Even The Ideal Health Insurance Is NOT Like Car Insurance
Continuing my oddball string of non-transportation rants, there's an analogy which has been bugging me for a while now, and I just finally figured out why it's so crappy.
There's a lot of folks out there who argue that old-style health insurance really isn't 'insurance' because it pays first-dollar stuff (i.e. you get coinsured on essentially everything after you meet a small annual deductible). Car insurance and home insurance, these people say, don't pay for oil-changes and gutter-cleaning. They only cover catastrophic conditions. Fair enough. (Google on "health insurance" and "oil changes" to see how widespread this meme has become).
But then you take a look at their proposed solution - HSA's (paired with high deductible plans). You have to meet a large annual deductible, and then most stuff is covered. Sounds like a better match, right?
Except for this little problem: in both car and home insurance, the deductible is per-event, not per-year. By that metric, traditional insurance actually maps better to car and home insurance!. Hint: the 'copay' is sort-of a per-event deductible. If you visit the doctor and it costs a hundred bucks, and your copay is $20, then your insurance covers $80 (although unlike car and home insurance, it probably doesn't cover 100% of that $80). Likewise, if my roof needs a $2000 repair, and my deductible is $1000, you could call that my co-pay.
Maybe a table is a better way to present this. I'm using what I remember of my old PPO, my current HSA, and my automobile insurance as examples here.
|Plan||Per-event deductible||Annual deductible||Coinsurance after reached|
|HSA / high-deductible plan||NONE||$4000||Almost 100%|
Clearly the high-deductible plan isn't any more like "insurance" if you define it as "how homes and autos are covered", despite the rhetoric you hear. A PPO isn't perfect either, due to coinsurance rarely being 100%, but one could imagine a similar auto/home policy being floated and still being called "insurance". On the other hand, I have yet to see an automobile insurance company ever offer a policy where you had to meet an "annual deductible" in addition to a "per-event deductible".