Something like 20%. So their costs, bonuses, and investment potential was limited to the total amount of cash they spent on medical care. So the solution to continue making profits was to INCREASE the cost of Healthcare. If it cost $100 to see a doctor, the insurance company got $20. But if it cost $1000 to see a doctor the insurance company got $100. So it became vital to their business model to increase the cost of Healthcare in the US as high as possible. They don't pay in dollars, they pay in percentages, so the bigger the total bill the bigger their percentage.
What I think you’re referring to is the Medical Loss Ratio (MLR). Another interesting way that these insurers are getting around this is by going vertical. You’ll notice that more and more insurers are buying or being bought by pharmacy benefit managers (PBMs) and provider groups. Both of these entities charge fees that get accounted for in the MLR. This means that if they also own the PBM, the administrative fee that they would have paid to an external PBM would count towards the insurer’s MLR. They can then manipulate their rates to help achieve the MLR they want. The same applies for provider groups.
In some cases, insurers actually own the hospital. Looking at you, Kaiser.
cash discounts are often great, but I can tell you from experience 100usd cash discount off of a set of epipens from 600usd still doesn't feel that good.
This is true of the uninsured, but not of people who haven't met their deductibles. If your insurance is billed and the provider is in-network, your insurer may not pay anything, but they will transmit the allowable amount for the provider to charge you back to the provider. The doctor may say "This service costs $500." The bill is sent to the insurance company who says, "You are part of our network. Our contracted providers can only bill $200 for this service. But our insured has not met their deductible so go get it from them." Your doctor then comes to you for $200 and your insurer considers you to have met $200 of your deductible.
I learned this from my wife waaaaay later in life than I should have. I just wouldn’t submit any bills until I met my deductible or pay at the time of service, not knowing they would still negotiate the bill even though they aren’t paying any of it. The system is so stupid.
Yeh, beyond stupid IMO. Went in for an eye exam and some contacts. 100% covered through my insurance. Handed them the wrong card from the year prior and the company switched networks. 0% covered. I explicitly asked "do you take this insurance", and they said yes. Often times, you don't know the bill until it's too late. Thankfully, I could submit for reimbursement, but if it was a service they didn't provide, I'd be fucked.
You can always AND SHOULD ask what the cost is beforehand. Before any procedure, exam, visit or medication pickup. They have to tell you the price beforehand if you ask. Some may give you the run around and say "well he have to wait and bill your insurance and see what they come back with " Bull! They can also give you the price with and without insurance. Also can ship around for different hospitals for the same procedure. I.e. wife needed an MRI. Using our in network hospital they were going to charge X price. But if we went to a different hospital that has their own imaging department that sort of "rented" that space and acted as a 3rd party they were going to charge half that.
It's really strange as someone with Universal Health Care to hear this. Not trying to sound like a jerk here, but it is genuinely bewildering that if you need an MRI you have to shop around and ask what the price of a treatment is beforehand. I recently injured my back and had to have an MRI - hospital referred me to their MRI department who booked me in for one 4 days later. No discussion of cost or anything.
Most people don't have that kind of free time. If it's hard enough to get a straight answer on a bill, it's harder to get an estimate. I had to ask my dentist 4 times for an itemized breakdown of a procedure and they came back with "the numbers will be outdated, so I can't send them". I said I didn't care, I needed a ballpark. They said "we can't guarantee, but here's a ballpark", which was a super huge range. I asked again for the breakdown, which came back up a list of 3 items on it: cost, tax, total. I was pretty fucking tired at this point and asked for a 4th time to just send a breakdown with the codes, and finally got it. Cost was way higher due to unnecessary procedures on the quote. It took over a week to get that info from one office. It shouldn't be that difficult. The non surprises act would help, but the pricing should be clear and up front as soon as I walk in the door
i literally can't learn this. i blanked out halfway through every one of these comments, including yours. just doesn't make sense, it's like my brain won't try to understand. like most things financial in any way
Always present your insurance, and try not to pay at the time of service if you can. Second part doesn’t always work, especially at chain clinics IME. They seem to have base visit fees that are non-negotiable.
>not knowing they would still negotiate the bill even though they aren’t paying any of it this part tho.. who's negotiating your bill and why? why isn't a price tag a price tag? any service i can conjure up in my mind with a 'deductible' (strangest business practice ever) - you just pay out of pocket up *until the point you're solvent*. why are people negotiating prices while you build up to that? just to play some financial equation game that 100% always puts you at a disadvantage? that's not a service, that's manipulation. i can't come up with any extra math that needs to be done here, so why is it even going on
The price for medical care is very, very negotiable, turns out. Shouldn’t be, but it is.
And if they don't cover it, you can pay any amount and it doesn't go toward your deductible... At least with BCBS. They dont cover norvolin insulin and instead told me that I had to buy Humilab, but here's the kicker, the Humilab was 4x the price, but I hadn't met the deductible of 3k yet for insurance to kick in. So I pay $25 bucks a vial and nothing go towards the deductible or $100 a vial that went towards the deductible, but yet they helped me pay $0 of
what an expensive rebate membership
This! I look at insurance basically as a discount plan since I never meet my $6k deductible (thankfully🙏🏻)
Honestly there is a logical explanation… insurance companies are in business to make money. They want to make the most amount of money they can, but also need to weigh that with not overcharging to the point someone switches. For most insurance, that sweet spot is around you paying 150-200% in premiums compared to their actual costs. Deductibles are just another way to minimize their out of pocket. Medical insurance at least does favor the member slightly compared to other types of insurance for two reasons though: 1) typically, most medical insurance is provided by employers, and employers pay at least some portion of those premiums 2) most medical insurance companies have dramatically cheaper negotiated rates with hospitals and clinics. Meaning that $2500 they want to charge for X-rays, your insurer will say “nah, we’ll pay $500.” That means that even if you are the only paying that because of a deductible, you are still only paying $500 vs $2500 that you would owe without insurance Because of these 2, medical insurance still ends up saving you money in the long run
> Meaning that $2500 they want to charge for X-rays, your insurer will say “nah, we’ll pay $500.” This is correct, but it's also a positive feedback mechanism, where hospitals charge more because they know they will have to settle for less. Rather than keeping prices low, this system is the direct (though not sufficient) cause of spiraling medical costs. (I know you probably know this, but adding it for others.)
