Myths & Misconceptions About Health Insurance

Health insurance as a concept is fairly simple: people pay premiums for insurance coverage that helps them pay medical bills (up to a certain amount) when they become ill. However, in practice health insurance is complex, with many different types of insurance that are constantly being altered due to new legislation and current market conditions. This has led to several misconceptions about health insurance, which have been clarified by organizations such as Harvard University and "Escape from America" magazine.

Sick People Cannot Find Affordable Policies

• This is a common misconception. On the surface it is true --- sick people have to pay outrageous sums for policies that cover their illnesses. However, the reasons are different than most people assume. Insurance companies decide on premiums based on risk, not past events. In other words, insurance by its nature is based on events that have not yet happened. As the health insurance report from Harvard shows, sick people have already become sick, so their interest is less in health insurance and more in the health care itself. Insurance companies do not offer health care; they offer health insurance, which is why they either refuse to cover sick people, or charge them as much as their treatment would normally cost. Insurance companies are at fault when they drop previously insured people when they become sick, not when they refuse to cover those already ill.

Social Insurance is Government Insurance

• There is a difference between general social insurance policies and insurance directly offered by a government. In many cases, private insurance aspects can remain, but a social insurance policy can be created to give people access to private policies. In this case, the government offers not insurance but funds to high-risk people so they can afford health insurance. There are many hybrid versions possible.

Emergency Rooms are Costly and Ineffective

• According to the Harvard report, many people believe that emergency rooms are too costly, since they are they only option for the uninsured in case of serious accidents. If everyone had health insurance, the belief follows, there would be less need for emergency rooms and overall costs would go down. This is not true, due to the behavior of policyholders. Those who do not have health insurance do not use medical care very often, while those who have health insurance use medical services more often, so health insurance actually raises health care expenses overall.

High Quality Care Goes with High Quality Insurance

• This is a common myth that causes people to believe those without insurance must put up with low quality care, while those with good health insurance get better care. While health insurance increases quantity of care, it is no guarantee of quality. The Harvard report suggests that quality depends largely on what doctors people choose, where they live and how much they are willing to pay out of pocket.