What If Car Insurance Were Like Health Insurance?

It’s a beautiful day. You’re tooling down a road and pick up a nail in your tire. A few miles later your tire is running low so you stop at the local garage and have it plugged for 10 bucks. They suggest you buy new tires before next winter.

It’s been 3 months since your last oil change. Since it’s a nice day you pull into Lube Stop and spend $50 on an oil change.

In fact the day is so nice, you fill up your tank and take a long ride in the country.

On the way back you notice your brake pedal is low, so plan to have the brakes relined in the near future before the rotors are damaged, another $75.

What’s missing from this equation? You didn’t consider asking your car insurance to cover the expense.

Now what if car insurance were like health insurance?

Imagine new laws requiring every gas station to submit an insurance claim every time you fill up at the pump. But good news – you are no longer required to pay up front. Tires, gasoline, and oil changes are now covered under your car insurance.

Under the new regulations the gas station has to wait 30 to 60 days to receive payment. Of course, the office clerk who submits the claim wants her paycheck weekly. The person who reviews the claim does as well. The insurance office has expenses for postage, utilities, and rent, not to mention they hope to make a profit. Some claims would be denied or lost, so the gas station would naturally charge everyone a little extra to cover losses.

Do you think the price of gas would be higher or lower? Would it actually cost more or less to provide the same service?

Suddenly your $800 for gasoline and maintenance has blossomed to twice that – or more.

The station owner is angry because he has to hire more help, wait to get paid, and deal with unnecessary aggravation.

At least to start with you (the customer) are happy – until you receive your insurance bill, which has increased by $1600 to cover the new services.

But by the time you receive the bill you’ve become accustomed to free gas. Hmm, perhaps if you just drive more you’ll make up for the increase in premiums. You’ll get new tires more frequently, as often as your insurance allows. And of course, you’ll want the best – no off-brands will do.

This scenario is exactly what’s happened with health insurance. And thus premiums spiral higher and higher. Does any of this make sense to you?

It doesn’t take a genius to see that when everything is “free” the “need” is endless. Of course, nothing is free, it only seems so. You’re still paying via a third party. And if you’ve already paid, you want the best – AND you don’t want to pay an extra dollar for it.

Of course, your insurance will have their shareholders in mind, and must generate a profit, even if this goes against your best interest. Soon only generic oil and knock-off tires will be covered, not to mention low-test gasoline. All this at twice the price you used to pay.

Makes you want to go back to the good old days, doesn’t it?

Copyright 2010 Cynthia J. Koelker, M.D.

What If Health Insurance Were Like Car Insurance?

Consider your body an automobile with legs, a pedestrian transportation unit. Your legs are your wheels, food is your gasoline, your skeleton is your chassis, your eyes are your headlights. Basically, your body is a high-tech machine.

Every machine requires maintenance. People expect to pay something to keep automobiles and other high-tech machines in running order. Drivers pay for gasoline, for tires, for oil changes. It’s just a fact of life. Why muck things up by getting insurance involved? Surely it’s quicker – and cheaper – to leave insurance out of the equation.

So it should be with health insurance. You pay for the small stuff, the trips to doctor, routine medication, eyeglasses, etc. – perhaps a thousand bucks a year. For big ticket items your insurance kicks in.

Insurance would be for things beyond your control, say accidents or serious infections. Or perhaps you’d like to purchase a “parts and labor” warranty, in case something goes wrong with the engine (heart) or you need a new transmission (hip replacement).

This model is similar to a high-deductible insurance plan, the kind many self-employed individuals purchase. Under a specified amount, the patient pays all medical expenses. Above the pre-set limit, insurance pays. There are high-deductible plans beginning at the $1,000 deductible level, with higher levels also available at even lower premiums. A $5,000 deductible is a cost-effective choice for many self-employed workers.

These plans are much less expensive than traditional insurance. The difference in premiums can be tucked away in a health-savings account to cover low-ticket items. Hopefully, with time, your savings increases, allowing you to choose a higher-deductible (and therefore less expensive) plan.

Doesn’t this make sense? For the first $1,000 to $5,000 (whichever plan you choose) you’re spending your own money, which gives you a strong incentive to economize. Better to ration your own care than depend on someone else to do so. If you come down with pneumonia or need your gallbladder out, your insurance kicks in.

Naturally, you want to remain healthy and stay out of the hospital. That’s strong incentive to take care of yourself. Plus, you maintain the highest degree of freedom yet still have a safety net in case of emergency.

The incentive to limit one’s own expenses is what’s missing from government-sponsored health plans such as Medicaid. Somehow we need to find a way for everyone to have a stake in the expense. Is it fair to ask those who are actually working to economize when those who are not working receive unlimited care at no cost?

Everyone needs to pay something or the system will become unsustainable – it nearly is already. “Free” health care ultimately increases expenses for everyone.

Making health insurance like car insurance won’t fix everything, but it is a step in the right direction.