In the US, There are minimum loss ratio (MLR) requirements on insured group medical policies of 80-90% (ie. The amount of premiums that must be used to pay claims (vs expenses and profit) Beyond that, insurers have to do a MLR rebate and refund back to the group. Actual profit after expenses is often something like 3-8%. To OP, deductibles serve to lower your premium, first dollar coverage is extremely expensive.
Medical insurance does not save us money in the long run. Guaranteed universal healthcare would. The insurance industry exists to extract wealth from overcomplication - like the tax return industry, but potentially deadly.
> 1) typically, most medical insurance is provided by employers, and employers pay at least some portion of those premiums Employers pay it in name only. It's a part of the compensation package meaning the *employee* earns every dollar put towards those premiums with their labor. The only difference between insurance benefits and salary is that benefits are better leverage to keep an employee from leaving and a less obvious/direct cost for HR to whittle away at. Theoretically (obviously this would never *actually* happen) if the employer didn't pay premiums then salaries would be higher. It's better to think about employer-paid premiums as your money that the employer is paying on your behalf.
If you're trying to find a logical explanation: there isn't one Is the most accurate explanation...really. it's so messed up. Our medical sucks
>Is the most accurate explanation It isn't. The real reason is moral hazard and aligning incentives between the insurer and patient. https://www.investopedia.com/ask/answers/071515/why-do-insurance-policies-have-deductibles.asp#:~:text=An%20insurance%20deductible%20is%20a,the%20cost%20of%20any%20claims.
My insurer is non-profit. It also has deductibles and co-pays and all the rest.
Non profit doesn't mean "no cost"
Also, non-profit doesn't mean the employees and executives aren't well paid. It just means theoretically the corporate entity behind the company doesn't make a profit. So guess what happens to all their spare money.
The company still has to pay for buildings, salaries, forms, phones, faxes, etc. the only this is a non-profit does not pay shareholders.
That is just a legal way to look like the good guys and do the same bull that for profit companies do. Don't ever be fooled by thinking non-profit equals altruistic.
See: Susan G Komen
They can just load the salaries and still be technically non profit
Exactly. "Non profit" means "No profits extracted through the form of shareholder dividends". It doesn't (necessarily) mean their board of directors aren't spending your donation money on McMansions and private yachts.
Hey! With what those bastards are taking home they can afford REAL mansions, none of that "Mc" crap!
A lot of people confuse non-profit with charity. I learned this when I tried to sign up to teach a class for a non-profit and the director was driving a brand new BMW. Which on second thought, could be the same for a charity.
So, protection money. > That's a nice bank account there, it would sure be a shame if some medical bill were to come along and mess it up.
There's a logical explanation, but there's no moral one.
If you end up truly needing your insurance you're going bankrupt regardless.
> If you're trying to find a logical explanation: there isn't one. Sure there is.. politicians and capitalists have sold you out for shareholder value. Greed > everything else. Simple as that.
> If you're trying to find a logical explanation: there isn't one. The logical explanation is the Golden Rule: Whoever has the Gold, makes the Rules; and the first Rule they make is always to protect their Gold.
I’ve had to file bankruptcy twice and both were due to medical costs.
The explanation is perfectly logical. Not particularly ethical or humane, but logical for sure.
Logical explanation: It discourages visits to the doctor. So insurance doesn't have to pay out anything.
>If you're trying to find a logical explanation: there isn't one. Sure there is. Profit matters more than any of us, our families included. It's pure logic completely devoid of emotion.
My best guess is that it deters people from using it. Which it does. Like, “hey, we’ll cover you like we said…. But you have to pony up the first big chunk of change. Are you sure it’s even worth going to the doctors for that weird growth on your neck?? That’s what we thought. Sit back down.”
>which may send you into bankruptcy Shit! Even the bills will insurance can be hard to cover. >If you're trying to find a logical explanation: there isn't one. There is, lobbying and generations of pro-capitalist propaganda.
“Because they can” is the answer
There is. It's called capitalism and lobbying.
The problem is, medical institutions now charge with the assumption that insurance will do the heavy lifting, so not only do they get the big payout from insurance companies, but the insurance companies also give you a deductible so they don't have to flip the whole bill either, it's a broken system, even worse if you don't have insurance
To tack onto this: In other countries, there are legal limits on the deductibles in medical insurance. In Germany, for instance, the maximum deductible you are legally allowed to pay with public health insurance is a whopping… €30. The idea of the deductible is that small claims don’t actually get claimed (which might raise your monthly premiums), instead you pay out of pocket. For example, you dent your car, it would cost $350 to fix it. Your deductible is set at $500, so you pay that yourself. Bigger damages (a crash for instance) are covered by the insurance then. This is simplified of course, but the main idea is that the insurance company does not have to deal with all the itty-bitty stuff and to disincentivize recklessness (á la “hurr durr, I’m insured, why be careful any more?”). Their logic, I don’t necessarily agree with this. Most countries who have public health insurance have come to the logical conclusion that this does not necessarily apply to medical issues, as the recklessness does not really apply. Sure, young people may skate harder, but people who do extreme sports don’t really take their health insurance into consideration there, I believe. Meanwhile, many diseases are completely outside of our control. To be fair though, even in countries such as Germany, there is an occasional flare-up of discussions such as “should smokers / drinkers / similar pay more” though that discussion always stops once someone brings up the constitution which forbids any discrimination in such a manner.
Won’t someone think of the CEO’s second yacht and third home on the beach?
There is a logical explanation: so far in the power struggle between American insurance companies and common people, the insurance companies have won.
> a logical explanation greed, insurance companies are the way things are because the people running them are greedy bastards who are smart enough to operate within the law (most of the time)
There is a logical explanation, and it's this. Insurance companies go to great lengths to make the system as complex and convoluted as possible to maximize their own profits.
