According to Webster, the definition of “insurance” is:

1 a : the business of insuring persons or property b : coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril c : the sum for which something is insured

2 : a means of guaranteeing protection or safety

We’d like to focus on that second definition: a means of guaranteeing protection or safety. It seems like a pretty simple concept, doesn’t it? Yet somehow, over the years, that concept has slowly faded away. These days, people expect their health insurance policy to do much more than just offer protection. Instead, they expect it to pay for all their medical costs (or at least a significant portion of the costs). People want low co-pays for doctor visits and prescription drugs. They want a wide variety of health benefits, at little costs. And really, that’s not what health insurance is all about.

People are always asking us how they can save money on health insurance premiums. Our most common answer is this: select an insurance plan with a higher deductible and less coverage. It will keep your insurance costs low, yet still provide adequate coverage in the event of a catastrophic health event or medical emergency. However, when we give this answer, we always get resistance. People commonly wonder what the point of having health insurance is, if it’s not going to pay for their regular doctor visits and medications. They assume that if they have a $2500 deductible, and they have never had $2500 worth of medical expenses in a year, it would be pointless to even have the health insurance policy. Why pay for something you’re not even going to use, right?

Unfortunately, that opinion is not correct. Insurance is not a tangible commodity. You don’t pay the premiums every month as direct payment for an equal-value service. That’s now how insurance works. Think about your car insurance policy. Most of us have car insurance, and we pay our premiums, and think nothing more of it. We know that if we get into a car accident, we’ll be extremely grateful for that insurance coverage. But, we don’t expect our insurance company to pay for our oil changes or tire replacements. We don’t submit our mechanic’s bills for coverage. We accept the responsibility for our car’s preventive care and maintenance. We may not be particularly fond of the expense, but we accept responsibility for it. Why would we treat our health insurance any differently?

In order for insurance to work the way it was intended, we need to re-evaluate our expectations of it. People need to be willing to pay for a policy, with the full understanding that it will only give you tangible benefits in the event of a serious illness or injury. We should be responsible for maintaining our health, in the hopes that we will never get seriously ill or need extensive medical treatment. Essentially, we’re paying for peace of mind. With an insurance policy in place, you no longer have to worry about going bankrupt due to medical bills.

Just like auto insurance, we should be paying our health insurance premiums and hoping that we’ll never have to use them. If we continue to expect our health insurance to cover medical costs that we know we will incur, such as routine check-ups, maternity care, and antibiotics, then we can fully expect the cost of our premiums to continue rising. Instead of focusing on lowering the costs of health insurance premiums, we should be focusing on lowering the actual medical costs. If medical treatment was more affordable, we wouldn’t need our insurance to cover it. Then, insurance could go back to being what it was meant to be: simply a means of guaranteeing protection or safety.