impact of inadequate health insurance coverage

Impact of inadequate health insurance coverage

How people are increasingly falling into the Health-Debt Trap

There’s only one thing worse than not having health insurance at all, and that is having insufficient or inadequate health insurance. What do we mean when we say ‘‘inadequate’’? Have you ever heard of the proverb which says you should only stretch your feet as far as your blanket goes? Ever tried to squeeze into a tiny shirt? Quite similarly, when you buy health insurance whose total sum insured is not enough to cover your medical bills, you’re doing exactly this while risking your entire life and financial stability. People are not wrong when they say one decision can change your life, especially when it comes to the decision of which health policy you choose. 

So, what are the consequences of a bad health policy decision, and how do you make the right health policy decision? Let’s try to dig out some answers. 

The Three Main Reasons of Why People End up Choosing the Wrong Policy

Humans are creatures of emotions. There are three such emotions or reasons which lead them to choose a policy that is not for them. 

  1. The first reason is misery. Let’s face it, nobody likes to pay premiums, but everybody likes claiming the sum insured. It’s a well-established fact that policies with low premiums usually have a low sum insured. In this way, a short-sighted person whose primary aim would be to save money would end up taking up a cheap insurance policy to pay lower premiums. Ironically, he will end up paying much, much more in the event of a health accident. 
  1. The second reason why people fall into the traps of bad policies is not researching enough. That is more due to laziness. It is surprising to see how many people do not think twice before buying a policy their life would depend upon. Before purchasing a policy, make sure you know what all of your options are. Make sure you talk to your colleagues, peers, elders and your entire social circle to find out what policies they subscribe to and how it’s working out for them. Once you make a choice, make sure you read the fine print of the document you sign, make sure you’re aware of all the terms, conditions and exceptions. 
  1. The third reason  people end up choosing the wrong policy is herd mentality. You see a bunch of your friends buying the same insurance policy, and you think ‘‘well, they must have put some thought into their decision, so I need not think much about it’’. Simply put, you rely on their judgement and only buy the policy because others around you are buying it. This is called the herd mentality: blindly following others. The main reason why it’s detrimental to you is that their decision is based on what their requirements are. Maybe they don’t need good policy and are only buying one to save on taxes. Or perhaps they already have a small pool of health savings set aside for their health expenditure, so they might feel like they don’t need a health policy. But if you, somebody who has neither of these two, blindly follow their advice, it can have some grave consequences for you.  

How Can an Inadequate Health Policy Adversely Affect You?

Despite all of the bad consequences and sound advice, some people still end up buying the wrong health policy. Let’s see how this wrong decision can affect them. 

  • Mounting health expenditure debt

Suppose you buy the cheapest policy you get which has a meagre sum insured. You have a good job, are risk-averse, and the last disease or injury you got was years ago, so you feel you don’t need a comprehensive health policy. But suppose now, you end up having a heart disease because of the stress life and work have exposed you to. You go to the hospital, and you spend money. The doctor advises you to have nine tests done; you spend money. The doctor finally finds out the problem and suggests an expensive treatment; you spend money. For surgeries, medicines, room rents, you spend more and more money. 

And what’s the worst part? Because of your days in the hospital, you receive a massive cut on your pay-roll. Now, you do not know how to fund your health expenses, so you turn to friends, relatives and banks to lend you some money. They know how desperate you are for the money, so they keep a high-interest rate, which will take years for you to pay off, even in a good market. Therefore, you must have a long-term vision and end up choosing a policy that adequately covers your hospital bills if need be. 

  • Worse Health Outcomes and a Short life

Seems far-fetched? It’s not! American research has found out that in the case of cancer patients, insured patients outlive uninsured cancer patients. This is simply because insured patients have an early diagnosis as most good policies offer you some free health-checkups throughout the year. This enables the insured people to have better health outcomes. The same was found for people with chronic or cardiovascular diseases. People with an acceptable health insurance policy have a better health outcome. 

Imagine it yourself, are you more likely to go for a health check-up if somebody else pays for it or if you pay for it? Similarly, are you more likely to get comprehensive treatment for the disease if you burn a hole in your pocket or if the insurance company pays it out for you? Therefore, insured patients have more health check-ups, better treatment, more money for medicines and thus end up living longer than their counterparts with no or inadequate cover. 

  • Long-Term Financial Instability for you and your loved ones

Imagine not being able to buy your dream house or to be not able to afford a health treatment right now because you took a huge debt to pay hospital bills for an injury you had when you were much younger. For a lot of people, this becomes the reality of life. This becomes an unfortunate habit in their life to choose between spending on health now when they have only mild symptoms and spending on health later when the disease has already done its full-blown damage. What they don’t understand is that they won’t have to make this ridiculous choice if they get an acceptable health policy! This decision is unnecessary! You do not need to keep paying off a life term of debt or become a slave to your job to pay off debt if you have an acceptable health policy. 

How can you save yourself from these consequences?

The answer is simple! You won’t face these consequences if you take a sound health policy decision! Take your time and do your research, search for a comprehensive policy that covers your ambulance cost, diagnosis cost, and treatment cost, and room rents. Once you have such a policy, renew it, and never let it go!

FAQs: Health Insurance Coverage

How can I make better Health Policy decisions?

You already have what it takes to have an acceptable policy: your research skills. You only have to consider now what is stopping you or keeping you away from it? The main three reasons can be misery, unwillingness to spend on health premiums, laziness that prevents you from digging deep into the research, and herd mentality. You have to make sure that you’re willing to spend on health. After all, health makes wealth. Secondly, you have to dig deep into catalogs, reviews, and terms and conditions. Last but not least, while you must listen to the recommendations of your peers, don’t follow them blindly as their needs are different from yours.

Is government-provided health insurance enough?

More usually, it is not. If you’re from a developing country, government hospitals might not be your first choice for treatment. Public health insurance also has a lot of loopholes; for instance, it does not cover widespread mental health illnesses. Therefore, while public health policies provide you with a minimum, it may not be enough just to be covered by the bare minimum. You need to take your health matters into your own hands and choose a private health policy right for you!

What are the qualities of a sound health insurance policy?

Remember the (4 As) while buying a health policy- Accessibility, Affordability, Availability and Adequacy. Accessibility refers to how easy and hassle-free is the claiming process. Affordability refers to how well you can afford the premiums. Availability refers to how you can contact them and how quick and responsive they are through their helplines. Adequacy refers to how large is the sum-insured, will it be enough to cover your bills in case of an emergency? Keep this mantra in mind, and you can never choose the wrong policy!

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