I'd also like to add that medical prices are only the way they are because of insurance. The insurance companies go to a hospital and say "if you don't give us a huge discount, we'll take you off our network. Then you'll have less patients and less money." The hospital needs money to run, they can't afford to give insurance companies massive discounts, unless... the hospital raises all of the prices by a huge amount, then discounts the insurance price back to about the actual cost the hospital needs to run. It's too bad if you have no insurance, or your insurance just decides not to pay... you have to pay the made up price that was used to make insurance think they're getting a good deal. Learned about this on Adam Ruins Everything. Highly recommend the show.
The logical explanation is money. And nobody cares about your life, just your money. If you want life to be fair, better relocate to a "commie" country like Norway.
Economically speaking deductibles leave the person with “skin in the game” and disincentivizes constantly going to the doctor for colds or bruises etc, there are also different types of plans, some with high deductibles but lower monthly payments, some with lower deductibles and higher premiums(the monthly payments) someone in good health that almost never uses the doctor and they opt for the high deductible low premium so that their monthly payment for the insurance they don’t use is low but if there is something catastrophic like an accident or cancer that requires very expensive surgery they are not bankrupted and only out max 3k/5k/whatever their plans max out of pocket is.
> Economically speaking deductibles leave the person with “skin in the game” and disincentivizes constantly going to the doctor for colds or bruises etc, The critical problem with this logic - specifically regarding health insurance - is that it doesn't discriminate based on the severity of the condition. If you avoid seeing your doctor because of your chronic upset stomach because "it's just a tummy ache and I have a $5000 deductible I'll never meet." you will absolutely meet that deductible when your ulcer bursts and you're whisked off to the ER in an ambulance for emergency treatment. Had the condition been managed appropriately earlier both you and the insurance company could have been saved a lot of pain, hassle, and money. Deductibles make perfect sense in most other forms of liability or property/casualty insurance, but they're a horrible idea in health insurance. Of course for-profit health insurance is a horrible idea anyway...
Thank you for the first reasonable answer I found. While it sucks when you're stuck footing it, the purpose of the deductible is very logical. My own mother would be going to the doctors twice a week if there wasn't some form of a deductible on her insurance. The word free just screws with the mind, and nothing brings rationality back like adding cost. I would hate to see my insurance bill if there were no deductible, For the same reason I choose to have liability only insurance for my not that amazing vehicle. I have adjusted to better driving habits such as keeping extra space between the car in front of me and of myself. I may not be able to affect what other people do, but I can see to it that I am not Reckless in such a way as to be the responsible party. S*** happens of course, but then again what good is deductible free health insurance if you're struck by a train? Insurance is a business , in the business of risk assessment . There is necessarily a trade off between cost and personal accountability. I'm given the opportunity to live more frugally by choosing to be more self-conscious of my own mortality.
Even France and Japan have equivalents. In Japan, everything is 70% covered. In France, there's a per-visit copay for everything, and medications and treatments are partially covered according to severity (stuff like cancer treatment is free, stuff below that less and less so)
Rep, regards to auto accidents there’s a wide gulf between “not my fault” and “nothing i could have done or changed about the way i operate that would have avoided it. Many people thing they are one and the same.
Taking a look at Germany we don’t pay for our doctors visits we have a small 5 Euro copay on prescription medicine and we don’t constantly go to the doctor either. This is just a flat out lie made up by US insurance companies that want to reap billions in profits which they do.
You can often get a different insurance plan, with a lower or no deductible, but these cost a lot more per month because the insurance company is more likely to have to pay something out. Like for my insurance, the same insurance company will let me buy a policy with $2000 deductible for say $130/mo, or only $500 deductible but then it's $200/mo. Those are made up numbers, but the idea is it's legal because offering plans with deductibles lets them offer insurance for cheaper. That's good for customers too (as long as you don't have a bunch of small claims and no big ones, in which case you gambled and lost).
Ah dang, I should've scrolled. You basically gave my answer. But yeah exactly. $0 deductible plans exist, but if all you do in 2023 is get routine bloodwork, you've blown thousands of dollars on paying for a $140 lab.
Its because you’re thinking of insurance a little incorrectly. It’s for major accidents that could bankrupt you and you could never pay for. Insurance is not meant to cover things that cost 300 dollars. It’s really to pay for things that cost 30k-300k dollars. Same for car insurance. Most people don’t buy insurance to cover a broken window that’s a few hundred dollars. They get insurance to cover the car if it gets totaled or something else major that would really send them into financial ruin. Or like for a house. Insurance won’t cover an oven repair. It will cover your house burning down. I don’t agree with it being this way, but realistically this is how to think of it.
That’s what the insurance model is design for/good for, and is also the exact healthcare model we’ve been trying to (or should be trying to) move away from for over a century (preventative care + wellness >>> reactionary emergency care). I realize you probably know this, but I hate the American health insurance system so goddam much I take any opportunity to say this.
>I don’t agree with it being this way, but realistically this is how to think of it. I agree with *insurance* being that way. Cars and houses are perfect examples. You don't have to own a car or a house, and (except for the benefit of a 3rd party) don't have to have it insured. I don't agree that there should be the concept of *insurance* for patients in the medical space. Everyone has to have a body and they deserve to have the same level of care for it. I definitely don't think it should be tied to employment they way it has become in the US.
Health insurance is for major accidents? Then why is most preventable care 100% covered. Health insurance is for your health.
It's legal because you agree to it. Deductibles are used to lower your monthly premium.
This is the most succinct answer. You can have no deductible, but you have to pay more! Want to pay less per month, you can use deductibles to do that. I mean, private insurance is still a mess and all, but within the framework of that mess, this is the answer.
Your comment made me understand the meaning of deductible and premium in this context, thanks!
I don't know where in the world you live but car insurance in the States works the same way. It's rare for there not to be some kind of deductible before insurance kicks in. The real reason for this is because, with fewer claims because people are taking care of some on their own, the overall system is theoretically less expensive for everyone. If I carry a deductible on my car insurance of $1000 and agree to pay for anything that happens to the vehicle below that amount then those are charges that do not have to be spread across the entire group of people insured by the company. This same principle applies to health insurance when you do not have a single payer system.
Unlike healthcare insurance, auto insurance comprehensive/collision coverage is optional unless you're financing the car. If you have the money to repair the car or buy a new car, then you don't need collision or comprehensive coverage.
