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Small Business Employee Benefits and HR Blog

Why Group Health Insurance is Evil

November 7, 2014
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Edited 11/10/2014:  The title of this article is tongue in cheek. The purpose of the article is to point out 10 reasons group health insurance is not the ideal place for consumers to buy health insurance. Please leave a comment if you disagree with any of the reasons! : )

In two weeks, we release our book The End of Employer-Provided Health Insurance, which discusses the obvious solution to our nation’s employer health insurance woes - employer-funded individual health insurance. The book is available for pre-order on Amazon.com and BarnesandNoble.com.

Healthcare costs now consume almost one-sixth of America’s economy, and, during your lifetime, medical and health insurance costs are likely to be your largest or second-largest expense after housing. Your group health insurance is arguably the number one threat to your financial future.

Why Group Health Insurance is a Significant Financial Threat

Have you ever thought about what would happen if you became ill, lost your job and your health insurance, and couldn’t get another job? Every year this happens to millions of Americans with dire consequences—and it doesn’t have to be a major heart attack or cancer to lead you to the poorhouse.

Have you or a loved one ever had a medical issue requiring multiple doctor visits, laboratory tests, or hospital stays? Then you already know that behind virtually every ill person is a second person needed to transport them to and from medical appointments, get them meals, and/or explain what is happening to their medical providers. Even if you don’t become ill yourself, you could still be terminated by your employer while you are performing this service for a spouse, child, or parent.

Approximately 1 million mostly middle- and upper-middle-class families file bankruptcy each year due to medical bills they can’t pay—yet amazingly, three-quarters of these families had health insurance from their employer when they first became ill. A family bankruptcy typically affects three individuals and lasts for seven years—meaning up to 21 million people, including children, are living in economic purgatory at any given time due to failed group health insurance.

Few employers can afford to keep paying absent employees for more than a few weeks after those employees have used up their available sick time and vacation. Such employees are then let go, and their financial problems, which are the leading cause of bankruptcy in the United States, begin.

What are the chances that something like this could happen to you? There are hundreds of circumstances in which you could exceed your allowable sick and vacation leave, and the chances of this happening at some point in your working life are greater than 50 percent:

  • Outdoor activities. Do you play sports, ski, snowboard, go boating, or ride bicycles? Any one of these outdoor activities could cause an injury that would prevent you from being able to work. Even without a specific injury, many active people will require some type of knee or leg surgery during their working lifetime.

  • Home accidents. Although most people feel safest at home, the home is actually the place where you are most likely to have an accident requiring medical treatment or one that could prevent you from being able to work. Common causes of home accidents include falls, choking, shootings, poisoning, and improper use of medications.

  • Commuting/driving. Do you commute to work? More than 3 million people are hurt each year in auto accidents. Common injuries include fractures, broken bones, and spinal damage resulting in short- and long-term disability.

  • High blood pressure. About 65 million Americans over age 20 have high blood pressure, a chronic disease requiring medication and one that dramatically increases the chances of having heart disease during your working lifetime.

  • The overweight/obese. Almost two-thirds of Americans are overweight or obese. This has contributed to more than 18 million Americans having diabetes and another 41 million over age 40 having prediabetes. Most people with prediabetes develop type 2 diabetes in 10 years. Diabetes virtually guarantees that you will have health issues requiring time away from work at some point in your life, and 65 percent of people with diabetes die from heart disease or stroke.

  • Cancer, heart attack, or stroke. One in four men and one in five women will develop one of these debilitating diseases before age 65.

10 Reasons Group Health Insurance is EvilGroup health insurance is evil

  1. It’s temporary—You lose your health insurance if you or your loved one gets sick.

  1. It’s overpriced—You pay $4,000 to $12,000 more than individual health insurance for the same coverage.

  1. It’s risky—Your coverage may be canceled at any time without notice.

  1. It’s limited—You don’t get to pick your doctors and hospitals.

  1. It’s one-size-fits-all—You don’t get to choose your deductible or copays.

  1. It’s unfair—You are disqualified from receiving your $2,000 to $12,000 per year share of the trillion-dollar federal subsidy.

  1. It’s unstable—Your cost could double due to one employee with a million-dollar claim.

  1. It’s bad for your career—People stay in jobs that don’t let them realize their full potential.

  1. It’s bad for your business—Management spends time on health insurance that should be spent on customers and products.

  1. It’s bad for America—group health insurance is the top reason U.S. healthcare costs are almost $4 trillion, approaching one-fifth the size of the U.S. economy.

I will be going through each of these 10 reasons in detail starting Monday. You can also download the Why Group Health Insurance is Evil eBook below.

Click here to read all articles in the series.

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