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Health Insurance: Why You Need It
by Larry Roth*

I have generally been blessed with good health, so I never really thought much about health insurance. I knew I needed it "just in case," but never thought I'd actually have to use it.

When I was writing Living Cheap News, I reviewed many books in the simplicity/frugality genre, and one shortfall of many of these books was their coverage of health insurance. Often, the need for health insurance was dismissed with such statements as "Once you're away from the stress of a job and materialism, good health will follow." The author of one book even said he and his family had no health insurance. This seemed a dangerous approach to me, but it was only after a health crisis that I learned how hazardous to one's wealth having no health insurance could be.

It all started innocently enough. I was diagnosed with diabetes ten years ago, but I've managed to control it pretty well. Last August, a pair of sneakers began to come apart, and I wound up with a sore on my foot. I thought I was taking good care of the sore, but a couple of weeks later, I had a sudden attack of something that felt like the flu. A couple of hours later, my foot was swollen, and I hurt all the way up to my thigh. I saw my doctor a few days later, and he referred me to a specialist. That night, I was admitted to the hospital, and my foot was operated on the next morning. The infection turned out to be staph and strep, and I was in the hospital for a week.

While I was in the hospital, which was part of the Health Midwest system, it was announced that Health Midwest was entertaining offers from HCA and Tenet. A local advocacy group opposed Tenet because Tenet had a reputation for being unfair to uninsured patients.

After I got home, I received the statement from my insurance company, Blue Cross. The hospital charged $36,000 for my one-week stay. Blue Cross reduced the allowable expenses to $6,000. My insurance has a high deductible, so I paid more than $4,000 of this.

Who Decides?
I have a good friend who is a doctor, and I called to ask if this was a normal reduction. She explained that hospitals have agreements with insurance companies, and the hospital must accept the insurance companies' determinations. "This is how the uninsured get screwed in our system. They don't have anyone to go to bat for them," she added.

In other words, simply because I had insurance, my bill was reduced from $36,000 to $6,000. A person without insurance would have had to pay $36,000, because they wouldn't have the clout to reduce the bill.

This seems extremely unfair to me -- the people least likely to be able to afford to pay the full bill having to pay it -- but it's one reason we all need health insurance. And in my experience, health insurance is a big reason why even people who are financially independent are reluctant to leave their jobs.

When I left my job with Company L in 1995, I felt extremely fortunate. I was insured by Kaiser Permanente, and Kaiser had recently moved into the Kansas City market. I switched my coverage and paid $133 a month. By the time Kaiser left Kansas City a few years later, my premiums had grown to more than $300 a month, and all I had gotten for my investment was an annual flu shot and a periodic check up. While Kaiser made provisions to move people in group plans to other plans, the 1,000 of us who were individual subscribers were literally left high and dry.

The Internet to the Rescue
I read about www.ehealthinsurance.com, and I checked it out. I eventually enrolled in Blue Cross through the site. My premiums are about $112 per month, or a savings of $200 a month over what I was paying with Kaiser. I also have a $5,000 deductible. I figured all I had to do was stay healthy for two years, and I'd break even. I think I just about made it.

In my state, ehealthinsurance.com offers plans from several insurance companies, as well as several options from each company. You might want to check the site, and see what the options are where you live. Be advised that the rate you're quoted won't be the rate you wind up paying if you have any pre-existing conditions. You'll pay more.

While I'm frugal and symptathize with those who opt not to have health insurance, after my experience I can't recommend that approach. While we can all do our best to take care of our bodies, there are times when our best just can't fight off infections, diseases, and accidents. They can happen to any of us. Don't gamble your life savings on good health. Get health insurance.

Prescription Drug Tip
My health insurance doesn't cover prescription drugs, so you can imagine how thrilled I was to discover that levothyroxin, a cheap generic I've been taking for years, was suddenly discontinued and replaced with a medication that costs me more than three times as much. I asked the Costco pharmacy I use to see if they could find a cheaper alternative. They were able to find one, and gave me a quantity discount. I still paid more than twice what I would have paid for levothyroxin, but it was 30% less than what I would have paid had I not asked them to find an alternative. You might try this approach with your pharmacist. By the way, in many states you don't have to be a member of Costco to use the pharmacy, so don't let your lacking a Costco card keep you from checking prices.

On a personal note, as I write this three months after my surgery, I am about 99% back to normal. I came across Patrick Quillin's The Diabetes Improvement Program, and I've been following his recommendations. I've lost a few pounds, I'm now off all diabetes medication, and I intend to stay that way!

* Larry Roth is the author of Beating the System and The Best of Living Cheap News and the editor of The Simple Life. Although he stopped publishing Living Cheap News in 1999, back issues of his newsletter are still available. For more information, visit www.livingcheap.com, or send a long SASE to Living Cheap News, PO Box 8178, Kansas City, MO 64112.

Reprinted from The Pocket Change Investor© 2003, Marc Eisenson & Nancy Castleman

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