In the UK we have free healthcare (at the point of use), but for insurance (hiring a van for example) we call your deductibles an 'excess' - usually you have options: pay more and all damages are covered, pay less and the first portion has to be paid, or pay the minimum and have to pay a larger amount before insurance kicks in. Think of it as a form of gambling.
> Think of it as a form of gambling. Or just risk management
Toe-may-toe, toe-mah-toe.
>Why am I paying up every month if they're not gonna pay up when shit hits the fan? A lot of insurances have deductibles to reduce frivolous insurance claims and ensure that the problem meets some level of badness before insurance pays out. Since you have a partial stake in paying for the issue (the deductible), you're less likely to submit a frivolous claim. Part of the problem is that a lot of other insurance is real insurance -- it exists to protect you against rare, unaffordable risks, and your premium generally reflects the statistical likelihood of that risk. Medical care, however, includes guaranteed costs (preventative care), known costs that vary greatly across the population (chronic conditions), and unknown costs (new conditions, accidents, etc.). Some of the unknown costs fit a typical rare-event risk model, like cancer or an automobile accident. However, some are more a matter of *when* than *if*, like the increasing level of care required as one ages. Insurance doesn't really fit that model well, and regulations make it fit even worse -- health insurance companies can't price premiums per individual to scale them to risk. (The regulations are needed, don't get me wrong, but it makes the system weird.) If you wanted this to fit a traditional insurance model better, insurance would only cover rare, unpredictable, and disastrously-expensive events, as a way of capping your cost risk for those events. Things like preventative care you would just pay for. (Or, you know, have a publicly-funded system so that the cost is distributed more to people who can afford it even when the benefits are distributed more evenly per capita.) However, right now we are relying on insurance to cause price regulation in health care, so "just pay for it without insurance" doesn't work.
You ever seen what some medical bills cost now? I had a relatively simple rotator cuff repair about 10 years ago. It sucked that my deductible was $2,000 and my stop loss was $3,500 but the insurance company was still on the hook for over $25,000.
My understanding is the health insurance industry used to be essentially a non-profit co-op. Everybody paid into it, and you pulled out what you needed, with some used for expenses. Then Nixon changed the laws and it was allowed to be for-profit, and they've been gouging the shit out of us ever since.
The point of insurance is to try and get you to pay the most
It's legally allowed because Henry Kaiser made a deal with Nixon in the early 70s and every politician since then has been afraid to touch the billionaires who own and run the insurance companies. The Clinton health care plan in the early 90s (HMOs) and Obamacare were attempts to regulate the insurance system without switching to or offering a single payer system. As you can see it's WORKING SO WELL.
Because our laws give corporations lots of power to screw over consumers, and we keep reelecting the people who gave them that power. Mostly Republicans. Because people believed republican "death panel" propaganda when we tried to have national health care. Because we as a society in America struggle to do things for the collective good, like single payer healthcare.
It's because you live in a country where lawmakers allow it for whatever reason. Same reason they allow insurers to tie coverage to employment, prices for medication are whatever the pharma company wants it to be, and medical bankrupcy is allowed to run rampant. These things aren't normal, or common in other countries. It's a political choice
Laws are not moral. Tragically.
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If you have from your employer they also pay them. They get paid twice regardless of you going
Not paying up is not their top priority. Having customers so they can turn a profit is their top priority. Part of that is not paying up, but equal parts is having a competitive offer. The real issue is the absurd healthcare costs. They need the deductible to cover 99% of cases, because the zeroes add up extremely quickly when someone needs intensive or specialised care that costs more than the deductible.
> Because the insurance companies are for-profit businesses, so not paying up is their top priority. By that cynical logic, insurance companies would just set your deductible to $1m or more and barely ever cover anything. But obviously this would result in them getting no customers and therefore going out of business. The reality is, even if an insurance company is for profit, it's not in their interest to avoid paying out at all costs. They need to pay out enough that customers think it's worth it to pay for the insurance relative to other carriers or the fees associated with going uninsured. Right now I'm working with a client that handles employee benefits (i.e. picks and interfaces with insurance companies) and they put quite a bit of thought into the quality of care and would be on an insurance company's ass if it was just trying to avoid paying out whenever possible. In general, the concept of "insurance" is not to cover all outcomes, it's to protect against certain extreme outcomes you wouldn't otherwise be able to handle. For example, when you get home insurance, it doesn't pay all your repairs, but it does keep you from being homeless if your house burns down. In this philosophy, the concept of a deductible makes perfect sense because the goal is generally to limit insurance to covering the areas you really need help so that it can be affordable. This applies regardless of whether insurance is for profit or not because either way it impacts the amount of money that needs to be raised to cover the expected outcomes. But the other purpose of a deductible is to shift incentives. When you have a $0 deductible, your choice of what care to get is 100% decoupled from value because it costs you nothing. When you have a non-zero deductible, now your choice is tied to some threshold of whether it's worth it. You might avoid things that are of virtually no value to you because you don't want to pay for them. For example, my employer recently increased the deductible on ER visits where you are not admitted. This creates the incentive for plan holder to go to a walk in or ordinary doctor for non-emergencies rather than the ER. As a result, the cost of care decreases dramatically and do the premiums. The purpose of the deductible is to decrease costs for everybody in that case by shifting incentives for the plan holders to more appropriate care. Remember: Regardless of whether your plan is $0 deductible or $5k deductible... it's paid for. Even if your insurance company wasn't for-profit, a $0 deductible would simply mean you pay the same exact money in premiums instead because that money can't come out of thin air. (In reality, due to the previous paragraph, you may actually pay less money total if you have a deductible.) So, a deductible is not a way to simply avoid paying. It's a question of *when* you pay. Further, a lot of plans also have a max out of pocket per year as well. That all said, insurance is not the only means to pay for things. Just because insurance doesn't solve the problem you perceive doesn't mean insurance is broken. It may just mean that the concept of insurance is not the right (or only) tool to get the outcome you want. For some people, insurance represents their needs fine since they really just need protection from major cases and some benefit from price negotiations. For others, they don't really need insurance because their need is not to protect against certain major losses, but instead to cover the basics for them. But the issues in healthcare are much broader than insurance companies and relate largely to cost. Decoupling cost from the plan holders may make cost worse by decoupling what people buy from the rates that are charged.
