Why Is Health Insurance so Complicated?



Why is health insurance so complicated, while car insurance and life insurance are so simple? Can health insurance be more like, well, insurance? Lanhee Chen, fellow at the Hoover Institution, explains.


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Script:
Americans carry many different forms of insurance. There’s car insurance, home insurance, life insurance, even pet insurance . . . Most of these insurance policies work well and are fairly priced. But there is one glaring exception: health insurance. Only health insurance becomes more complicated and more expensive at the same time. So, the obvious question is: why?
To answer this question, we have to start at the beginning. What is insurance? It’s pretty straight-forward: You pay a monthly fee which provides financial protection against unforeseen, sometimes catastrophic, events. People buy homeowners insurance, for example, to protect themselves from the financial loss incurred in the event of a fire, a flood or theft. Because millions of people are paying into the insurance pool, the pool has enough money to cover the unlucky person whose house does burn down.

And since insurance is meant to share risk, it only stands to reason that higher-risk individuals have to pay more to be insured. Someone who has had two accidents is going to pay more for car insurance than someone who has never had an accident. Why? Because their track record indicates they are more likely to have another accident.
Health insurance in America works very differently. Many of us have health insurance plans that aren’t insurance at all. They’re really pre-paid health care plans. They cover routine check-ups, less serious illnesses, and recurring expenses like prescription medications in addition to protecting you from a health disaster. All of this has made healthcare much more expensive and complex than any other form of insurance. That is true whether you get your insurance through your employer, through the government, or if you pay for your own plan.
But while insurance provides a bulwark against unforeseen loss, it does not protect against routine expenses. Car insurance protects you in the event that you wind up in a car wreck or your vehicle is stolen, but it doesn’t cover routine maintenance like oil changes, replacing brake pads or tire erosion. Why? Because everyone needs routine oil changes, new brake pads, and new tires. So, there is no risk to protect against.
The Affordable Care Act, known as Obamacare, was passed on the promise that it would fix these issues and bring down healthcare costs. But it has actually made the problem much worse.


First, it limited the variety of health insurance plans private companies could offer. It did this by mandating that every plan had to cover the same set of ten health benefits, including preventive care, maternity care, mental health care, and contraception.

Second, Obamacare prevented insurers from charging premiums based on the risk they were assuming. A person with a much higher risk of getting sick couldn’t be charged more than a person with a much lower chance.

These two aspects of Obamacare – requiring all policies to have certain coverages and not allowing insurance companies to charge more for riskier clients – caused the price of insurance to rise dramatically. In Arizona, for example, the price more than doubled between 2016 and 2017 alone.
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TOP 10 Tips for Cheaper Car Insurance 2017


Would you like to get cheap car insurance rates? Lower auto insurance premiums? From the author of "13 Car Buying Mistakes" Kevin Hunter comes this fantastic video. Do your homework and get multiple quotes. It's your ticket to save you money on car insurance!

According to Edmunds:
1. Get more than one rate quote before you commit."Company prices are very different, and it pays to shop around. You can easily wind up paying double from one company to the next," says J. Robert Hunter, director of insurance with the Consumer Federation of America, a national watchdog group.Want to get a sense of who the low-priced carriers are? The National Association of Insurance Commissioners offers a map on its Web site that lists each state's regulators. Click on your state and you're taken to the state's Department of Insurance Web site. Its consumer buying guide compares insurance premiums across a range of companies. You'll also learn how many complaints each company has logged. Surprisingly, you don't have to sacrifice service quality to score a low premium. "A lot of the lower-priced companies have the best service rates," says Hunter.There are a host of independent Web sites, like CarInsurance.com, that allow you to comparison-shop by offering online price quotes.
2. Evaluate insurance costs before you buy your vehicle.The year, make and model of your vehicle can have a profound impact on your insurance rate. All else being equal, new, expensive or sporty cars will cost more to insure than older, cheaper and more utilitarian vehicles. But you could find a substantial discrepancy even when comparing the cost to insure similar cars. So if you've got a few models on your shortlist, contact your carrier to see what rate each vehicle commands.
3. Go high on deductibles.If you're willing to give a little with your deductible, you can wind up saving big on your rates. "If you go from a $250 to a $1,000 deductible, you can save between 25 and 40 percent on your policy," says Hunter.
4. Nix collision and/or comprehensive coverage on older cars.If your older car has comp and collision coverage, you might find yourself paying more in insurance than the car is worth. "Take your comp and collision premium and add it up, then multiply it by 10. If your car is worth less than that, don't buy the coverage," says Hunter.
5. Mind your credit score. An increasing number of carriers are considering credit scores when making rate calculations. "Your credit score can be very important in determining your rate," says Hunter. "You can wind up paying up to 50 percent more if you have a bad credit score."
6. Ask about low-mileage discounts.Many carriers offer discounts to policyholders whose annual mileage is lower than the norm. Maybe you have a short commute. Or maybe your participation in the office vanpool results in fewer hours spent in your daily driver.
7. Ask about group insurance discounts. Oftentimes, insurance companies offer discounts to policyholders who are members of certain organizations or professions, such as veterans, engineers or teachers.
8. Ask about all other discounts. Some carriers offer discounts to policyholders whose vehicles bear certain safety features, like anti-theft devices or motorized seatbelts. Others give reduced rates to senior citizens, and to students whose grades meet certain requirements. "Many carriers offer discounts. Ask for them when you're shopping," says Hunter.
9. Avoid lapses in coverage. Even a brief lapse in coverage can disqualify you from receiving discounts. "They use lapses in coverage to increase your premium," says Hunter. Pay your insurance bills on time.
10. Think twice about paying in installments.Most carriers charge an administration fee to pay in installments. One carrier surveyed levied a $10 charge per installment to those who opted to break up their bill. The solution? Pay your premium up front, if at all possible. Of course, this charge is more significant for those with small premiums.

TRAVEL INSURANCE: TRAVEL TIPS, TRICKS & HACKS

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Travel Insurance - some people swear by it, others never use it. So what's the big fuss? This video will tell you everything you need to know.

Why do I need Life Insurance?


Buying a Life Insurance plan is like buying peace of mind, knowing that your family will be financially secure should anything happen to you.

In this segment of our Life Insurance 101 series, find out how Life Insurance can protect you and your family from the unexpected and help you prepare for three risks we may all face in real life:

1) dying too soon, 
2) living too long, 
3) being disabled or getting sick. 



What is Life Insurance?

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Some people think that Life Insurance is too complicated. The truth is, it doesn't need to be.

In this video, we'll tell you more about what Life Insurance is, its history, and the technical terms associated with it so you can understand it better.