Healthcare and health insurance are the same thing, right?
Actually, they’re completely different—and the difference is important. It can be easy to get the two confused, and if you have in the past, you’re not alone. Most people don’t choose to become consumers of healthcare, but we have to become consumers because we participate in the system whether we like it or not.
Unfortunately, most of American’s only think about healthcare when they’re sick, which leaves them woefully unprepared and vulnerable to those sky-high costs you read about in the news.
Roughly 289 million people in America have some kind of health plan. Most of us get it from the following sources:
- we enroll in our employer-offered plans
- we directly purchase from insurance carriers ourselves
- we qualify for and enroll in Medicaid
- we turn sixty-five and enroll in Medicare
- or we are employed through a government entity and receive one of their offerings.
And for many that’s where it starts and stops. Which begs the question, what is the difference?
What is healthcare?
Healthcare refers to the system of doctors, specialists, nurses, hospitals and every other kind of profession in the health industry that’s responsible for caring for someone’s mental or physical wellbeing and treating illnesses. Every time you see your family doctor, get an X-Ray or get treatment for a chronic condition you are using the healthcare system.
Why is that important?
The important thing to remember is that the healthcare system is designed to care for you. The healthcare’s primary responsibility is not to look after your financial well-being. Doctors, nurses, surgeons and everyone else who treats an illness wants to serve their patient by making them better.
That makes our healthcare system very inviting and accommodating when it comes to providing care. However, as consumers of healthcare, we need to understand that we have the power and the responsibility to engage that care responsibly and in a way that best suits our health and financial needs.
What is health insurance?
Health insurance on the other hand refers to the financial tool that individual use to protect themselves against times when they need the medical system. It is a way to transfer the risk of paying for care from you as the individual to the insurance carrier.
Health insurance helps protect you against the unexpected costs that arise when you have a sudden healthcare need or an ongoing chronic condition.
Why is that important?
If you have a health insurance plan these days, one way or the other, you are paying more than you would have a decade or two ago. You then have the “privilege” to pay more when you actually incur a health expense—i.e., you see a doctor.
We all know that health insurance doesn’t give you a free pass to use the healthcare system whenever you want for free. Which means that it’s critical that you shop for the insurance that’s right for you.
Costs that are predictable and affordable, you do not want to insure otherwise you will be overpaying. By the same token, you want to make sure you’re not under insuring and that you’re prepared for the unexpected.
Why is the difference so important?
Because health insurance isn’t an endless pool of resources – but many of us act like it is.
Behind the scenes, Th confusion between the two can create a vicious cycle going on. The more people use healthcare, the more premiums go up next year when their health insurance policy renews. That’s because the insurance company sees the extra usage and assess that there is more risk than they expected.
Insurance companies are big businesses after all, and as businesses they’re trying to turn a profit.
The “Doctor Mystique”
Another piece that plays into this misconception is an affect we call the “doctor mystique.” People have grown to expect a cure for whatever they have and to revere their medical professionals. This behavior is in part because we think that we pay premiums for our health insurance which means we should be using it.
As a result, when your insurance plan finally begins to cover all expenses at 100 percent or you’ve reached your out of pocket maximum, you mentally check out. You think, “I don’t care what the services cost, how many are performed, if they are necessary, or if services not provided are on the bill.”
What does that mean for me as a healthcare consumer?
Whether you agree with how the system works or you hate it, the fact is that it’s the system we have right now. Understanding the difference between healthcare and health insurance is one of the first steps you if you’re going to take back control.
The most important thing we want you to learn from this guide is that what you decide matters the most in this equation. It means we need to be smart when shopping for insurance and also wise when it comes to expecting the healthcare system to immediately cure any ailment.
This is what we must do if we are going to collectively flip the script on the system and propel a healthcare consumer revolution.