Insurance was originally intended to protect us in the unlikely event of a very expensive catastrophic incident. Consider your homeowner’s insurance policy for example, that would engage in the unfortunate event such as a total loss due to a fire. But such events are statistically unlikely to happen in your lifetime and that is what keeps home insurance premiums affordable. On the other hand, you would never use your homeowner’s insurance for minor maintenance items such as unclogging a drain, minor pest control, or gardening. If you wanted that service, you would choose a gardener who you believed will do a good job and pay a fair price for the service out of pocket.
Rising Premiums for Added Services
Imagine if your homeowner’s insurance decided to raise the monthly premium and include gardening as a benefit. They would of course use a portion (maybe 50%) of your added premium to pay for your gardening as promised. You might first get a pre-authorization for your gardening and then, when approved, have to use their “in-network” gardener. They have already established a network of gardeners willing to work for a reduced fee and the promise of high volume referrals. The insurance company would have rules so they would never lose money on this new benefit. They would dictate which types of shrubbery and trees are covered under your policy, how often the gardener can come to your home, and of course you would have a copay for every gardening visit.
Why would anyone decide to pre-pay for home maintenance like gardening and give up their right to have a direct relationship with their gardener?
Insurance companies invest large marketing dollars convincing you they have the best providers in their networks, and scare you into believing your cost would be so much more if you had a direct relationship with the service provider.
The Health Insurance Lie
More expensive than ever and still climbing, health insurance has gotten way out of hand. The health insurance companies expect us to pre-pay every month higher and higher premiums by promising to cover more and more items. What they don’t tell us is that we are not very likely to use or need many of these added items that we are paying for. They make the rules like prior authorizations and out of pocket co-pays to discourage utilization of those benefits. They know exactly how much they are will pay out and set premiums accordingly to protect their margins and continued corporate profits.