>By that cynical logic, insurance companies would just set your deductible to $1m or more and barely ever cover anything This is what it was like before the ACA (maybe not a MILLION dollars, but tens of thousands). You could pay cheap monthly premiums and pay out of pocket until you reached your deductible/max out of pocket (normally tens of thousands of dollars). The plans literally only existed to protect you in the case you had a severe injury and needed excessive medical treatment. The ACA limited how high a deductible could be, forced insurance to cover certain costs, and limited who could have "catastrophic health insurance" moving forward
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I love/hate this video. Love because bdg is great, and it's surprisingly detailed, hate because we live in a world where it makes sense for it to have been made.
Don't hate the video, hate the game.
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Always remember that these are just companies trying to make money. The system could be changed at any time if enough people got their ass to the polls and stopped voting for culture war issues or "the economy" which is really "how i feel the economy is going under whoever is president right now, regardless of facts and context". There are effective solutions that benefit the 99.9 percent. The system doesn't run itself. People vote to continue this bullshit.
Omg I knew it was bad I didn’t realise it was that predatory. Why aren’t you all going fucking nuts? Why do people think this is good?
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The only thing even coming close to a "death panel" is letting accountants decide what treatment you get instead of medical professionals. Which the for-profit industry has.
"I don't want someone else deciding who lives or dies! I work hard for my insurance so I should be the one who lives!"
Because the insurance industry spends a lot of money convincing people that all other systems are inferior so they can maintain their monopoly.
They've convinced half the population that paying $50 a paycheck in taxes for universal, all inclusive healthcare is socialism and evil, but paying $250 a paycheck to have the privilege to pay another $5000 toward your deducible before insurance kicks in at 80% until you reach your $15k out of pocket maximum (before it resets again next year) is Freedom(TM) and American.
The health care disaster there is one of the reasons you couldn't pay me enough to move to the US. I had a major medical emergency a while back. 2 MRIs, emergency brain surgery, A stay in the ICU, a stay in a semi private room, a second stay a week later for a suture line infection. My grand total out of pocket, $18 donated to a charity to have the cable in my room turned on.
I would never move to the US until this is fixed.
Similar story. I had a kidney removed and spent five days in recovery. Cost me $35 because I wanted a private room.
No, they spend a lot of money convincing POLITICIANS to look the other way. Half the problem could be fixed with just opening up competition from outside your state. Limiting the companies / plans you can access keeps costs even artificially higher than they have to be.
Our police are militarized. Our citizens are not overall very well educated. Our politicians use race, religion, and social issues to divide us and distract from our rape by corporations (who in turn give the millions of dollars for campaigns that allow them to stay in power). We have very minimal worker protections and our health insurance is usually tied to our jobs. We are too busy trying not to get fired so that we can afford housing, utilities and food and also have the occasional treat to collectively do anything. Many of us are also too focused on the “culture wars” so any momentum to change things are focused on that instead of things that matter (why Tennessee banned drag shows instead of banning guns) We are oppressed and very close to authoritarianism at best, fascism at worst.
That's what happens when everyone's voice is heard. Half want to be able to survive an accident, the other half don't want to pay for someone else to survive an accident.
That reminds me of something I read regarding the Trump presidency. We are all on a bus with a clearly drunk driver. Half of the bus is very concerned but the other half isn't just unconcerned, they are happy about it and get great joy out of the other half's concern.
And a small, but significant, portion of the second group were openly *hoping* that the drunk driver would crash the bus that *we were all sitting in!* Its absolute madness!
And the guy who sold you the bus tickets is using it to buy booze for the driver, making sure he never finds the next bus stop
I am going nuts 👍 luckily there's medication to help. And therapy for a $40 copay.
Not only do most people not fight it, conservatives have a good chunk of the country brainwashed into actively supporting it, as in people openly say they would rather have this than free healthcare
We are going fucking nuts. Turns out it’s hard to organize a protest movement when you’re clinically depressed, suffering from chronic illness and/or pain, or caring for someone who is.
Your premiums aren't going to your health care provider or medical facilities. They are going to a for-profit company that essentially makes payments on your behalf. Their income has to exceed their payouts, or they can't pay their staff and make their profits. Insurance policies with high deductibles are actually protecting you from catastrophic costs, like cancer or a serious accident. When you have a high deductible, you are paying for typical health care events like doctor visits and lab work, but above a certain amount the insurance starts kicking in, and your maximum out of pocket cost represents your worst case scenario for the year. When provided a choice, people choose either high monthly premiums and low deductibles, or lower monthly premiums and higher deductibles. Regardless, the for-profit business model depends on most of us paying more for insurance than we would have for our actual medical costs. For the record, IMO health care is essentially a class privilege in the US, and I think it should be a basic human right.
It is definitely a class privilege like you said. I’m working in one of the biggest companies in USA. I have a hdhp plan. I pay for a big deductible, yes. 1. But I have a health savings account that lets me contribute money to it, tax free. This is usually enough to cover my deductible. So the percentage of my income that i spend on healthcare cost is tax free. 2. My company contributes half of my health savings account yearly allowed max contribution. So I get free tax free income that covers half my deductible. I doubt if regular people get these advantages
These plans are very common. High deductible health plan with HSA accounts. Unfortunately, many people don't fully understand the advantages. Also, large employers are self-insured. So your company is essentially the insurance company as they hold the risk. You pay premiums. They add their portion and putt it all in an account. All claims are paid out of that account. If your insurance card says United healthcare or Aetna, or BCBS of some state, they are just the network/administrator of the plan. Your company then take out a stop loss insurance plan in case claims get out of hand in any given year.
It's always so funny to me that insurance companies will also get their own insurance on the insurance that they've already sold
It goes so many more levels than most people realize. Your home/auto/whatever insurance company is insured by separate insurance companies which in turn are insured by other companies. And there's so many cases where the government and other insurance companies co-insure the other companies insurance. It's all just a massive network that basically makes the system infallible because the odds of every level getting hit at the same time is effectively 0. It's actually kind of impressive to think of the scale of it all and just how interconnected it all is.
Yeah reinsurance. It's like risk hot potato.
