I have noticed that, most of the time, health insurance companies neglect to put a key piece of information into the approval letters that they send to customers. They fail to put in what the cost of the premium will be. I think that insurers should be legally required to put that into approval letters. Here are the reasons why I think so.
When an insurer sends an approval letter to a customer, it means that the insurance company has taken all the information from the person’s application, and calculated how expensive it would be to cover the medical care that the person is presumed to require. The exact amount that the insurer plans on charging a person for his or her insurance premiums has been calculated, and decided upon, before the approval letter gets typed up and sent out. There is no logical reason to intentionally hide that key piece of information from a customer.
When you buy a car, a new refrigerator, a pair of shoes, or ticket to see a movie, the price is clearly laid out for you. Somehow, health insurance is the only thing that it is legal to sell in the United States without letting consumers know what the cost will be.
Perhaps health reform can change this. Right now, we have a situation where people apply for health insurance with absolutely no idea how much the policy will actually cost them. They also have no way to discover exactly what the policy will, and will not, cover.
Once approved, the consumer is left in the dark about how much the premiums will cost. They have to call the insurer, and ask a bunch of questions, in order to learn how much they will be spending on the policy. This seems as though it should be illegal.
This leaves consumers in a situation where they have to call up the insurance company and specifically ask what the cost of their premium actually is. The consumer has to find time in their schedule to call when the insurer is open, and then wait to be connected to a representative who has that important piece of information. In short, a person has to go chase down their insurance company in order to find out what the insurer will be charging them. This is an inefficient system that could easily be made efficient if the insurer would put the cost of the premium in the approval letter.
Neglecting to put the cost of the premium in the approval letter actually ends up costing the insurer money. If the premium is too high, the consumer is going to cancel that policy. Savvy consumers can do this before the insurer is able to bill them for the first premium.
In those cases, the insurer gets absolutely no money from the consumer. The insurer had to spend money to pay the underwriter to go over the application, to have someone type the approval letter, to have someone send it in the mail, and to have a representative answer consumer’s questions by telephone. The insurer has to spend money to have someone enter into their computer system that a person has canceled his or her policy.
Perhaps that cost is calculated into the price of the premium. The insurer is assuming that the consumer will decide that the premium is a fair, and affordable, price. If not, then the insurer has to “eat” those costs. All of this could be avoided if the insurer simply put the price of the premium in the insurance letter. The consumer could immediately cancel, without the extra hassle and extra costs.
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