John Goodman included why dental insurance is so different from health insurance in the October 18th edition of Wednesday Links, but I thought it was too good not to write a longer post on it. It has been 15 years since I had dental insurance through work. At the time my dental coverage cost $34 a month and had a $250 deductible. It provided one free teeth cleaning per year with routine dental care paid at 85%. Oral surgery, crowns and root canal procedures were covered at 50%. The maximum benefit was $2,500 a year as I recall. My dentist wouldn’t even take it. The next year I dropped coverage because it wasn’t worth the $408 annual cost.
The gist of the Vox article is that dental insurance isn’t like medical insurance with unlimited benefits after a deductible. The article claimed:
Dental insurance isn’t a scam — but it’s also not insurance. How we pay for going to the dentist is supremely screwed up.
The thing about dental insurance is that it isn’t really insurance — it’s more like a half-helpful discount plan with a maximum. And once you reach the maximum, you’re on your own, often to the tune of hundreds and thousands of dollars. As though going to the dentist needed to be less fun.
Dental insurance and optical coverage have never caught on to the same degree as health insurance. That’s not necessarily bad, although one would never know that by reading the Vox article. The average person would probably be money ahead to put additional funds into a health savings account (HSA) instead of dental insurance and use that money for the dentist. More from Vox:
According to the American Dental Association, one-third of adults aged 19 to 64 don’t have any benefits at all. (For comparison, just 8.4 percent of Americans lack health insurance.) Many patients put off dental care and cite cost as the main reason they don’t go to the dentist — including those who are insured.
I’m surprised that two-thirds of adults under the age of 65 have dental coverage. I didn’t realize it was that high. Dental insurance does not work like health insurance (and that’s a good thing).
“When you look at the dental insurance model, it doesn’t protect the patient from financial risk. It’s the opposite,” said Marko Vujicic, chief economist and vice president of the Health Policy Institute at the American Dental Association. “Once the benefit runs out, the $1,400 or whatever it is, all of that financial burden is on the patient. So it protects the insurer, they’re limited on their exposure.”
Yet, the article goes on to say that whenever Congress considers adding dental benefits to Medicare, the American Dental Association opposes it. Dentists don’t want 66 million seniors calling their office, trying to use benefits that pay much lower fees than dentists prefer to work for.
Dental technology has advanced in the past few decades. Today dental patients have far more options than when I was a kid. When my grandfather had periodontal disease, they pulled his teeth. Nowadays there would be far more interventions available, such as periodontal surgery, implants, crowns, etc.
Dental care is labor intensive. Whereas a primary care physician may see three, four or even five patients an hour, a dentist may see only one or two. A dental hygienist can clean teeth but he or she cannot fill a cavity, perform surgery, or treat a root canal. They can assist the dentist with all the above but there still must be dentists performing the work.
According to the Bureau of Labor Statistics, dental inflation has risen 4,159% since 1935. During the same time, medical costs have risen 5,275%. According to one study, over a 20-year period (1996 to 2016) medical expenditures nearly doubled, while dental expenditures increased only about 50%. One reason for more constrained dental spending is probably the fact that dental coverage is not as generous. As a result, dental patients are more price sensitive. Because patients are more price sensitive, dentists must be more competitive.
Something else that would help patients is to allow dental hygienists to practice independently and allow dental therapists to service routine dental needs independent of dentists. A lot more Americans would visit a dental office if the costs were lower for routine services not requiring the expertise of a doctor of dental medicine.
Is dental coverage a bad deal? That depends on one’s circumstances but for the average person, routine dental care is probably cheaper using an HSA and self-insurance. My dentist has his own discount plan. A $199 annual fee gets me a 20% discount and two free cleaning each year along with a variety of other services. I even wrote about getting expensive dental care in Costa Rica at prices that are a lot cheaper than available locally.
Devon, as usual, you are wrong when you write. Please don’t try and teach insurance agents that are REQUIRED to tell the truth. I don’t believe you when you say your tiny small employer, The National Center for Policy Analysis (NCPA) had a $2,500 maximum annual dental benefit in 2008 for slave employees like you. Remember, you had a small employer-group Blue Cross plan. A $2,500 maximum dental benefit would be on the high end yet today with the coming 2024 employee rates. The State of Nebraska is $30/month per employee and the maximum benefit is $1,500/year.
Devon, only complete idiots spend the money that is growing tax-free in your tax-free HSA. You have a Ph.D. in ECONOMICS so please explain why it’s smart to drain your HSA with Qualified Medical Expenses (QME) instead of letting your HSA balance grow tax-free and taking out the dental expense, tax-free, in the distant future.
Don’t you believe that Albert Einstein was correct when he said the Compound Interest was the 8th WONDER of the world? You have insisted for 27 years that people should spend down their MSA/HSA funds as rapidly as possible. You should have saved your dental receipts and invested your HSA balance in Anthem Blue Cross when Obama was elected at $46 a share because 13 short years later it’s $546 a share.
I met a 59-year-old retired Iowa business owner named Bob in Jefferson, Iowa 2 Saturdays ago and when he sold his business his only option was an HMO in Iowa Obamacare. He has a $100,000 HSA balance which he has invested. He doesn’t spend his HSA balance Devon like you. So please explain Devon, why Bob and Albert Einstein are wrong. Good luck.
