Auto vs. health insurance and personal responsibility

Health insurance in effect allows people to live as much of an unhealthy and “dangerous” lifestyle as they want without having a financial impact in the form of higher monthly premiums. Now compare that to an auto insurance policy, in which if you speed, get tickets, or live a “dangerous” lifestyle your monthly premium can skyrocket. Why is this?

The concept of both of these insurance products is to provide coverage in case it is needed, such as automobile insurance for car accident or fender benders and health insurance for heart attacks or cancer. If at a high level the concept of the products is the same, why do they operate completely differently when it comes to the monthly costs around personal responsibility? I for one would like to know.

Reasons for health or car insurance

I have heard people say, and read, that health insurance is meant to be a safety net of last resort for when you get sick and that the concept of a policy is that everyone contributes some money to the insurance marketplace (whether you are healthy or not) in order to provide coverage to others. The experts say while you may be healthy today and for years to come (so you in effect do not need your health insurance) there will almost always come a time when you need your policy. And since everyone pays a monthly premium that makes your medical bills more affordable for those times when you do need health insurance.

That seems to be the common argument, and I can sort of understand that. But at a high level, isn’t that what car insurance is about as well? Pay premiums into a plan for a period of time if/when you need it, such as an accident? So once again, why does auto insurance in effect encourage personal responsibility (drive safely, stay out of trouble, etc.) while health insurance doesn’t?

As with a health insurance plan you can eat fast food, smoke, and drink every day and generally pay the same amount of money as someone who is in great shape and makes the right personal choices. Note there are very few exceptions to that rule as a small number of companies are now starting to give discounts to people who participate in wellness or related workshops.

Insurance and personal responsibility

I strongly believe and have read some other commentary from time to time on this and that one of the biggest reasons that the health care system is broken in this country is there is almost zero personal responsibility. Not when it comes to lifestyle/diets/exercising and not when it comes to people being smart about how insurance is used, how much a medical service costs, and how money is spent in the system.

Now while we can talk about lack of responsibility around medical costs, such as Americans have no idea (nor do they care) what one medical provider charges over another for a service such as X-Rays so there is zero incentive to shop around for a better deal, we will focus more on responsibility around lifestyles.

After all about 40% of Americans are obese, and much of that is due to personal choices around unhealthy diets, lifestyles, no exercise, and bad habits. Note there may be some exceptions to that as some people may be obese due to an underlying medical condition, but of course that is not the main reason for obesity in the US. The clear majority of obesity and unhealthy lifestyles is self-inflicted. Now those who are obese pay the same amount of money as someone who is healthy, eats well, and tries to do their best. It is crazy.

When I drive my car, it is all about personal responsibility. I think most Americans feel the same way about driving. I do not think anyone wants to get a speeding ticket or run a red light or stop sign and get a ticket. When you do that your auto insurance rates can be increased 20, 50, even 100% for years on end.

I think many people drive “smartly” to prevent the insurance spikes. Or once someone gets their first ticket, and they learn what an impact it has on the cost of their car insurance, they are much more cautious and mindful of how they drive in the future. They want to drive smartly and do the right thing to save money on their auto policies.

So, someone please tell me a good reason why someone who eats fast food 7 days a week (and let’s see all their meals each day!), why do they pay the same amount as someone who eats vegetables, exercises, and lives healthy? Health insurance companies charge the same to those two-different people. But an auto policy will charge that speedster, reckless driver more than someone who gets zero tickets. The lack of person responsibility when it comes to health insurance is astounding to me.

I think charge people more or less based on their health, or even if they participate in wellness activities to try to be healthier, may be a good start to solving this health insurance crisis in the US. Encourage personal responsibility.

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