Last week the blog Political Calculations had a provocative post titled “Do you even need health insurance?” It included a calculator that allows individuals to assess the likelihood of needing hospital care at each age, which is the purpose of health insurance for many people, to ensure they have the ability to pay for needed health care in the event of a major medical expense.
For myself, a 42-year old male, there is a 6.2 percent chance of being requiring hospital care. So the question presumably becomes, am I willing to bear a 6.2% chance of getting hit with a big hospital bill in exchange for not having to pay insurance premiums? Other individuals younger and older (and femaler) will wind up with different percentages – were I a 24-year old male, I’d have only a 4.1 percent chance of needing hospital care, while if I were 63 there would be an 18.53 percent chance of incurring a major medical expense.
There are a number of limits to this, of course – the blog post notes several of them including:
- If you or a member of your household are going to have a baby, or plan to during the next calendar year, your child’s delivery will very likely take place in hospital facilities. According to Cigna, a normal delivery can cost over $7,500, so you would likely benefit from having health insurance coverage, which becomes especially true if your child’s delivery is more complicated.
- If you have very young children, especially under the age of 2, you will likely benefit from having health insurance coverage.
- If your health or that of a member of your household is impaired, such as might be the case if you’re managing a chronic health condition like diabetes, you will likely benefit from having health insurance coverage.
- If you or a member of your household are involved in violent crime or associate with those who do, or are otherwise planning to engage in risky activities with a high likelihood of injury or that might make you sick, you will likely benefit from having health insurance coverage.
And of course there’s the matter of individual risk tolerance – some people might think nothing of going uninsured with only a 4 percent chance of getting hit with a big hospital bill, while others might lie awake panicked at the thought. Every one of us has their own perspective on risk, so just knowing what the likelihood is of winding up in the hospital doesn’t provide the ‘right’ answer.
But the blog post does pose an interesting question, and since the author was kind enough to refer people to The Self-Pay Patient for information on how the uninsured can get health care, I thought it would be helpful to provide my own thoughts on the question.
The short answer is, in my opinion, Yes – everyone should have some form of insurance-like coverage. Which is not quite the same as saying that everyone should have what is today being sold as health insurance.
Accidents happen, and illness can strike at any age. When I was in college, I had a 21-year old roommate who developed testicular cancer. Fortunately it was caught early, the cancerous testicle was removed, and he’s alive and well today (and has 2 kids to boot). So thinking that young people or healthy people don’t need any form of coverage for healthcare is probably a mistake, unless their parents are fabulously wealthy and can pay for needed care out of the yacht fund.
But as I’ve pointed out numerous times here, there are a number of alternatives to conventional health insurance that can provide coverage that is just as good if not better in the event of a major illness or injury. Health sharing ministries and organizations, short-term health insurance, fixed-benefit, critical illness, and accident insurance, and even certain life insurance policies, can all be great substitutes for more expensive conventional health insurance. Other options of course include medical loans and charity, as well as savings and any funds in a health savings account.
Each of the alternatives to conventional health insurance has drawbacks, but the same can be said of conventional health insurance as well – yesterday’s blog post featured the plight of a family with insurance who wound up getting hit with tens of thousands of dollars of out-of-network charges even though they had what many might consider ‘good’ insurance with a low deductible.
So just as I believe that everyone should have some form of insurance-like coverage for health care needs, I think everyone should decide for themselves what tradeoffs and risks are acceptable. A few questions individuals might ask themselves include:
- Am I willing to accept a high premium and a narrow network of doctors and hospitals under conventional health insurance in exchange for a wider range of benefits and some greater degree of financial security?
- Am I willing to accept in exchange for much lower costs the very slight but also very real chance that I will be struck with such a severe illness or injury that my alternative coverage won’t cover all of the bills?
- Am I willing to accept that part of being a self-pay patient likely means saving a lot of money in exchange for some hassle in finding a doctor or facility that caters to patients paying out of their own pockets?
- Am I willing to accept that one tradeoff is higher premiums for an insurance policy that covers mental health or substance abuse treatment or lower costs as a self-pay patient but far more limited options and access for the same?
- Am I willing to accept that in the event of a truly catastrophic medical expense, I may need to liquidate savings, take out a loan, or rely on family and charity?
These are just a handful of questions that people should be asking themselves. I won’t pretend to know how anybody should answer any of these or any other questions that might come to mind, but I do hope people will at the very least understand that there are real tradeoffs no matter what decision is made.
So, the answer to the question ‘Do you even need health insurance’ depends on what is meant by ‘health insurance.’ If it only means what is allowed to be sold on an Obamacare exchange or offered by employers, the answer is probably ‘no’ for most people. But if ‘health insurance’ is expanded to encompass any of the other options that exist for paying medical bills in the event of a catastrophic medical expense, then for what it’s worth in my opinion the answer is ‘yes.’