This is the second column my series about the state of dental insurance in our country. The information presented is intended to explain “dental insurance” from a perspective which may be different than most consumer’s view of insurance. I encourage you to read all the columns in this series. If you missed any they can be found at www.thetowncommon.com. I hope the information helps you to make more informed decisions about your dental health.
One of the statistics I presented last week was the fact that dental “insurance”, unlike medical insurance, has a yearly monetary limit that the company will pay out. For the majority of dental plans this number has not changed since the 1970’s. I know I don’t need to point out that you could get a lot more with $1000 in 1970 than you can today. So, why hasn’t the limit increased?
There are many answers to this question. The bottom line is that raising the dental insurance limits would be extremely unprofitable for insurance companies. Here are some reasons why:
First is the “use” factor. Many patients who have dental insurance use their insurance right up to that yearly maximum. This is generally not the case with other types of insurance. In fact, the entire dental insurance model is based on a certain percentage of those insured not using their benefits at all. A recent statistic I heard is 48% don’t use any of their benefits. If the yearly benefit was higher, the premiums would need to be much more expensive for the insurance companies to make a profit. This would destroy the model and there would be many fewer employers signing up for those plans.
Another reason dental benefit programs have not changed is pre-existing conditions. Many dental problems are often ignored for years, and patients will often wait until they have “insurance” to take care of their problems. This is why some insurance companies have a “wait period” for certain dental procedures. When that patient finally has dental coverage and the dentist tells them they need three root canals and three crowns, they are shocked to hear that their insurance will only cover a small percentage of the treatment. Again, there is no dental insurance available to cover situations like this because it would be extremely unprofitable for the insurance companies.
In order to run any business, revenue and expenses need to be managed to make a profit. In order for the dental benefit companies to remain profitable (the definition of profitable is debatable), they need to either increase revenue (charge more for premiums) and/or decrease their expenses (pay out less to dentists). They know that employers, or individuals looking for dental coverage, will not like escalating premium costs, so they form “discount plans” to solve the problem. I will explain how that works next week.
Is there a solution to the problem? To provide “full coverage” for dentistry, insurance companies would have to charge more for premiums than most people/employers would deem worth spending. Consumers, especially when it comes to insurance, seem to want to pay the least amount for the most coverage. It makes sense until you factor in quality of care.