Why Does Insurance Have Deductibles?
Many older people remember the golden days when they could go to a doctor or dentist, flash their insurance card and not have to pay a penny. Why does Insurance have deductibles today?
To understand how deductibles came about in the health insurance industry, you have to go back a few years and look at the mindset of the person who was covered by health insurance. The old forms of group health and dental insurance were pretty inclusive when it came to coverage. In other words, just about everything was covered. People would go to a doctor or to a dentist for just about any ailment that came along. It was the safest course of action, and it did not cost anything. They had already paid for these visits by paying the insurance premiums and felt they might as well take advantage of them.
This was all good and well until the costs of health care began to go up in an uncontrolled spiral. The idea of the group insurance plans was that everyone paid premiums and the collected money was available to pay everyone's medical bills. As long as the total of the premiums exceeded the bills and payouts, everything worked fine. As the costs went up, the premiums had to go up as well. It could not be helped. As premiums went up and began to take a serious bite out of people's paychecks, their initial reaction was to go to the doctor more often. They were paying so much, they felt entitled. They wanted their money's worth.
Yet, the more visits, many of them not completely necessary that were made to the doctors, the higher the payouts. This led to higher premiums and the whole cycle began again. It was necessary for the Insurance Companies to devise a plan that reduced unnecessary visits and brought premiums back under control. The idea they came up with was the deductible. Now, people were going to be actually paying for doctor's visits until a certain amount had been paid. Once the deductible was paid, the insurance would cover the rest.
This was going to cut down on unnecessary visits, but now on legitimate and needed visits. At least, this was the thinking of the Insurance Companies. They fully expected patients who needed medical care to still get it and pay the deductible. There was a certain fairness to this system because it was putting the burden of payment more on the ones who were using the services and not the healthy ones who only paid higher and higher premiums.
Today, some forms of insurance are being offered with very high deductible payments. They are designed for healthy people who do not anticipate the need for much medical treatment in the near future, but want protection from catastrophic illness. This illustrates the fact that deductibles were a method of making health insurance more affordable and better geared to the needs of individuals. By: Barry Waxler Article Source: http://www.ArticleDashboard.com Get a free consultation on your insurance needs with a financial advisor at UFCAmerica.com.
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