High Deductibles is Being Effectively Uninsured

deductible dpc dsc insurance Jan 10, 2023

The first time I read on LinkedIn, "if you have a high deductible insurance, you are effectively uninsured..." I had to think twice about what the author was saying. Here's what I gathered:

- if you have private insurance, a high deductible means you have to pay that amount before the benefits of the insurance kicks in

- example: if you picked a plan because of a low office visit co-pay, you are likely shifting the financial burden towards a higher deductible

- if you were to need the benefits of your insurance, say you got into a car accident and ended up in the hospital accruing medical bills, and your deductible was $5000 for that year, you'd have to pay at least $5000, then the rest of the bill *may* be covered by insurance (you have to file claims and paperwork of course)

- if you don't meet that deductible for the year, let's say you accumulated $4999 of out of pocket expense, you still won't get the full benefits of the insurance coverage, then it resets every year

- most healthy people will not meet their deductible

Many people, like small business owners, have to pay for their own insurance with monthly premiums of $500-1000 per individual per month.

One person may be looking to spend at least $6,000-12,000 per year just to have insurance - benefits not initiated until you spend more! Add $5000 to meet the deductible first, then get the benefits. 

Before the deductible, you're paying out of pocket for medical services as if you were uninsured. The paradox? You are likely paying rates that is determined by the insurance contract, which is typically more than if you were to ask for a cash price.

This has applied to me with my car insurance. I had a crack in my windshield that required a replacement. My car insurance deductible was $500, and to get the "benefits" (to get them to pay anything) I'd have to go to one of their contracted service centers, which conveniently quoted me at *exactly* $500. I'd have to drive out of town to get the work done during their work hours, which I wasn't particularly in favor of doing. 

I did a quick Yelp search and found someone local who could complete the task without interfering with my work schedule, who replaced the window right in my parking lot, charged only $300 and no insurance hassle. The service was quick, convenient, and pleasant. 

This might look like pennies on the dollar compared to what people are paying for health insurance, but the concept is the same. I paid for car insurance but received no benefits for when I needed it. I was also effectively uninsured for damages under $500. If damages were $600, I'd have to pay $500 of that first. 

Being effectively uninsured means that even though you pay into health insurance, we've essentially been bamboozled into believing having health insurance is a good deal. In fact, it's very expensive and the ones who find it beneficial are the CEOs, no surprise. (Check this link out)

Do we all need health insurance?

Catastrophic coverage - yes.

Elective coverage - you're better off shopping around and asking for the cash price. Consider this if you're needing an MRI. A cash price near me is $495 for an MRI of the foot vs $1200 "in-network." Or if you need faster access to your doctor check out DPC or DSC.

Direct Primary Care (DPC) doctors offer low monthly membership options that can supplement or replace your in-network options, and Direct Specialty Care (DSC) doctors offer a convenient pay-as-you-need services resolving your issues faster with quicker appointment times than corporate settings.

Something to think about next time you're confronted to pay more out of pocket despite having health insurance for 'covered services.' More on that topic later.

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