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Value Creation Blog

The Real Reason To Have Health Insurance

Posted by Josh Patrick

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In the debate around health care costs and having health insurance, there is one giant thing that's always missed.  That's the savings you receive for out of pocket costs if you have insurance in the first place.

You see the health insurance that you have even if it's high deductible policy saves you tons of money.  The reason is very simple.  Health insurance companies negotiate lower rates with their health care partners than you won't receive without insurance.

Let's start with an analogy.

If you ever stay at a hotel you might have noticed the "rack rate" cards that are on the back of your door.  You might have also noticed that the rack rate is significantly more expensive than what you paid.

This is also true with your health care costs.  Hospitals and doctors have the same rack rate.  But the difference is you'll pay that full rack rate if you don't have insurance.......and this difference can be huge.

What about those high deductible policies that keep getting slammed in the press.

Even if you have a policy that only costs a couple of hundred dollars a month with a $10,000 deductible, having insurance is a good thing.

If you have a relatively small medical event that has a rack rate of $1,000 you could save as much as $400 or $500 if you have a high deductible policy.  The reason is the insurance company pays a much lower rate than you do if you don't have insurance and they pass those cost savings on to you.

Now, let's look at an example with a much higher cost.  Let's say you have a cost of $7,000 bill for some health care bill.  You would have to pay the full $7,000 if you don't have insurance or $5,000 if you do.  That's a saving of $2,000, or maybe four or five months of premium payments.

What about if my I have a $100,000 event?

This is where that high-deductible policy can save your financial life.  With insurance, your out of pocket expense would be $10,000.  Without insurance, your cost is $100,000, enough to push many people into personal bankruptcy. 

So, with all of the conversation about health care costs, the real reason to buy insurance, even if it's a high deductible plan that likely won't use is to insure against catastrophic losses.  And, this is the reason you buy insurance.  To save  

And, this is the reason you buy insurance.  To save your financial life if you happen to have a health incident that costs a significant amount of money.

Here are some other articles you might like that educate about health care and its costs.

GOP Health Care: AARP Says New Plan Raises Pre-Existing Costs

The newest Republican plan to repeal and replace the Affordable Care Act could send premiums sky-rocketing to more than $25,000 for people with pre-existing conditions, according to a report from the AARP.

via GOP Health Care: AARP Says New Plan Raises Pre-Existing Costs

Here's How Much A C-Section Would Cost Under The American Health Care Act

When the American Health Care Act passed the House last week, many people started worrying about how they might be affected by the proposed replacement for the Affordable Care Act. It's been the intention of the Trump Administration to "repeal and replace" the ACA since day one, but the House's vote was the first major step toward making that a reality. One of the biggest fears many people have is that they will pay more under the AHCA if they have a pre-existing condition, which would include pregnancy and, therefore, childbirth. To get an idea of the impact it could have, here's how much a c-section would cost under the American Health Care Act.

via Here's How Much A C-Section Would Cost Under The American Health Care Act

How health care cost and coverage might change for everyone under GOP bill via How health care cost and coverage might change for everyone under GOP bill

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Topics: health care