What If Car Insurance Was Like Health Insurance?

By Brian Gay, MD

Healthcare insurance has evolved very differently than home or car insurance, with benefits typically paid for by the employer. The consumer who is ultimately paying ironically has little control and no free market exists to drive innovation, increase choices, increase quality, and reduce costs. Because employer-based care has been around for generations, we take it for granted. But what if car insurance was also paid for by the employer? It sounds crazy, but then so is having healthcare paid for by employers. The following is an alternate reality with employer-based car insurance.

Struggling to see the rainy traffic ahead, Michelle realized that her wiper blades needed to be changed. She frowned in disappointment. This was not going to be easy.

She recalled last summer when she had another minor problem with her car - a balding tire. After weeks of back and forth with her insurance company, they finally agree to approve a new tire. But because of her high deductible, she had to pay the entire $1500 for the tire out of pocket. She thought it unfair that despite being responsible for the whole cost, she still had to get permission from her insurance and have the service performed at one of the expensive locations that were "in-network". And why did a tire cost so much anyway? It just didn’t make sense. In fact, each experience dealing with her car insurance had been expensive, stressful, and time-consuming — and here she was again.

When she got home, she made an appointment to get the wiper blades evaluated at an approved location. At the appointment, the mechanic agreed that the wiper blades were at the end of life and submitted the numerous documents and photographs required by her insurance company. Two weeks later, she received a standard denial form. Michelle was angry because she knew that insurance companies always denied the first request as a matter of protocol. The letter explained that based on the age of her wiper blades they were not due for a replacement for another 6 months. If she truly needed them now and wanted to cost to be applied towards her deductible, she would have to get help from a wiper blade specialist.

Like so many times before, she thought about switching to another insurance company. But all companies were the same! Weeks later, Michelle took another day off work and met the specialist. He agreed that the wiper blades no longer functioned and was kind enough to take the time to argue her case with the insurance company until, at last, the pre-approval was granted! Hearing the good news, Michelle sighed with relief and thanked the specialist profusely aware that he did not get paid for his time pleading her case with her insurance company.

Now she just had to choose a shop and be done. However, this was confusing because her insurance company had negotiated different rates with each of the 3 approved sites in her area. The rates also varied based on her plan and other factors such as her copay, total deductible, and the amount of the deductible that she had met that year. In fact, it was so confusing that Michelle could not figure out which was the cheapest option for her particular situation.

To avoid confusion, she chose the shop closest to her home and set up an appointment. The busy auto center did not seem to care much about quality service. But no bother, the new wiper blades were finally on. There had been no choice of style or quality – just a single model that was approved by her insurance company. Her deductible had not been met, so she paid the whole $125 out of pocket.

As Michelle drove home, a light rain was wiped crystal clear by the new wiper blades. She grinned with relief. Yay! Out of the corner of her eye, she noticed a new tiny red glow from on the dashboard. She peered closer, squinting to read, “service engine soon”.