Health Insurance

Private Health Insurance - one of many ways to fund medicine...

Private Health Insurance is not the only way to provide for your medical bills, but in the US it is probably the best option.

Those of us lucky enough to live in countries with state-funded health services may not need to invest in Private Health Insurance. The National Health Service in Great Britain provides for almost all medical needs at government expense, meaning that the role of Private Health Insurance for the British is reduced to providing luxury treatment in private clinics for the elite.

Something similar is the case in most European countries: France, Belgium and German, for example, all have publicly-funded healthcare systems which minise the need for Private Health Insurance.

...But almost always the best option for Americans

In the USA, this first option isn't available. State funding for non-emergency medicine is limited to the relatively small Medicare aned Medicaid projects, which do not cover most medical needs to the extent people will generally consider adequate.

Theoretically, there is another option: no insurance at all. That is, we could imagine paying for each medical procedure individually. This is how medical cover worked historically, but it is not practicable in today's world. The cost of medicine has been rising constantly over recent decades, and most of us could easily be bankrupted by a single procedure.

That leaves us with Private Health Insurance as the only reasonable option to pay for healthcare in the USA. Since healthcare now uses up a significant fraction of our income, it is essential to find the best policy, and avoid paying more than necessary.

Dangers and Pitfalls

Buying a Private Health Insurance policy is a minefield that must be navigated with care. The key is to know exactly what you want, and how much you are willing to pay for it. Try to get a policy with coverage limits that are as rigorously-defined as possible. Vague hints that something will be covered are of no use whatsoever; these will inevitably melt away when the time comes for the insurer to pay out.

Another thing you need to decide on is whether you want a policy that is only concerned with repairing your health when it fails, or one that also proactively provides you with checkups, advice on healthy living, and so on. Both forms of policy have their merits - the former is good for those who will not take advantage of the add-ons, and also for people who already get help with healthy living from other routes (such as through their gym)

Individual, corporate or family

There are many different routes to health insurance. The most common is a corporate policy. This is bought by a company to look after the health of all its employees.

The corporate system offers several advantages, which explain why it has become the dominant means of providing health insurance to Americans. A company can buy insurance at once for a large number of employees, who will have very different levels of health. This reduced the problem of adverse selection - where it is the unhealthy people who buy insurance, driving up the costs for everybody. It is also in the interests of a corporation to keep their employees healthy. Minimising the number of days lost to illness is one of the activities that causes Human Resources departments to fret and worry. Even beyond the days lost, studies have shown that a healthy workforce is immensely more productive than one which is bogged down by continual illness. In some cases, corporations are required by law to provide healthcare for their employees.

For all these reasons, corporate health insurance has become the norm for Americans. But it isn't the only option, and certainly isn't always the best option.

Anybody not employed by a large corporation needs to at least consider individual or family health insurance. Family health insurance will allow your entire family to be looked after together - not necessarily a big issue in treatment for serious illnesses, but a big advantage in proactive healthcare, regular checkups, and so on.

Individual health insurance is concerned only with the policy-holder. It can be very closely tailored to your individual needs. Don't want dental care - fine, don't pay for it!

Getting the right deductible

'Deductible' is a term you'll be running into time and time again as you shop for insurance, so you may as well get used to it. It refers to the amount that of any bill that the insurer won't pay for you - in other words, the part of the bill that you'll have to foot yourself. This can be the biggest factor in the overall cost of a plan, expecially if you are often ill. Although the best choice will depend on your circumstances, it's generally best to avoid both policies which have very low deductibles (meaning their premiums are generally very high), and those which have high deductibles (meaning that you pay most of the cost of any procedure). Get the deductible right, and you're well on the way to finding a good policy.