Another Comment on Health Insurance

Besides the dropout of an important insurer, one huge complaint about Obamacare is that the policies it offers are not very good.  The deductibles are so high that they offer nothing for ordinary healthcare but only serious illness.  Certainly that has been my experience with my own policy.  Although somewhat overlooked, this has been a common complaint about health insurance policies even before Obamacare, but the general trend does seem to be toward higher deductibles.

Nonetheless, even with the deductibles I think insurance policies have advantages for the simple reason that it is expensive to be uninsured.  Insurance companies are able to use their monopsony power to get providers to accept lower payments from them than they do from the uninsured.  Even if your insurance does not cover a service, people who have it benefit from the lower reduction offered insurance companies.  Sometimes the amounts are quite large.  The other reason being uninsured is expensive is that many providers require the uninsured to pay the full price up front before seeing them.  If you have insurance, they require only a copay up front.  Granted, if the service later turns out to be within the deductible, you get billed for it later on.  But, besides the reduced price providers offer to insurance companies, you have at least the option of paying in installments instead of all at once.

Of course, all this will probably be less than the premium price.  Indeed, insurance companies make their money by collecting more in premiums than they pay out to claimants.  Specifically, health insurers make more by collecting more premiums from the well than they pay out on behalf of the sick.  And that basic model will apply, Obamacare or no Obamacare.