For years I had some kind of corporate health plan. When I started my own business, I bought a Blue Cross plan that roughly mirrored the corporate health plan I used to have -- very low deductible, lots of coverage. And it had very high premiums.
So I finally got serious and went out and did something 99% of Americans never do or never have to do: I went out and really researched my health care options. And what I found was that to raise our family's deductible from $500 a year to $2000 a year would save me over $3000 a year in premiums. In fact, if I switched plans, I would get just as high of a maximum payout and I would get a better gaurantee on future pricing and a commitment never to drop my coverage from a large, well-rated insurance company.
There's an old joke about an economist and another fellow walking down the street. There was a $10 bill laying on the ground, but the economist just walked right past it. The other fellow said "what are you doing, you just passed up $10." And the economist replied "It can't be a real $10 bill, because in an efficient market someone would have already picked it up."
That was my reaction to my health care options. I asked my broker, "you mean that if I increase my deductible $1500 I can save $3000 a year? Even in a worst case year I am better off, and in a healthy year I am MUCH better off." He replied "Yep." I asked, "But why doesn't everyone do this?" He just shrugged. As my Harvard investment management professor used to say, as he wrote up a market situation on the chalkboard to begin each class, either this is an opportunity, of there is something we don't understand. As I have gained more experience with my new health plan, I have become convinced it is the former.
McQ over at Q&O has a great post on insurance vs. insulation. I won't quote it all, but it is well worth your read. Towards the end, he quotes John Stoessel on my particular conundrum:
But people are so conditioned to expect others to pay their medical
bills that they hate high deductibles: They feel ripped off if they
must pay a thousand dollars before the insurance company starts paying.
But high deductibles may be the key to lowering costs and putting you in charge of your health care.
I am absolutely convinced that the best possible step for US health care is to expose more users to the market and price-value trade offs, while providing high-deductible insurance that shelters people from bankrupting unusual events. More here, here, and here.