The Case For Health Insurance

April 11, 2018 Posted by

Most people don’t want to pay for health insurance. For those below the age of thirty living healthy and active lifestyles, health insurance is viewed as an irrelevant, unnecessary cost. The reality is no one plans to get sick or hurt.  When given an option to spend money on insurance (and the related costs thereof) or spending money to enjoy themselves, the choice is relatively simple to make. A night out on the town, or monthly premiums for insurance coverage?

Despite the ease of making this decision, the benefits lost and inherent cost of not being insured outweigh the entertainment value of a night out. In fact, the financial strain a personal medical injury or illness to someone uninsured can cause devastating, long lasting financial ruin.  For many, this means thousands of dollars in medical expenses, and may possibly lead to bankruptcy.

The Cost Break-Down

Take for instance a potentially life-saving trip to the emergency room. According to Blue Cross and Blue Shield, the typical cost for an ER visit ranges from $580-$700. Here is a breakdown of of the average cost of routine services at a hospital:

  • MRI scan – $500-$1300
  • Allergy testing – $220-$370
  • Epipen – $400 per pen
  • Child birth – $9,800-$12700
  • Bypass surgery – $78,318
  • Cost per day in a hospital – $5,220

Although Americans use the doctor less than people in other countries, we still pay more for health care. Currently, Americans pay $3.4 trillion a year for medical care (and, unfortunately, don’t get impressive results).

The United States is routinely the most expensive place to buy medical care, whether that’s a Humira pen used to treat autoimmune disease, or a knee replacement, or an MRI scan.

What the average American spends a year on healthcare

The most recent data available from the Centers for Medicare and Medicaid Services (CMS) reports:

  • The average American spent $9,596 on healthcare in 2012 (up from $7,700 in 2007)
  • Average annual costs per person hit $10,345 in 2016 – which is nine times higher (inflation adjusted) than in 1960 (only $146)
  • 72 percent of young millennials, aged 18-24, have less than $1,000 in their savings accounts; 31 percent have nothing saved at all
  • Premiums for individual coverage averaged $321 per month
  • Premiums for family plans averaged $833 per month
  • Average annual deductible for individual plans was $4,358
  • Average deductible for family plans was $7,983

This means that last year, the average family paid $9,996 for coverage alone.  If they met their deductible, the total was just under $18,000. Meanwhile, an average individual spent $3,852 on coverage and, another $4,358 to meet the deductible, totaling over $8,000.

These figures do not take into account any additional co-insurance responsibility a person may have. In addition to co-pays and deductibles, an increasing number of plans now require co-insurance payments, which require that, even once the individual meets his deductible, he will continue paying some percentage of all costs until he hits his out out-of-pocket maximum.

With all these costs piling up, it’s clear why some may opt out for insurance, but recall what one day in a hospital can cost?

New Year, New View on Health

In December 2017, the Senate voted to pass the Republican Party’s sweeping tax reform bill, and among other provisions, the bill would eliminate the penalty for not buying health insurance starting in 2019. This means beginning in 2019, consumers will be able go without coverage and not face a fine. The penalty for going uncovered for 2017 is $695 per adult, or 2.5% of household income in excess of tax filing thresholds, whichever is higher.

“Existing customers should shop around rather than allow the system to re-enroll them in their current plans,” says Sabrina Corlette, research professor at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute. There are plenty of bargains out there.

Ultimately, without health insurance, individuals will find it difficult to get services from medical providers, especially preventive or routine maintenance items.  Not many people can afford to pay retail costs for medical expenses out of their pocket, and while one might be young and healthy today, anything can happen. The personal decision to obtain health insurance should not be in the air – health insurance is indeed a necessity. Avoid financial turmoil caused by unplanned medical costs and protect yourself with health insurance.

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