Wednesday, July 1, 2009

Who should pay for Medical Insurance ?

It is human to forget about your health when you are healthy. You are young and fighting fit and who wants to think of sickness and hospitals ? May you be blessed to remain that way always. But just in case …..

Its a feature of our times that, God willing, we’ll all live longer. But as we live longer, a variety of old age diseases and disabilities will become inevitable. Medical costs can be one of the biggest liabilities of the future and it is only prudent that we provide for it.

This post argues that employer provided insurance is the worst system that can be. It’s a dinosaur that should be quickly made extinct. Here’s why .

In the good old days, when you joined a company and you retired from it, the employer providing medical cover was a great idea. The employer even provided for cover after your retirement. Perfect. And then came Armageddon. Just look at what happened to General Motors.

This stone age practice has continued. Employers still provide medical cover in countries where there is no public or government cover. This is the situation in the US, India and China. (unlike in the UK where there is National Insurance). And I’m willing to bet most of us are covered by our employers and are sleeping easy. I was covered by my employer too. And I slept easy too. Big Mistake.

The biggest argument against relying on employee cover is what do you do when you retire. That’s when most of your medical expenses might come up. At 60 or so, when you go for cover, you’ll find it either refused, or with a zillion exceptions, or at an outrageous cost. All the years when you were young and had little medical expenses are “lost” – your past employer has taken the benefit in terms of reduced premiums.

What happens when you get sacked ? What happens when you might decide later in life to “do your own thing” ? What happens when your employer goes bust – you’ll find gaping holes in his insurance plans, I ‘m prepared to bet.

I suggest each of us, irrespective of how old we are, and what our employer covers, goes out and buys a private insurance. As early in life as possible. And hope to God that we never have to use it. It’s the best investment we can make.

And to those of us who have children, buy the insurance, the day our darling is born. That’s one of the best gifts we can give the child for the future.