Play It Safe With Your Health

You can't avoid risk. But it isn't smart to take risks when you don't have to.

Yet that's exactly what many Americans are doing with their health. According to figures released by the Census Bureau yesterday, nearly 47 million lack health insurance coverage. And while many among the uninsured don't have the money to pay for it, a closer look at the numbers shows a surprising number of wealthier individuals who choose not to have health insurance.

High income, no insurance
As you'd expect, there's a definite relationship between income, work status, and insurance coverage. The more money you earn, the more likely you are to have insurance. Full-time workers have better coverage than part-time workers, and both are better off than the unemployed.

But even families with the financial resources to get insurance are choosing to go without. Among those households with incomes of $75,000 or more, nearly 9 million people -- almost 8.5% -- are uninsured. More than 13% of those earning between $50,000 and $75,000 don't have coverage.

Of course, even among some of these higher-income families, health insurance is hard to pay for. While employers often make affordable health insurance available to workers, the number of people covered by those plans has fallen to less than 60%. Small businesses often can't afford to cover employees, leaving them reliant on costly individual coverage that's usually difficult to find.

Finding middle ground
Even though health insurance coverage is expensive, going without it involves taking on a huge amount of risk. Without insurance, all it takes is one serious illness or injury to throw your financial life into chaos. And although there are things you can do to improve your health and decrease the chance of incurring large medical bills, you can't eliminate the risk that an unexpected health problem will need attention.

With that in mind, one trend among both individual and employer-sponsored health insurance plans is high-deductible insurance. Sold by insurance companies such as UnitedHealth (NYSE: UNH) and Aetna (NYSE: AET), high-deductible plans offer limited benefits until you pay a certain amount each year. So while traditional plans might charge you only a small co-pay to visit your doctor one or two times a year, you'd likely pay the full cost of those visits with a high-deductible plan.

The tradeoff lies in reduced costs. Premiums for high-deductible plans are often just a small fraction of those for more comprehensive coverage. And even though you'll pay more of your own medical bills, the premium savings can sometimes fully make up for those costs -- especially if you're in good health. At the same time, most high-deductible plans give you complete coverage above that initial deductible amount. So if something happens that requires costly medical care, your insurance will kick in to protect you from a financial meltdown.

On the rise
It's likely that high-deductible insurance will get more popular as health costs continue to rise. According to one report, large employers such as Wal-Mart (NYSE: WMT) and American Express (NYSE: AXP) already include high-deductible insurance among the options their employees can choose.

It's true that high-deductible insurance leaves you on the hook for a large part of your ordinary medical expenses. But for those without better alternatives, high-deductible insurance can be the best way to avoid a potential financial disaster. The risk of losing everything is simply too high to go without some type of coverage.

© 2007 Universal Press Syndicate