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California health insurance  -  Health insurance articles  -  Health insurance basics

A Quick Intro to Health Insurance

We have articles that drill down to the absolute minutia of California health insurance but sometimes it's good to see the forest through the trees and really try to wrap our heads around what health insurance.

Let's get back to the basics and understand what we're really buying which will consequently help us make a better purchasing decision.

So here we...what is heath insurance?
First, we're going to have to forget what we've learned from our prior group health insurance and even California individual/family health plans from a decade ago.

Somewhere along the line, we lost sight of what insurance is really there for and it came back to bite us in the wallet and purse as medical inflation skyrocketed.

Gone are the day of really rich benefits for the small bills. We just can't afford them any more and they really were a departure from what insurance is all about.

Insurance is protection from risk

You don't insure against losing 10 dollars.

Why not?

It's not worth it.

You would pay so much to do so and the "policy" would not make sense. Y

ou insure against $10K or better yet $50K. The real reason for insurance is protect you from some potentially large (although improbable) risk that might wipe you out.

Health care has unfortunately entered this realm as many people find out the hard way. Roughly 50% of bankruptcies in the U.S. are the result of a sudden and unforeseen health issue. The unforeseen is the key point there. No one every plans to get cancer or tear an ACL. As a recipient of an ACL repair, I can tell you I do everything to avoid it.

This addresses the "but, I'm healthy" response we occasionally hear although not as often as before. You don't see it coming and regardless of your habit for Greek yogurt and yoga, some health issues are impossible to see coming. This is why we buy health insurance. We want to cap our exposure in case of the big what if.

Yes, we can go without health insurance but if something happens, it might mean we owe a hospital $50K or we lose our house.

It's just not worth the risk which is where health insurance comes into play.

Health insurance is shared risk

With health insurance, many people all pool their collective money together (your monthly premium) and if one of them has a big bill which they inevitably will (it's pure statistics at this point), the collective group pays for it according to the benefits of the plan. If you have a $50K bill spread among 50K people, it's only $1 per person.

That's the theory and for the most part it works.

Now most of you are saying..."Wait a minute...I pay much more than $1 for my health insurance".

Why is this?

Well, we actually have a lot more health care per capita or person in our collective group now. Think brand name medications, MRI's, deliveries, diabetes, etc. Our medical technology and more importantly, use of that technology has skyrocketed and will probably continue to for years to come.

Also, we have expanded what we expect from health insurance. When the carriers brought out PPO's and HMO's, there was a great deal of pressure on medical costs since these are essentially cost containment systems. If the discounted PPO rate is 40-60% less than what they were paying before, the carriers could start offering no deductible plans (which they did) and office copays (which they did) and medication copays (which they did).

People loved it! Richer benefits.

We went away from insuring the big bill to everyone's delight. It last a few years before medical inflation caught up with it. There are now medications that run $50K annually and MRI's are given out almost on a pre-emptive basis. Health insurance has come full circle and now the average deductible is probably between $2500 and $3500 and for a good reason...that's what people can afford (barely).

Now you have a better understand of health insurance and what it's true importance is, you can better analyze the benefits and rates when running your California health insurance quote below. Remember...Big Bill...Big Bill...Big Bill. Self insure the small stuff and keep the money in your pocket.

You can run your Health Insurance Quote Online to view rates and plans side by side from the major carriers...Free.

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