Rethinking Paradigms

The Oil Change Co-Pay

by Eric Peters, LRC

If using insurance to pay for everything is such a marvelous idea, why not expand the concept? How come, for example, we tolerate paying for tire rotations and oil changes out of pocket?

Why not carry Car Maintenance Insurance (CMI) instead? Wouldn’t this make owning a car more affordable? Morefair?

Is it not outrageous that so many millions of Americans aren’t covered?

I’ve asked people who defend Obamacare about this. They immediately see the silliness of using insurance to cover minor routine car maintenance. But somehow, they don’t connect the logical dots and grasp that the same reasoning applies to minor routine maintenance of one’s body, too. People in this country didn’t always whip out an Aetna or Blue Cross card – and fill out myriad Byzantine forms – when it was time to settle up with their doc. They opened up their wallet or their purse and handed the man (or his nurse/office manager) a $20. There was no need for an entire staff of sour-faced fraus to handle the endless reams of paperwork – each paper-rustling sour-faced frau costing the doc (and thus, you) a considerable chunk of change.

There was no army of cube workers down the line processing your paperwork – and doing all in their power to dodge the bill and send it back to you.

It was a pretty good system. It still works pretty well, too – when it comes to fixing our cars. We carry insurance for catastrophic – or at least, major – events. But we don’t –yet – expect – CMI to cover our next $29.99 oil change or tire rotation. Because most people still seem to understand that it would drive up costs – and not just a little bit – because routine maintenance is, well routine. It’s going to be necessary. One hundred percent certainty. Which in the context of insurance means it would be madness to use insurance as a way to pay for it. Because the whole point of insurance is to reduce the cost of the relatively isolated catastrophic event by pooling resources. One hundred people pay in – in relatively small amounts – to defray the cost (at a reasonable cost to each person paying in) of a loss or damages incurred by a relative handful. Most of the people paying in don’t take out – collect a payment. They pay in to insure themselves against the possibility of having to deal with a huge bill for something unexpected – something they hope will never happen. And which very probably won’t happen.

This is what makes insurance make economic sense.

But if it is known going in that everyone paying in will also expect a payment – that the insurance will be used to pay for everything, no matter how minor and not just the unexpected exceptional event – well, now you’re just playing a variant of musical chairs.

Only when the music stops playing, none of us have a place to sit.

What good does it do me to use insurance to pay for an oil change when the cost of that insurance is much higher than the amount I’d be paying if I just paid for such routine maintenance out of pocket? Sure, I’m “covered” – but that’s not much security (a treasured thing in the Age of Clover) when said coverage is unaffordable. And as a consequence of which, the services rendered are inexorably rendered less often as those rendering them do their best to staunch the financial hemorrhaging.

Which is precisely what has happened as regards “health care” – precisely because people have become accustomed to not paying for “routine maintenance” directly, out of pocket, as they would – as they still do – when it comes to their cars. They see the seemingly inexpensive $20 co-pay and think happy thoughts about affordable care. That they are “covered.”

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