Why Being Uninsured Makes Sense for Many Americans

A study by Himmelstein and colleagues analyzed 1,771 personal bankruptcies filed in the year 2001 to evaluate illness and injury as contributors to bankruptcy.2 More than a quarter cited illness or injury as a specific reason for bankruptcy and a similar number reported uncovered medical bills exceeding $1,000 in the two years before filing. Among those who were listed as uninsured, the average medical costs were $10,893 since the onset of illness. It is interesting to note that this figure is lower than the cost of two years of premiums for the high-deductible major medical policy mentioned above.

Litigation is a riskier but sometimes effective way out. Take the example of the man who participates in a bar fight that he provoked by making uncomplimentary statements about another man’s date. He suffers multiple facial fractures, requires a tracheotomy, and is treated for shock. He subsequently develops acute respiratory distress syndrom (ARDS). Even though this is successfully treated, he sues the hospital and doctors for the ARDS and the ugly tracheotomy scar. He doesn’t have much of a case but will drop the suit if the hospital and physicians zero his outstanding balance. Or maybe he gets really lucky and develops a more significant complication that he can make some real money on. The more complex and lengthy a hospital stay, the more complications that can occur.

Objection #2: Routine medical care and preventive medical care would be expensive without insurance.

Just as George Carlin noted that the meaning of life has changed, so the meaning of health insurance has changed for many people. Instead of health insurance acting as a safety net in case of a catastrophic event-its original intent-people have begun to use insurance as a means to fund routine and expected medical expenses. However, insurance is a very cost-ineffective and inefficient way to provide the means for routine medical and preventive care. In order for your insurance plan to offer (as mandated in some states) routine medical care such as yearly mammography, you have to pay not just for the cost of the mammogram but also for the overhead of the insurance company and their profit.

On the opposite side of the equation, the radiology suite has to charge more to provide a mammogram to someone using insurance as payment since the overhead is higher when dealing with these types of patients. For example, a radiology unit near my home is reimbursed more than $220 for a screening mammogram from some insurance plans. (The 2007 Medicare fee for screening mammography is $115.88.) Their best cash price, during breast cancer awareness month, is $50 ($125 the rest of the year). Another facility charges $89 cash year-round. Similarly, the Blue Cross rate for a 23-hour stay for a vaginal delivery when my daughter was born in 2002 was $1300. The cash price paid in advance was $900. We decided to pay cash in advance.