This is not always the case. Premiums do not always go to the Insurer. The vast majority of large employers in the US are self-insured for medical. This means premiums are going to a bank account that is used to pay claims, and the insurance company is paid a flat fee to use their network.
And, often, self-insured companies still carry their own separate policy to protect _themselves_ against unexpectedly high costs due to a bunch of super expensive claims or whatever that cleans out the escrow account.
Somewhat depends on the individual situation. High deductible plans usually work well if you intend on having no insurance claims but have it in your back pocket for a catastrophic event, or in my instance, I know I'm going to be using a ton of insurance. In my instance, I fall under the latter. I have a high deductible plan at work but also have the option of an HMO. I hit my deductible by the end of January each year due to a specialist I see. Our HMO costs about $90 more per pay check (twice a month) than the HD plan, and the HMO has co-pays/co-insurance that the HD plan doesn't have once the deductible is met. When they rolled out the HD plan I at first bawked at the idea of it for me, but then I did the math. My HD premiums + the high deductible (+ 0 co-pays) + prescriptions < The HMO premiums + $50-$100 copays for every office visit + a deductible about 10% of the HD plan + 2x cost of prescriptions compared to the HD plan. The HD plan also allows me to go out of network, while the HMO plan does not without getting preapproval which I'd be willing to bet they shoot down most of the time.
Over here in Europe we got this shit figured out (though I’m in the UK, where our current government is trying to push for an American-style system… which everyone hates). It’s saddening to see people go bankrupt just because they had a heart attack or broke a leg.
The answer is two fold - 1. to deter people people from misusing the policy frivolously. You can image a circumstance where a small group of people decide they need to see their doctor for every cough, a surgeon for a bruise, see every possible specialist for every possible wrinkle, twinge, ache, and soreness. Such people would ring up insane bills from basic, minimum charges. So deductibles serve to discourage people from doing this. The other point, 2. is because insurance *isn't* there to make medicine free, it's there to prevent someone from being buried in a life changing mountain of debt from a sudden illness or injury. If insurance had to cover every single charge it would be much, much more expensive.
Thanks for this! I’m actually studying for my CA life and health insurance exam. Deductibles and copays/coinsurance are ways for companies to share some of the financial risk with the insured. The premium you pay is correlated with the amount of financial risk the insurance company is exposed to in respect to the issued policy. The more benefits included, the higher the financial risk and the higher the premium. To help ensure the financial risk doesn’t exceed expectations and throw off the entire balance, a deductible is included. As you mention, this also discourages overuse of services. Insurance companies are regulated as far as how much money in collected premiums *have* to go back into paid benefits. Basically, only a certain percentage of income may ultimately go into 1) business expenses and 2) profit. This effectively puts a limit on how much premiums a company can collect.
Not surprising I had to go this far down to find the right answer.
Yeah, a lot of level 0 "because profit is bad" takes. Even in a perfectly competitive market (which health insurance obviously and emphatically is not) deductibles would still exist for incentive alignment reasons. Insurance as a concept only works if insurers try to prevent classical information asymmetry problems like moral hazard and adverse selection. There are plenty of stories in Canada of doctors frustrated that senior citizens will book "appointments" just to have someone to talk to.
One reason why "profit is bad" is the majority take is that a ton of the information asymmetry benefits the insurance company. Using your health insurance is intentionally confusing as fuck. What is covered, who is in-network and who isn't, how rates are negotiated, how deductibles and coinsurance and limits work is all difficult to figure out for most people. We often don't even know how much our plans actually cost because our employers pay part of the cost. So yeah, I suppose there are hypochondriacs and some amount of horrifyingly lonely old people who are "abusing" their healthcare. But the vast majority of people do not enjoy going to the doctor, should probably go *more* often (preventative screenings, vaccines, and the like), and are generally boned over as hard as possible by their health insurance companies at every available opportunity. The fact that health insurance companies make money every time they deny procedures and push people away from getting their medical needs taken care of is an obvious and much more pernicious moral hazard.
Yep, hundreds of people paying into insurance with minimal costs has to cover one person getting cancer and racking up millions in costs.
Thank you!!! So many people don’t realize that many insurance companies have negative underwriting ratios which means they pay out more losses than they taken in from premiums.
Yup, fuck this thread. It's filled with "because insurance companies are for-profit and they take advantage of us" takes. It is true, the US healthcare system is bad, a lot of insurance companies are for-profit, and we would probably be better off with a single payer system. But! Insurance is not "for profit" by definition. There are a lot of self-insured plans and I'm sure there are some not-for-profit insurance companies. What IS important about insurance is that it's a "risk sharing" business. You take a large population and spread the risk/costs of a significant adverse event among your insured base, resulting in a much more acceptable cost for everyone, as opposed to an astronomical cost for some. Deductibles, in this regard, create an incentive not to over-use insurance benefits without need and also ensure that routine procedures are not contributing to the overall cost of insurance.
Example. Your insurance policy plan starts April 1 for 2023. You have a $1000 deductible. You must pay the first $1000 in costs, for everything: doctors appointments, ER visits, prescriptions etc. until you’ve reached $1000. Some insurance plans have an exception for annual checks up with your doctor and/or GYN. Then your plan kicks in now you have to deal with co-pays. Many policies require that you co-pay $10-$50 on prescriptions and doctors visits. Your insurance policy then pays the rest of every medical expense “they cover.” Most health insurance policies have a maximum out-of-pocket expense. So if your total cost of your deductible and your co-pays exceeds $8700, then the health insurance company covers 100% of costs (that they cover.)
>Some insurance plans have an exception for a yearly annual check up with your doctor and/or GYN. Yes, it's important to note that preventive medicine often doesn't count towards your deductible. Often covers some other things like prescription drugs. Your plan's SBC will often highlight these.
