Thinking about Health Care Costs

The other morning my husband and I were discussing insurance costs. We participate in a health sharing ministry, and our monthly share has crept up over the years so it's now over $500 a month. Since we have basically not used health coverage for anything except obstetric care, and paid for midwives out of pocket, this seems to him like a lot of money down the drain.

I'm more risk-averse. What if something crazy happens and our kid was in the hospital for a month? Would we want to make choices based on the cost?

He said he didn't like the whole insurance mindset and its basis in fear. Fair enough. Fear is a good way to make some decisions, not a good way to make others. Fear of medical bills has made most people opt for insurance that "covers everything" so they don't have to pay cash for their antibiotics, prenatal vitamins, and routine care, even though these are not expensive, and the co-pay can easily be more than the cash price. Moreover, these are all worth paying for, and it's odd to lose sight of the blessing that these medicines are available with a simple trip to the store. And are part of the reason that so many adults still have living parents and living children.

Still, my family would vastly prefer a lower monthly payment and a very high deductible. We're mostly healthy and don't mind paying when it comes up, and in my experience, the word "cash" cuts the bill right away, without any negotiation. So I said I would look into it and see if there is anything cheaper.

As we sipped our coffee before kids woke, we started talking about the random huge medical bills that various people in our community had incurred over the years. Heart repair, cancer treatment, kidney transplant, preemie care, recovery from cesarean sections, compound fractures with pins,....the list went on. It seemed like the odds of getting a catastrophic medical bill (something that might total a million dollars) were about 1%. The odds of getting a "very large" bill, of course, were much higher, 5-10% if we estimated our friend's expenses correctly.

Let's say you negotiate that million dollar bill down to$250 K. You'll be paying that off for a decade at least, assuming you don't decide to declare bankruptcy, which many people in those circumstances do.

Whatever you think of medical pricing, putting a leg back together over months was worth something, and there's a debt to be paid. So to me the question is, are we going to take even a 1% chance of having a life-altering expense?

Imagine a world without insurance. Pricing would be lower, for sure. You could negotiate up front. But families too proud to negotiate and too poor to pay would let their kids go without some care. There are several examples of this in the extended family history - kids not getting the care they needed because the parents would not "take charity". Their child then bears the consequences for life.

Or let's say when big bills come up we chipped in for our friends. Maybe anything over 5K and we'd pass the virtual hat, send them a check for a few hundred to a few thousand to ease the financial pain. We thought of all those big medical expenses in our community and guessed they totaled something like 10 million.

So then we did the math. Let's say 100 families are sharing each other's medical expenses over the last 15 years (the time frame we've been involved enough to know what has come up for people).

10 million dollars divided by 15 years, divided by 12 months in each year, divided by 100 families would be.... about $550 per month. My husband laughed when he saw this; it's exactly what we' re asked to contribute for our medical sharing.

Are there better ways to share the expense? Maybe. Cheaper ways? Probably, and we hope to find one. But this little thought experiment over an hour showed us that the amount we're being asked for is reasonable to help share the burden of large medical costs.