Ron you may be correct about my out-of-pocket maximum. It’s been probably 15 years since I had it and did not come close to my limit. I wonder if my limit was $2,500 in total spending (split among me and the carrier). That sounds like a play on words that would make enrollees thing they had better coverage than they did.
The Vox article says “often to the tune of hundreds and thousands of dollars”
I question both the amount and the word “often”. What dental procedures cost that much? What is their incidence? I think none.
I dropped dental insurance about the same time Devon did. I have some professional knowledge here. I came up the ranks as a group insurance underwriter, and served as a VP at 3 large companies.
My reason: for dropping dental insurance: I was self-insured above my employers dental plan maximum payout of $2,000 in a calendar year. I was not even trading dollars below $2000. I was paying more in premiums than the cost of care I received.
So self-insuring it all was no big step.
btw, if even the largest employers offer dental insurance annual maximums st only $2,500, the participants are already self-insured for those “often” expenses of “hundreds and thousands of dollars.”
😎
If you need ‘hundreds and thousands of dollars’ in dental care in a given year, you probably went years without care. In those situations, patients probably opt for extraction rather than care.
GROUP Scammer Warning: John, how can you sleep at night after putting trusting employees on health insurance that they lose after an EXPENSIVE Short-Term-COBRA if they get a life-threatening illness like ovarian cancer and are just too sick to work. Before Obamacare these poor schmucks you sold to were out of luck after 18 short months and their insurance terminated. John says, “Sorry Ma’am, you’ve hit the end of the line!” That’s DEADLY John!
I shudder to think how many lost souls had to die a depressing death in poverty and TORTURED without insurance because of you John. I know you just flippantly laugh it off because the non-licensed HR babes at these companies did all the selling and you didn’t pay them a commission! It’s all so evil and mean. I know agents like you just think it’s fun!
John, I enrolled a small business owner in Chicago in February 1997, the 2nd month of the tax-free MSA “Original Pilot Test.” Her name was Mary and she got ovarian cancer and it took her too long to die.
John Fembup, you had a thing going on alright! Selling dangerous and deadly insurance to trusting employees that they lose with a catastrophic illness PLUS, you didn’t pay a commission to your nonlicensed HR salesgirls. Because your uninformed salesgirls were not licensed they were not bound by ethics so they could lie, which they did. Good luck getting into Heaven John.
As Mark Twain once observed, “Some people only need a spoonful of supposition to build a whole mountain of demonstrated fact out of.”
A much sharper observation came from a much better source: “Judge not, lest ye be judged.”
Devon, you have perhaps inadvertently hit a very important nail on its head, in your well-written post.
Namely, in your observation that because dental insurance is skimpy, patients face some real prices. Dentists are forced to be somewhat competitive. Many persons postpone needed care because of the price. Overall, public health spending on dental care is not growing out of control.
The “nail on the head” is that dental care spending is controlled — that is a good thing — but many persons suffer pain and/or defects in their appearance because they are postponing care.
What I am trying to say here is that “facing real prices” is not an unmixed blessing. I watched the whole sequence with my grandmother. Before Medicare, she would postpone medical care due to the price. She lived with pain at times. After Medicare, she got better and the USA as a whole spent far more money.
Higher deductibles and skimpier coverage would help cure our financial woes. But it would have a social cost as well, in the postponed medical care.
“Higher deductibles and skimpier coverage would help cure our financial woes. But it would have a social cost as well, in the postponed medical care.”
What you allude to is what economists call “revealed preferences.” Perhaps it’s due to inertia or transactions costs of finding a provider but people have repeatedly revealed their preference is “other uses for their money” rather than dental visits.
I wonder if some of this (at least for medical care) isn’t somewhat due to the idea that medical care should be free. That is, free with employer health coverage. Nearly free with Medicare. Free with charity care, etc. By that I mean 1) we have highly regulated health care system that makes it more expensive; 2) we like to perpetuate an idea that nobody goes without emergency care. We don’t really have a free market in medicine and people don’t think about it the same way for other services.
Thanks for comments.
I have always been a little uncomfortable with Dr. Goodman’s and Arthur Laffer’s advocacy of real prices as a key to reform.
The reason for my discomfort is that I think they have a class bias. (not a terrible sin, but it is there.) They paint a picture of a person with a good income, and some savings, who declines a medical service because it feels overpriced….and this drives down overall costs.
This actually occurs, of course, but I would like a little more discussion of the person who has a lower income and no savings….who declines medical care because the “other uses for their money” is like rent or food.
Let me go at this another way. HSA’s will indeed lead to lower medical costs over time….but from all I have read, the great majority of HSA account holders have incomes over $75,000 a year. I would like more emphasis on ways to actually fund the HSA’s for all participants.
Bob, I think you are incorrect and when HSAs were born the Bush Whitehouse said, TIME Insurance Company reports 41% of all HSAs had no previous insurance and 61% are families. We had to keep track because Hillary LIED and was screaming they were a tax dodge for the weathy.
Actually, younger people are going tax free basically because HDHP is the cheapest monthly premium for them. Like always, people enroll to save premium and then love to ELIMINATE taxes. Bob, please tell young people the easiest way to create wealth is in accounts that are NEVER taxed, but you know that.
The current Maximum Annual HSA Deposits are so small the rich could care less.