The market for medical insurance is gradually shifting. Historically, it has been about emergency medical procedures. But now, it is moving closer to a pro-active healthcare model. Read on to find out why this is no bad thing, and some ideas of how you can get the most out of your medical insurance.
Medical insurance: not like its brothers
Medical insurance – at least, in the forms common in the USA – has now evolved to a stage where it is only broadly similar to other kinds of insurance.
Often now, when you buy a medical insurance policy you’re buying into a whole package of healthcare – dental options, exercise programmes, nutritional advice, childcare clinics.
In my opinion, that’s one of the most positive developments around in insurance. Sure, purists may say it confuses matters, or that people are given extras they don’t want. But let’s look at some of the postives.
First, comprehensive medical insurance removes much of hte danger of moral hazard. Moral Hazard is an economists’ term, and maybe you aren’t familiar with it. Essentially, it talks about hte problem when one person has to pick up the bill for behaviour caused by somebody else.
Naturally, because the ‘somebody else’ doesn’t have to pay for his own mistakes, he hasn’t got much reason to improve his behaviour.
You can probably see where I’m going with this. Medical insurance is a case of moral hazard. You can live dangerously, smoke 40 cigarettes a day, pick fights, swill vodka from the bottle, and generally destroy your health – because your insurer, not you, will be paying for your treatment.
The converse is also true: you don’t have much (financial) incentive to eat healthily, go to the gym, and generally look after yourself.
Take this situation to an economist, and she’d likely propose a solution where your insurer pays for things to keep you healthy.
They want you to be as healthy as possible, because they’re the ones stuck with the bill of you aren’t healthy. So, it makes sense for your insurer to pay for the gym, the nutritionist, and so on.
And so, we arrive at comprehensive medical insurance. Your premiums are increased slightly – but not by anywhere near as much as it would cost you to buy the benefits for yourself.
In return, you get a full ‘healthy living’ package, encouraging you to look after yourself.
How to get the most out of medical insurance
Perhaps this sounds obvious, but I fear it isn’t to everybody. If you want to get the most out of your medical insurance, take all the options that are going. If you’ve been offered checkups, take them. They only use up a little of your time, and they give you an immense benefit in terms of health.
Choosing medical insurance
But let’s get down to the nitty gritty. For one reason or another, you find yourself without medical insurance. How do you find yourself a trustworthy, helpful deal?
If you want maximum flexibility in your cover, you probably want a ‘fee for service’ plan. This lets you choose your own doctor, and claim back the cost from your insurer at a later date. It’s a good arrangement if you can get it – and if your wallet can handle the higher costs this entails.
But if you don’t have a burning need to see a particular doctor, if you’re content to be treated by services approved by your medical insurance company, then you can often get a better deal by selecting a Health Maintenance Organization, which will remove some of your choice, but lower your premiums in return.
There is a hybrid of these two structures, and it bears the oh-so-inviting name of PPO – don’t you love the medical obsession with incomprensible acronyms? This particular jumble of letters expands to ‘Preferred Provider Organization’, which is perhaps only marginally more intelligable.
PPOs are HMO variants that let you go outside the HMO system in certain circumstances. These can be good plans, but here more than ever it’s essential to read the small print and to know what you’re getting.
Whichever way you go, think about what is covered. Unless money is very tight, you probably want a package that goes beyond the basics. Don’t find yourself paying personally for ‘extras’ like psychiatric care.
But equally, the ‘bells and whistles’ aren’t inherently better, unless there’s a chance that you’ll use them. So, use your nose, and find the medical insurance that is right for you.
There’s a lot more to think about in medical insurance, but there’s no point laying it on you all at once. The key is to think and feel your own way through, and to be ready to fight back against anybody who gives you the hard sell.