Comparing one health insurance policy with another is too much of an apples to oranges comparison. People should understand what benefits they are buying and what they are not buying. The lack of transparency here makes buying health insurance difficult because it is difficult to compare health insurance plans.
The focus of my agency has been health insurance for the last five years or so. In the 90s I sold health insurance for Mutual of Omaha. I also helped people buy car and homeowners insurance in the 80s when I worked for MetLife.
The Difficulty of Comparing Health Insurance Plans
I actively sell medical insurance. I haven’t sold car or homeowners insurance in over twenty years, but it still takes me less time to understand a car insurance policy from a company I haven’t seen before than it does a health insurance policy from a company I haven’t seen before. There is something wrong with that! I don’t think it is my neurology. I think it is the fact that auto and homeowners policies are standardized and health insurance is not.
If people were able to more easily understand and compare health insurance plans, many of the policies I see today would not be sold. There are several policies that we have decided not to sell because they limit the important benefits. However, they have some attractive bells and whistles that distract the consumer and make them believe that the policies are better than they are.
I remember buying a tape player from an off brand company a long time ago. When I got it home I realized that it didn’t have a rewind button. If I wanted to rewind the tape I had to turn it over and press fast forward.
There was nothing on the box or in the documentation that said that it had a rewind button. I still felt ripped off. I had come to expect that functionality in a tape player.
Health insurance should cover all the major things we all expect unless there is a clear statement “on the box” saying that there is no rewind button. Health insurance should be standardized and easy to understand.
Standardization hasn’t hurt the auto and homeowners insurance industry. People still purchase those types of policies everyday and there are many insurance companies and policies to choose from.
When the policies are the same or nearly the same, we can make better decisions. If we decide to spend 10% extra to buy from a brand name company or better service, that’s OK. The consumer gets to make that decision for him or herself. However, we shouldn’t pay 20% extra and merely think that it is only 10%.
I’m sure that some companies went out of business when they realized that they couldn’t keep up. Insurance companies that are unable to dazzle us with brilliance will go out of business once they can no longer baffle us with their misleading policies. I say good riddance!
If I were king medical insurance policies would be standardized so that people would know what they are buying. This would make it much easier for people to make intelligent decisions about something as important as the insurance that will pay for them to have their children and live longer, healthier lives.
Why is health insurance so complicated? I don’t know why for sure, but it shouldn’t be.