I’ve been helping a friend look for health and dental insurance these past few weeks. As a physician employed by a hospital, I get insurance as a benefit of my employment. Essentially, it is a corporate type of insurance that is paid for by my employer. Anybody who works for my hospital gets the insurance, regardless of whether they are healthy or sick, smokers or non-smokers, or young or old.

I’ve never really had to get insurance for myself outside of the workplace and I’ve found that it is extremely frustrating for the individual who must acquire the insurance himself – who basically does not receive this as a benefit of his employment.

Not only is it expensive, but your health condition affects the cost of insurance. If you have asthma, some insurance companies will not even write you a policy. Those that do charge you about double the rate of a healthy person of the same age. There are two disturbing things about the insurance industry.

First, as I mentioned, your health history affects your coverage. Thus, there is an incentive to not disclose as much health information to your physician or to your insurance company because doing so will increase your costs. Essentially, the sicker you are, the more expensive you are to the company. As a patient you are clearly being financially penalized for being sick.

The second disturbing thing is that insurance as a business relies on shared risk. The shared risk is the sharing of financial risk. An insurance company makes money by collecting fees in the form of premiums from its members. An insurance company can only make money by collecting more than it pays out in claims. Thus, all of the healthy members or members who underutilize health care help pay for those sick members or overutilizers of health care.

The purported benefit is that a member can pay an affordable premium in exchange for the promise of coverage if there is a catastrophic event that the member would otherwise be unable to afford.

What this conundrum amounts to is a health system that is focused on the bottom line. Members must go out on a limb and have faith that their insurance carrier will honor their claim when they are sick. Members must have faith that their insurance carrier will be financially solvent when they get sick. Those without insurance must acquire it when they are healthy so the premiums are affordable and hope that they can afford the escalating premiums as their health decreases.