Updated: 3/18/2011 9:13 PM ET|
7 health insurance myths debunked
Think that insurers are what make coverage so expensive? Think Canadians have it better or that your company's plan is the cheapest for you? Think again.
Hearsay and bad information often fuel people's misunderstandings of health insurance. When was the last time someone snuggled up with a cup of coffee and her insurance policy?
According to the Life and Health Insurance Foundation for Education and the Henry J. Kaiser Family Foundation, the following myths are alive and well in the minds of most folks.
1. It's cheapest to buy health insurance through an employer's group plan.
If your employer offers a group health plan, you're likely experiencing annual increases in premiums, reductions in what's paid for by your employer, increases in your out-of-pocket expenses and the possibility that you're paying for lots of benefits you don't want or need.
An individual health plan (the kind you buy on your own), especially for someone who's healthy and young, can offer significant savings. Unlike individual plans, group health plans must abide by state health insurance mandates, which can require coverage for everything from autism to hearing aids and from contraceptives to in vitro fertilization.
Although an individual health plan can deny your application based on your health status, Matt Tassey, a spokesman for LIFE, notes that if you're eligible the plan can be customized to meet your specific health care needs.
"If you're a man, you have no need to see an obstetrician. But if they have an employer-sponsored health plan, they are still paying for (the obstetrics coverage)," he says.
2. Health insurance is expensive because health insurance companies are driven by profit.
Brenda Weigel, a spokeswoman for the National Association of Health Underwriters, says this is a common misconception. "The fact that health insurance is expensive is because health care is expensive. Or there's the common misconception that Medicare administrative costs are lower than private plans, when in fact there is quite a bit of cost-shifting," says Weigel.
When patients use a government insurance program (such as Medicare), providers of health care shift more costs to people who have insurance. The result is higher premiums for people who purchase their insurance on the individual market and workers who receive insurance through their employers.
Tassey notes that rising prescription drug costs also fuel increases.
3. If you're young and healthy you don't need to pay for health insurance.
Then what happens when you break your leg in a snowboarding accident or blow out your knee while playing soccer? If you find that your tonsils need to be removed, the cost of a tonsillectomy can start at $5,000, with an additional $1,500 per day for an overnight hospital stay.
"There is this idea that if they need to be hospitalized they can just go to the emergency room because they have to take you," says Tassey. "We like to call them 'young immortals.'
"A problem arises when they have to be stabilized or, worse, have to stay in the hospital for an extended period of time. What happens if they have to be transferred somewhere else for care or have to see a specialist? The cost could reach $100,000 once you add everything up, and starting out their lives in serious medical debt can have a long-term repercussions on their financial future."
Tassey says young people rarely think about health insurance until it's time to have a baby.
4. The highest numbers of uninsured people are under age 25.
The fastest-growing group of uninsured Americans is age 50 to 64. The difference between the younger and older people is accessibility to health insurance. While younger people who are not covered by an employer's health plan may find it easy to acquire affordable individual coverage on their own because of age and health status, older people do not have the same advantage.
According to recent estimates from the Kaiser Commission on Medicaid and the Uninsured, middle-aged and older adults under age 65 (and not yet eligible for Medicare) are fast becoming the largest group of Americans without health insurance.
In fact, 19 million Americans from age 50 to 64 were uninsured or underinsured in 2008. Members of this group are more likely to arrive at a doctor's office with a number of chronic medical conditions, making it difficult or impossible for them to buy individual health insurance. As baby boomers reach age 65, the sheer number of people in need of coverage has the potential of overwhelming the Medicare system.
"This is a serious problem as the baby boomers age and the cost of health care skyrockets. If you drive an old car, you have to do repairs to keep that car moving. Just imagine having 75 million old cars coming into the Medicare system -- that is exactly what we are looking at in the next several years," says Tassey.
5. COBRA is very expensive, and a short-term health plan would be cheaper.
The federal COBRA law allows you to continue buying your former employer's group health plan if you are laid off. The catch is that the employer no longer has to contribute to the premiums. One alternative is buying a short-term health plan on your own.
