What If Health Insurance Was Like Car Insurance?

Think of your body as a walking car, a pedestrian transportation unit. Your legs are your wheels, your food is your fuel, 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 cars and other high-tech machinery running. Drivers pay for gas, tires, oil changes. It’s just a fact of life. Why turn things upside down by including insurance? It is undoubtedly faster and cheaper to leave insurance out of the equation.

So it should be with health insurance. Small things, doctor’s trips, routine medication, glasses, etc. You pay for. – maybe a thousand dollars a year. For big-ticket items, your insurance kicks in.

You are insured for things beyond your control, such as accidents or serious infections. Or you may want to purchase a “parts and labor” warranty in case something is wrong with the engine (heart) or you need a new transmission (hip replacement).

This model is similar to a highly deductible insurance plan, the kind that many self-employed individuals buy. Below a certain amount, the patient pays all his medical expenses. Above the predetermined limit, the insurance pays. There are heavily discounted plans starting at $1,000 and higher tiers are available at even lower premiums. A $5,000 deduction is a cost-effective choice for many self-employed workers.

These plans are much cheaper than traditional insurance. The difference in premiums can be stored in a health savings account to cover lower ticket items. Hopefully, over time your savings will increase, allowing you to choose a higher deductible (and therefore cheaper) plan.

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Doesn’t that make sense? You spend your own money for the first $1,000 to $5,000 (whichever plan you choose), giving you a strong incentive to save. It’s better to share your own care than to depend on someone else to do it. If you get pneumonia or your gallbladder needs to be removed, your insurance kicks in.

Naturally, you want to stay healthy and stay out of the hospital. This is a powerful incentive to take care of yourself. You also maintain the highest level of freedom, but still have a safety net in case of an emergency.

What’s missing from government-sponsored health plans like Medicaid is that they limit one’s own incentives. We have to somehow find a way for everyone to get a share of the costs. Is it really fair to ask employees to save while non-workers get unlimited care for free?

Everyone has to pay something or the system will become unsustainable – almost already. “Free” healthcare ultimately increases spending for everyone.

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

About Lily Hammond

I have been working as an insurance consultant in my own insurance agency since 1998. Because I've been doing this for so long, I know every detail and I'm here to help you. You can find my e-mail address and work phone on the contact page.

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