Employee Benefits

What do Hurricanes and High Deductible Health Plans Have in Common?

Ed Oleksiak
Ed Oleksiak
Sr. Vice President, Employee Benefits

The recent destruction and flooding caused by Hurricane Matthew caused me to think about the different way we view homeowner’s insurance and health insurance. Seems like an odd comparison, but stay with me on this.

Many individuals shy away from high deductible health plans and opt for a more expensive preferred provider organization (PPO) plan even though their maximum exposure is identical under both types of plans. Yet, the same individual has a high deductible homeowner’s policy for their home.

One major difference between the two is when you can purchase a policy. Most homeowners are required to buy a homeowner’s policy because their mortgage lender requires it. Fortunately, this requirement existed for those recently impacted by Matthew. As the hurricane approached, homeowners couldn’t go to a marketplace and purchase hurricane or flood insurance. The coverage had to be in place before the weather struck. That’s not always the case with health insurance. If individuals can come up with a special enrollment period (SEP) reason, they can buy health insurance even if they just discovered they needed significant medical care. This is a major cause of the failure within the Obamacare system. I heard a couple of days ago that the average term of coverage under Obamacare is only 7 months. For those enrolled under an SEP, it’s only 3 months. The current system allows individuals to sign up for healthcare, incur expenses, and then drop the coverage. Can you imagine the cost of homeowner’s insurance if people along the East Coast could have signed up for insurance as Matthew moved into the area?

Homeowners along the East Coast are now pulling out their policies to see where their deductible level is set. Many probably didn’t pay attention to the deductible when they purchased the policy. Just like many health insurance purchasers, the focus is on the premium and not the coverage levels. A homeowner’s policy can have different deductibles or exclusions for wind, hurricane, or flood damage, just like a health insurance policy can have a higher deductible for prescriptions or exclusions under a drug formulary.

The same effort should be used to evaluate a homeowner’s policy as is used to evaluate a health insurance plan.

One advantage high deductible health plans have over homeowner’s insurance is no cost preventive coverage. Homeowners need to pay for the hurricane expenses, such as plywood, tarps, sand bags, and flashlights. But just like health plan participants, preventive actions aren’t taken by most people. So when they went to Home Depot or Lowe’s as Hurricane Matthew approached, they found the stores out of stock for these preventive items. Despite health plans providing preventive benefits at no cost, the participation in these services is inexcusably low.

There are some preventive services required by a homeowner’s policy. To purchase a policy, the roof must be built using certain clips to help prevent wind damage. Absent the correct clips, a policy may not be issued. What if health plans weren’t issued if the participant didn’t get their age appropriate screenings?

Homeowner policies and health policies are both insurance, but we sure do view them differently, don’t we?

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