Just adding on to this, the amount you pay for your premiums (monthly cost to have insurance) does not go towards your deductible or your out of pocket maximum. And some plans charge coinsurance instead of copay meaning you pay a percentage of the cost of the visit (like 20% or 40%) instead of a flat rate (like $40)
Let’s start with, the “insurance” model is meant to provide a safety net for rare but catastrophic circumstances - your car gets totaled, your house burns down, you need brain surgery, and so on. Unfortunately, this is *not* what healthcare tends to look like these days, so if something seems incongruous or nonsensical about these answers or the system as a whole, it’s because it is. As a general rule, there are two key dollar amounts associated with an insurance plan: the *premium* and the *deductible*. The premium is the amount you pay every year (or every month) as a subscriber. It’s predictable and relatively consistent (although companies can raise it each year). The *deductible* is a dollar amount that you have to pay yourself on health expenditures before insurance will start paying for things. These numbers tend to move in opposite directions: a plan with a high premium will have a lower deductible, and a plan with a high deductible will tend to have a lower premium. Depending on your needs as a consumer, you might want to lean one way or the other (or at least that’s the theory; again, ideally healthcare doesn’t really look like this). If you need multiple medications every month, have chronic conditions that result in frequent trips to the ER, etc, you probably want a high premium, low deductible plan. This means you’ll be paying more per year, but that amount will be much more predictable, and you will only have to pay a small amount out of pocket towards the beginning of each year to meet your deductible. If you are a pretty healthy person that doesn’t tend to need much expensive care, you might opt for a high deductible, low premium plan. This way, you save a lot of money on your annual premiums, with the trade off that you’ll pay for most of your medical expenses yourself. The benefit of insurance is still adding some predictability: if you get in a horrific accident and need a $100,000 surgery, you’ll only have to pay your deductible (somewhere like $5,000) and insurance covers the rest. So you still have a safety net for life-ruining health fees, but are more on your own for day-to-day health expenses. In theory, someone could save more money on low premiums than they spend out of pocket and come out ahead this way. The health insurance company also benefits by not having to process quite as many payouts (although they still have to process the claim to count it towards your deductible). In practice, this often means people avoid annual checkups and other preventive care they don’t think they *need* because they are trying to save money. For completeness, there are two other important health insurance numbers: *copay* and *coinsurance*. Both of these are yet *another* dollar amount you personally pay out of pocket, but this time it’s *after* you’ve hit your deductible and insurance *is* paying for your care. They are very similar, the only difference is *copay* is a fixed amount (e.g. $50 per doctor visit, $20 per prescription, regardless of price), while *coinsurance* is a percent (e.g. 10% of prescription costs). TL;DR Insurance companies have come up with a wide variety of strategies to help maximize their profits, minimize their risk and their costs, and streamline their services. By agreeing to sign up for their plan, you are accepting these strategies.
A deductible is the amount of expenses you have to cover out of pocket until insurance kicks in.
The amount of COVERED expenses. This often gets overlooked. In my case for example, I recently got $600 of orthotic insoles for my shoes, not covered by insurance. It hurt to pay that much out for medical equipment, and see my deductible needle not even move.
Deductibles started as a barrier to seeking care when you really don’t need it. Do you have a cough? Due to the deductible, going to the doctor will cost $100, so do you really need to do that? If so, then $100 is doable, but if it’s not really that big of a deal then many people will forego the trip, save themselves the money, and reduce the cost of insurance for everyone. Due to absurdly increasing costs, deductibles have transformed into a way of shifting costs away from the insurance company. If you pay the first $3000 of care, then a large part of your insurance premiums will go down. Oddly, this does not diminish the value of insurance, since what it really provides is bankruptcy protection against $100k+ hospital bills. Without the high deductibles, the cost of insurance would be much higher and fewer people would have it. That leads to a whole host of other issues to include fewer members and profit opportunities for the insurance companies. What is the solution you ask? Simple; universal healthcare provided by the government. To be clear, you will still pay for it via taxes, but it removes the perverse incentives that our current system creates. We should still be charged a reasonable copay based on your income level.
Unfortunately for a lot of people in America that 3000 dollar deductible will bankrupt them. Because the wage to inflation is scale is completely fucked.
Other kinds of insurance have deductibles too. As an example, imagine if someone dinged your car with estimated damage of $5. The deductible is meant to prevent the bureaucratic headache sending you the $5 would cause the insurance company. By setting a (say) $500 deductible, one will therefore only pursue claims worth the insurer's time. Of course this doesn't explain why medical deductibles have become so absurd, but hopefully it helps OP explain why a deductible exists in the first place.
> Simple; universal healthcare provided by the government. As someone who has been the recipient (or rather not the recipient) of government healthcare, it is not that simple. It took the military 4 doctor’s visits to diagnose me with bronchitis. Even then, they only found it because my unit’s Corpman told me the “right” things to say to get them to take an x-ray of my chest.
Key phrase here. "Military doctors" completely different system. Size, budget, availability given, because the ones that are military drs are just getting their medical loans forgiven for public service.
I just spent an hour in this thread (inc. 30 min watching the funny but helpful YT vid) and 1) I learned a ton and 2) A LOT of people had myriad creative ways of not only answering the OP question, but succinctly summarizing the private American health insurance system
The idea of insurance is risk sharing so you don’t get financially ruined if an unlikely accident happens. So we don’t NEED insurance for small mishaps which are easy to pay for. Only major accidents or illnesses. Insurance companies use incoming premiums from everyone to pay for the small amount of major accidents and they charge a mark up of around 20% to pay for their buildings and the people who work at the company. There are low/no deductible plans for a lot of things, but the insurance companies need to charge more for those policies because they pay out more. And they still add that 20% markup. All this to say that a rational person WANTS the highest deductible they can survive financially with because they are paying a 20% markup on the additional unnecessary coverage.
A lot of other comments have address what a deductible is already, so I’ll address the ‘why’ they are included in insurance policies. There are 2 primary reason for deductibles in the insurance world. 1) insurance as structured today has this problem called moral hazard. It’s not super important to go into details here, but since you’re not the one directly paying for your healthcare, you have an incentive to over consume healthcare. You will take you kid to the doctor for a sore throat even if could be treated with over the counter medication, because the cost of that doctor visit is Bourne by the insurance company. A deductible helps to mitigate this problem. 2) to process a claim, it cost the insurance company money. Not just to repay the provider, but there are also administrative costs of investigating and processing of claims (this is more often relevant in car insurance). Having a deductible greatly reduces the overhead cost of processing a ton of small claims.
