Protension: the online journal of Tom Elgin

Actually, health insurance isn’t sexy. But it’s important enough that it ought to be.

So now I’m selling health insurance as a student rep for Zane Benefits, LLC. Their marketing materials look pretty run-of-the-mill, and you’d be tempted to write them off as some kind of MLM or fake scam. But I met all the people involved (so far 4, at a 2-month-old startup) when I was in Park City this summer. Basically they’re trying to be the first to take advantage of recent changes in legislation to reshape the private health insurance market. Why will this work? Well, the healthcare market is a little quirky.

Everyone should use an insurance agent.

1. Health Insurance costs the same no matter who you buy from. Insurance agents do take a cut, but the insurance company isn’t allowed to charge you less if you buy direct.

2. Health Insurance companies can’t advertise. They could, but the people who respond to health insurance ads are unhealthy people who are hard to insure. You have to either charge them a lot or turn them away, wasting your time and leaving them mad at you.

3. If you’re a numbers geek like me, you don’t need an agent. I spent about 15 hours online last April and found a good policy for myself. When I met the Zane Benefits people, they found the policy I’d bought in about 45 seconds, along with a couple other comparable ones. Since going through an agent is free, it’s a good deal for people who don’t have time to burn learning about this stuff.

Most people should buy an individual policy.

1. In most states*, insurance companies can price-discriminate based on your age and health. If you’re young and healthy you can pay a fair market rate for your insurance, usually less than $1000 a year (I pay $504). *(not in NY, NJ, ME, MA, VT)

2. If you have an individual policy, you don’t have to worry about getting and keeping a job with health benefits.

3. If you buy a policy when you’re young and healthy, the insurance company can never raise your rate just because you had an accident or developed an expensive condition.

The $1000/year figure makes sense, because that’s about what an uninsured healthy young person would spend on healthcare in a year — on average. Of course there’s a chance you’ll break your back snowboarding and run up a huge hospital bill, and that’s the point of insurance: to spread risks like that among a large number of similar people.

This entry was posted on Tuesday, August 1st, 2006 at 5:44 PM and is filed under News, Work. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.