Health Insurance Acting Like Insurance – Not A Prepaid Medical Plan

Health Care

It’s long been a plank that we need healthcare reform due in part to the number of medical related bankruptcies:

A study released Thursday [pdf] by the American Journal of Medicine finds a huge increase—nearly 20 percent—in medical bankruptcies between 2001 and 2007. Sixty-two percent of all bankruptcies filed in 2007 were tied to medical expenses. Three-quarters of those who filed for bankruptcies in 2007 had health insurance.

I’ve often wondered about those numbers but haven’t taken the time to dig further into ’em.  For example, if I break my leg, incur $7,000 in medical debt but can’t work, did I really declare for protection because of the 7k or because of all the other bills mounting up as a result of no income?

Be that as it may, I was reading an NPR article when I came across these numbers:

According to an analysis by eHealthInsurance.com of one large insurer’s 2012 claims, just under 11 percent of people with a $2,500 deductible met the deductible for that year. For those with a $5,000 deductible plan, the figure dropped to just under 4 percent. Only 3 percent of people with a $7,500 deductible had that much in claims, and at the $10,000 deductible level the figure was just over 2 percent.

Just 11% of people with a deductible of $2,500 hit that amount.  That means that the remaining 89% of the folks who had such a policy didn’t have bills more than $2,500.  At least qualified bills that high.

The story is the same for the plans that have $5,000, $7,500 and $10,000 caps.

In any event, I was struck by the fact that it seems deductibles are doing their jobs.  Individuals are covering themselves for what might be described as normal day to day bumps and bangs.  Only when significant illness or injury strikes does the plan step in.

Just like insurance should.

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