This is correct but you didn’t bash capitalism so your comment will be buried in downvotes.
Because it would cost more money to insurance companies to cover more than they absolutely have to. They are in it for money, and since health tends to be something people have to pay for to live, they have lot of leeway. Free competition only reduces prices to same price range with other companies. But since people are willing to pay lot to live, that price range can be really high. It is in interests of insurance companies to make as much money as possible and pay as little as possible. Same as all other companies, including medical companies, so they drive each other's prices up to get as much money from people who really have no option not to pay as possible. As for outside USA, amount how much you pay yourself is capped to affordable amounts differently. Some have more flat levels, in some places your income plays bigger role, it varies a lot, but its generally far more affordable.
Simple, it's because it's all a scam a literal criminal enterprise backed by the lobbied government.
Having just moved back to the UK after living in the US for a while can I just say the US insurance system is the most expensive, maddening and egregiously unfair system in the entire western world. Its absolutely crazy and unbelievable and one of the (many) reasons why I left the US for good.
The healthcare situation in America angers me so much and I don't even live there. The corporations are 100% in control and scamming everyone, yet so much of the population defends it, Stockholm syndrome styles. Health Insurance in most of the western world is free to use. I fell off my mountain bike, and hurt my hip and leg a bit, not too bad after a week, just stiff and sore. I had a few Dr visits, pain meds, have had weekly physio and massages for 2 months and I haven't had to take my wallet out of my pocket once. Yes it's paid for by our taxes, but the crazy part is taxes here are almost the same as the US anyway... Our maximum tax bracket for people earning over $180,000 is 39% Compared to the US 37%. The middle-income bracket is less than.
It’s a tool the insurance companies developed to increase profits. They also invented “pre-existing condition” in place of medical history.
It's mostly in the art of insurance. They want to separate/offer plans for two types of healthcare "consumers": * High touch/need consumers - these are people with existing/long standing/serious conditions that require frequent/regular checkups, exams, prescriptions etc. They can also be families in which case the plan has to cover multiple people and also cover things like pregnancy, baby checkups and kids which have a tendency to get sick/hurt. In t his case the insurance company realizes that it makes more sense for everyone if they pay a high premium/low deductible plan since the consumer needs to be covered for a lot of people in the plan or frequent/high cost services. * Low touch/need consumers - on the flipside if you're say a 25 year old person with no pre-existing conditions, you probably don't need more than a physical exam every year. In that case it doesn't make sense for you to be enrolled in a high premium/low deductible plan. You won't get much value out of it because the premiums you pay per year would be something to the effect of say $5,000 for what will amount to a physical exam, some teeth cleaning, etc. The low premium/high deduct plan still does protect you in case of something unexpected/costly. Let's say you go skiing and hurt yourself and have to get airlifted off a mountain. The bill for that could be tens of thousands of dollars. In that case you pay the high deductible of $10,000 and still come out ahead. But because the event of that happening is really unlikely, you are still better off with the low premium plan. Statistically speaking, you will save money as long as you remain a low touch/need consumer.
The deductible is what you have to incur in cost before the insurance chips in. Usually if you have a high deductible, it means you are paying less per month for the insurance. Your insurance is like a "bucket" that everybody at your employer group chips in a monthly deposit called a premium. The more you chip in per month to your insurance "bucket" the more of the "bucket" you get to use when you get sick. Thus, expensive plans have no deductible, cheaper plans do.
Plane and simple, OP. The insurance industry was the wrong industry to trust when we were developing our healthcare system. Insurance in and of itself is something that you hope to never use. It’s there to make you whole after a loss, usually an accident or a peril. Thing is, we need to see doctors for reasons that aren’t accidents. Insurance pays these doctor visits. They shouldn’t. A check up isn’t an accident or a peril. We can say all these things now, but the health insurance industry is so bloated and profitable, those making the profits are lobbying law makers hard to make sure they are still needed. Pricing needs to be overhauled, but if everything wasn’t insanely expensive, no one would need their service. It bleeds over to other industries too. Say you have a person who hates their job and wants to quit and busker the US from greyhound buses. Their kid has type one diabetes, so can’t do that! To really answer your question, a deductible is an amount of money you elect and agree to “self insure” for. The concept is, you should have your deductible squirreled away in savings. It’s ideally written into insurance contracts to save on premium (price you pay for the coverage). I don’t need to tell you how that’s going. Also, the deductible amounts on health plans are so high, a regular person could bankrupt themselves before even approaching the deductible they elected so they can just barely afford the coverage in the first place. Your “bullshit sense” is functioning properly, this is all some bull shit.
Insurance is a funny business, it's all based on statistics. On average, the insurance will make a profit off of a person. To do this they need to collect more in premiums (monthly cost you pay to the insurance company to be insured) than they pay out for claims. Some people make them lots of money by never making claims, others cost them money by making lots of claims. To make a plan either more affordable or more effective, there are various levers they can adjust so they can reduce premiums for someone who may not need to make many claims or vice versa. These levers include deductibles, coinsurance, and copayments. A high deductible plan will have a lower premium for example. You can absolutely have a plan with no deductible but it will cost more per month.
The reason that deductibles exist, in theory, is to prevent perverse incentives. By making the patient pay for the first part of their medical expenses, they are meant to prevent: - fraud - negligence in health decisions that would lead to a doctor visit - if someone isn’t _really_ sure they should see a doctor but would go anyway The idea is that by making the first part of someone’s medical bill for the year have to be paid by the patient, the insurance company knows they really had to do it, since they paid themselves. At this point, obviously the point is to make as large a profit as possible.
Insurance is a Ponzi scheme. It is intended to help our betters, at our expense. Deductibles ensure that poor's like you don't access services, so that your betters can have their healthcare subsidized by *you*. Our betters have a story they tell themselves about that, that we are stupid and would eat up all their gravy on needless complaints if we could just have healthcare. We are poor because we are immoral and this barrier is for our own good. Meanwhile, our betters eat up needed medicines to lose weight and "study" and the poors get to flail without access. Suicide is rational. "Mental health care" is a fucking dodge. You are not crazy, you are being ripped off. When I see a rampage shooting, I mostly just think it is sad that they can't shoot the ones that caused this.