Are there Alternatives to Comprehensive Major Medical Insurance

Many people have made a conscious decision to be uninsured and the reasons behind the decision are many. For some it is budget, for others it is value, and for others it is health. There are possibly as many reasons as there are uninsured.

Ask most people why they are uninsured and they will respond that it is due to the price of insurance. For many people this may be true, but for others it becomes a personal decision in which they choose other expenses over the expense of health insurance.

An article in a local paper a few years back detailed a 40-something single male complaining that he had been completely priced out of the health insurance market. A photo accompanying the article showed him standing in front of a brand new Ford F-350 pick-up truck while talking on his cell phone. The article also stated he had a two pack a day smoking habit. This is clearly a case of someone making a budget decision and blaming lack of coverage on high premiums.

For many others it comes down to the value they feel they receive from their policy. They may have had a $1,000 deductible three years ago, but after getting a rate increase they raised their deductible to $2,500 in order to keep the premium affordable. Another year went by and another rate increase came, so they decided to raise their deductible to $5,000 to keep the premium at an affordable level.

What some individuals start to look at this point is the value the insurance policy is providing them versus the amount of premium they are paying. According to an independent actuarial study in 2006, 78% of individuals had under $5,000 of total medical claims the year prior. This means 4 out of 5 people with a $5,000 deductible to meet will not see any benefit from their health insurance policy in a given year.

A $5,000 deductible in conjunction with an average annual premium in the $1,500 range means that individual has the potential to have $6,500 of out of pocket before ever seeing a benefit from their health insurance. This person ceases to see value in owning health insurance and makes a conscious decision to go uninsured.

For the rest of the uninsured it comes down to their health keeping them from getting coverage. A recent study showed that 3% of the U.S. population accounts for 50% of all of the health care spending. This shows that a very small number of people drive the costs for all. This group will also have an incredibly difficult time finding coverage in the individual health insurance market because of underwriting practices.

For those individuals facing budget and value concerns in regards to their health insurance decisions, alternatives to comprehensive major medical policies exist. Many of these alternatives are more affordable and come without deductibles. Limited benefit plans are a growing solution for many of these individuals. These plans don’t typically cover catastrophic type claims, but do provide coverage for more routine types of health care services.

The private health insurance market will continue to develop and provide innovative health insurance solutions. Consumers will demand alternatives in the market as comprehensive major medical continues to get more and more unaffordable.