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I'm OK, You're OK

Published 1/29/2004

I'm too healthy to get insurance.

Recent life changes encouraged me to get new health insurance. Blue Cross - which has insured me for decades - wanted information from my doctor.

What doctor? Other than a wrist fracture I haven't seen a doc in years. I've had no illnesses, no injuries, and no complaints. But without a health history, despite the fact I've never made a claim, Blue Cross's underwriters figure I'm too much of a risk.

$300 to a random doctor selected from the phone book secured the physical and blood work the bureaucrats required. Eventually the paperwork percolated through a labyrinth of channels and company presented a variety of options for deductibles.

Here's the data. The first column is the deductible; the second the monthly premium payment. I added the third column, the total yearly premium payments, as the company apparently doesn't want to bother us with this bit of trivia.

The numbers tell us one thing above all: to get rich quick, start an insurance company.
Choose the $100 deductible instead of $5000 and you'll spend an extra $6744 per year on the premium. to get $4900 of insurance. Go from $500 to $400 and spend $756 per year to save $100.

I could rant about the effect this has on the poor, but even for those unfortunates the only sensible option is a high-deductible. Save the difference and use it for a medical catastrophe. In a healthy year you'll be building a nest egg; bad years you still come out ahead.

The huge deductible scares folks. "$5000! We'd be devastated by that!" Perception is reality.

Big bucks scare folks. Last week I had an interesting dialog with a developer about a similar issue. They're - sigh - building their own RTOS. From scratch. VxWorks looked pretty attractive but costs a bundle. Why not give a vendor a few tens of $K and get tested, working code?

Why, that's real money, cash on the barrelhead, the company has to write a check.

Paying one of their people for a year's work is a lot more palatable because the apparent cost is just a few thousand a week. And it's already part of the budget, a known fixed expense.

The developers all understand the folly of the decision, but management's no-capital-expenses policy dictates this madness.

Back in the 70s my boss foiled a scheme I'd hatched to save the company big development dollars. It, too, required spending some serious cash, but would ultimately trump the do-it-yourself approach we usually employed. He told me, "look, I've got to pay you anyway."

I never had the guts to tell him "Actually you don't. You could fire me anytime and save some serious dough."