Health insurance is costly, but not dependable: Why?

Tell anyone in Miami that health care insurance is expensive and he or she will respond “Tell me something I don’t know.” That’s why it is extremely frustrating for people when they experience problems with their insurance, like a denied claim. Understandably, they feel they have been paying a lot for this protection and do not understand why it is not there for them when they need it.

But why is health insurance so expensive?

One reason has to do with bulk purchasing, for lack of a better term. To give an example, Medicare is cheaper than private health insurance because it can pay for many services all at once and thus negotiate a lower rate. Private insurers are smaller and do not represent as many consumers, so they don’t have that ability. Thus, they have to pay more and pass the cost along to consumers.

A second reason is that the American government doesn’t get as engaged as do the countries of other governments. In some countries, healthcare is a public good, or doctors’ education is heavily subsidized (so they are paid less, leading to less expensive doctor’s visits) and factors like that mean lower costs. Please do not interpret this as a political statement or an endorsement of the way any other country does things. Rather, it’s just a comparison that is worth turning over in your mind.

Finally, we approach healthcare differently than some societies. This is a more tenuous claim, but some people believe that if we led healthier lifestyles or engaged in more preventative care as opposed to only treating problems as they arose, we’d pay less in the long run. Again, this is the most abstract and debatable of the three reasons we have offered here, but like the last point, it’s something worth thinking about.

So, health insurance is expensive, but that doesn’t guarantee it will be there when you are counting on it. You should know that if you ever feel wronged by your insurance company, you can talk to a lawyer — a lawyer who works for you and not for the insurance company — about the matter. In some cases, lawyers like this can help you find a way forward.

Source: Slate, “Health Care Is Expensive Because The Prices Are High,” Matthew Yglesias, Feb. 16, 2012

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