If you are relatively healthy, a short-term plan could bridge the gap between other insurance plans, but if you have a pre-existing condition, or need maternity care or prescription drug coverage, you may not be able to find a short-term plan.
Also, short-term plans generally require you pay high deductibles before coverage begins. This deductible can vary from $250 (for very healthy policyholders) to well into the thousands. When you consider the cost of meeting the deductible before the plan pays for medical care, COBRA may be the better choice, especially if you have a pre-existing condition. In addition, a typical short-term policy lasts a maximum of six months, and the insurer is not obligated to renew your policy.
6. Large employers always offer health insurance to workers.
The Kaiser Family Foundation points out that one in five workers in firms with 500 or more employees is uninsured because many companies do not offer health insurance.
When workers are offered health insurance, they take it. According to the Employee Benefits Research Institute, less than 5% of those workers who are eligible for health benefits are uninsured.
7. Canada has a better health care system than the U.S.
The debate rages on. Canada's universal care system is fine, but there's a limit on what you can get. For example, if you happen to be a Canadian age 70 or older and need bypass surgery, the government won't pay for it.
"Universal health care isn't better; it's just different," Tassey says. "One of the largest hospitals in the U.S. is the Henry Ford Hospital in Detroit. Many Canadians come over to Detroit for care -- not because it's better; it's because they can get it (in the U.S.). There is no rationing (in America) of any sort, so they can just write a check."
Americans may complain about the high cost of health care in the U.S., but Tassey points out that people are rarely denied care for any reason.
"People in the U.S. demand care and demand it immediately. They also think we can cure anything," notes Tassey. "Unfortunately, it costs a lot of money to treat the number of fatal diseases that need a cure. We already have a semi-Canadian system for those who are 65 and older -- it's called Medicare, and it's going bankrupt."
This article was reported by Michelle Matlock for Insure.com.
VIDEO ON MSN MONEY
Dead-on, Mark. This might very well be the least-researched article on the topic I've seen since the reform debate polluted the press with all manner of propaganda.... and this looks way more like propaganda than journalism. There are some truths here, sure... But the issues it raises, and fails to address, are significant.
The implication in this article is that males should NOT get insurance that pays for female medicine like gynecology or pediatrics, or that only people with autistic children should have insurance for autism treatment...As if males had nothing to do with pregnancies, and as if people who have autistic children know this ahead of time... Sheesh.
If you're male, you don't need ob-gyn. Sounds like saying "If you never get sick, you don't need health insurance."
This article is insurance company propaganda, and really quite worthless.
Usually, MSN articles are objective. This one is just an ad for the insurance industry, which is raping the American people daily.
We DO NOT have the best health care system in the world as this implies and many politicians state.The U.S. ranks 36th among nations in health care status according to the World Health Organization. But, we rank first in military spending, so everything is OK here!!
Our priorities are all wrong, have been since Reagan, and this piece contributes to the problem.
This is nothing but an advertisement. There are a number of opinions without supporting facts. I just read a blog comment from a cardiologist in Canada online that says a person age 75 will get bypass surgery (paid by the government) if necessary. One of the worst Msn Money articles I've ever read.
Everyone talks about "educating the consumer," so good choices can be made, and healthcare costs controlled. That makes sense: when you go to a restaurant, you look at the menu, and choose based on taste and prices.
I suggest that if all insurance companies in the US, along with Medicare, each published their "menu prices," --i.e.: procedure costs along with provider quality of care--, the consumer could then go to the provider of their choice based on quality and price, and providers should be required to charge the same amount as they do insurance companies or medicare.
That would be an inexpensive first step in making healthcare affordable in this country: the data is available, it just needs to be publihed by all on the Internet.
How do you explain that an MRI can cost $450 to $3500 within 100 miles radius? And unless you know your options how do you decide whre to go and what it should cost you?
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