What Is Wrong With Health Insurance?

By Dean Howell, ND

A lady was talking with me recently, and she said she would love to have health care treatment with me. But she couldn’t because her insurance coverage did not include naturopathic physicians. When asked which of her chosen health care services were covered by her insurance, she replied that only medical (illness) care was covered, and none of her health care was covered. So, I said, why do you have insurance when you pay for most of your health care out-of-pocket?

She keeps her insurance because of her fear of the costs of illness care and hospitalization in medical catastrophes. So she spends over $5,000 annually to soothe her fears, and then she pays out of pocket for almost all of her health care. Since she isn’t wealthy, she has to choose very carefully her nutritional supplements and treatments. Care with me was not affordable, because medical insurance pays little or nothing for “alternative” health care. Seniors and people with diabetes, chronic infections, or neurological diseases sometimes pay $10,000-$15,000 annually for medical insurance, all because of their justifiable fears of high medical bills, even when they pay for much of their health care themselves.

Why don’t insurance companies pay for most out-patient health care but instead focus on illness care? The obvious answer is that illness care is more profitable. How is it more profitable? The answer is subtle, and it will take some explaining to reveal the truth.

How does the insurance industry work? To most of us, it seems like this:

  • You agree to purchase a health insurance policy in which you are added to a group, or you are added to your employer’s plan and group.
  • The insurance policy has associated terms of the amount of deductibles (you pay first) for laboratory, radiology, emergency room, hospital admissions, office calls, and pharmaceuticals. Once these deductibles are met, the insurance pays the rest of these same costs. The higher the deductibles and the fewer treatments or coverages allowed, then the lower the cost of your medical insurance.
  • The insurance policy also has definitions that describe what medical and health care services will be covered. Lately, for many health care and medical consumers, most of their health care expenses do not meet any of these definitions, limiting them to emergency and illness care after paying their deductibles.
  • The insurance company bets that your group will require less funding than your group is charged by the insurance company. If the costs are higher than the charges, then the insurance company loses money.

Or so it would appear. This is the scenario used by the government when it determines how much to allow the insurance industry to raise medical insurance costs each year—-the insurance industry is not required to lose money, but they are not permitted to make very much money either. This is an important fact.

One thousand middle-aged, healthy customers will pay about $5,000,000 a year. These customers will have to spend around $1,000,000 on assorted medical costs before the insurance company will have to spend much money. How likely are the companies to spend more than $6,000,000 on medical care for these 1,000 customers? That is the bet that they base their rates upon. The first $1,000,000 is the customers’ composite deductible responsibility. Then the cost of medical and approved health care, plus the cost of administration and operations must be less than $5,000,000 or they lose money.

Or do they? There is an unstated factor that makes insurance much more profitable. This is obvious if you look at the television advertising for insurance companies. They tout the reliability and stability of the insurance company because of the real estate, stocks, and bonds that they own, which ensure that the companies will remain solvent in the face of catastrophe. How do they buy these things? Of course, it is with the money you initially pay for your insurance policy and every payment you make later.

One insurance company executive told me that the insurance companies receive 10% to 20% annual profit from their investments. So this means that every $5000 that you give the insurance company becomes $5500 to $6000 in a year, and becomes $10,000 in three to seven years if it is carefully invested in stocks and bonds. Or with $5,000,000 from one thousand customers, the insurance company can have $1,000,000 in ready cash and buy $20,000,000 in real estate (with a $4,000,000 down payment). After that, the real estate will make the bank payments without any additional money from the insurance company.

So this is actually how it works: a bill is sent by your medical provider to the insurance company. They delay for two weeks, asking for additional records to verify that it is an approvable procedure. Approval is granted. If your deductible has been reached, the insurance company can wait 60 to 90 days before paying your bill to your health care providers. This is without spending some of the $1,000,000 they held for expenses from before. Meanwhile, the one thousand customers have given the insurance company $1,500,000 to $2,000,000 in additional payments before they pay your bill.

Is the insurance business beginning to look more profitable? It is obvious that a few things must be done in order to make an insurance company profitable:

  • Get many healthy people into the insurance group. These people are the nice folks who pay for the treatment of the sickly members of the group.
  • The sickly members will stay with the insurance company forever, because a new company will decline to insure them. This means that you can charge them as much as you want, softening the costs of their continued treatment.
  • Fight with your customers about every possible medical cost, avoiding or delaying payment as long as possible.
  • (Once I was trying to convince an insurance executive to fund a research project of mine to demonstrate lower costs in the treatment of whiplash injuries. After carefully explaining my project and pointing out that the advantages of my successful cases were the lower costs of treatments and the lower costs of legal settlements, I was surprised when he said, “What makes you think that we want to lower the costs of treatments and settlements?”)
  • Keep the costs of health care as high as possible. Insurers must show the state insurance commissioners their books, so no investment profits will show (a different sister company has the profits), and the high expenses will allow them to justify charging more. This keeps the insurance rates as high as is legally possible, and this is the money that they invest! If you understand the impact of Items 1, 2, and 3, you will understand that the insurance company will make more money with higher health care costs than with lower health care costs. This is the carefully hidden flaw in our health care model!

So the insurance companies embrace all high technology diagnostic techniques and therapies, effective or not, and require as much paperwork and justification as possible from the health care community in order to raise the cost of treatment and to delay the time of payment, allowing more money to be invested, increasing insurance company profits more than the increasing costs debit the company. Isn’t that slick? Remember, we all suffer because of this clever ruse.

What is the better alternative? First, get control of your lifestyle and home/work environments by eating pure foods and avoiding electrical, chemical, and other environmental toxins. Next, detoxify your body to rid yourself of the accumulated poisons of your life so far. These will ensure that you will be healthier. Realize that the drug/surgery model does not make you healthy; it makes insurance and drug companies rich. Next, at most buy only catastrophic health care coverage ($10,000+ deductible) and thus save most of the money you would be spending if you were still buying regular medical insurance. If you avoid expensive outpatient care or hospitalization for a year or two, you will have saved as much as the deductible, and then you can begin an investment program of your own with your saved “insurance payments”. If you avoid tapping your health fund for ten years, you could have $30,000 to $50,000 saved! If you don’t, you will still have more money than you do now.

Get rid of your traditional health/illness insurance now! Stop supporting the abusers of health insurance, who are the people with poor lifestyles and bad habits. Let them take care of themselves. The rest of us should stop making insurance companies rich and keep our money for our own!