Do High Travel Insurance Costs Make You Sick?

We pay more for our emergency travel health insurance as we age, as our underlying health conditions accrue and as specific health risks, such as Covid-19, occur. Most of the fee calculation is based on actuarial tables, where the potential for payout of insurance coverage is statistically determined to be more likely. This makes sense.

Insurance companies are not in the business of being charitable. They exist to make a profit, like any business, and since most of our biggest insurance providers are American, they must strive to make the biggest profits for their shareholders.

In the US, many insurers also work closely with US hospitals, who also are profit-driven, generally. This close relationship between insurers and medical providers, pharmaceutical companies and hospitals, Big Pharma and insurers gives rise to the suspicion that they may be colluding to set or inflate costs to the consumer, but there have been few instances where any of the three have faced fines, criminal or civil charges or challenges from the government.

This also makes sense, since those same players have strong lobbyists in the American government network and contribute heavily to political campaigns of politicians in both parties. Why would those same political forces upset their largest donors and biggest driver of the American economy? So, prices rise.

The USA has the highest per-capita health costs of any country, followed only by Switzerland—a distant second. The World Population Review reports that, in 2018, the US spent $10,586 per person on health care, Switzerland $7,317. Canada does not make the top ten.

Newswire.ca reports that only 40% of Canadians who travel buy emergency health coverage. Those that do purchase are more likely to be older, wealthier and with health concerns. Most respondents say that the high cost of insurance is an impediment to purchasing.

But the factors such as age, health and duration of trip do not explain the costs of premiums and the disparities.

A single male, 70 years old with no underlying conditions, pays, on average, $185 for a 30-31 day coverage, regardless of his destination. A similar 69-year-old pays $145, while a 65-year-old may be covered on his credit card, for no fee.

A 32-day trip will see a substantial increase in premium costs for the same coverage.

Many countries now require that you provide proof of health insurance coverage when you enter the country. This includes Cuba. However, in Cuba, you can buy the insurance when you arrive for about $3 per day. If you buy from the big health insurers, your costs will still be $185.

A more interesting fact is that, regardless of your country of destination, your premiums do not change. While the primary destinations for Canadian travellers are the USA, Mexico and Cuba, the costs per person for health care are about double Canadian costs in the USA, about the same or slightly less in Mexico and substantially lower in Cuba, with all three providing world-class care. Cuba, for instance, is ranked 25th in the world for quality of care, out of more than 200 countries. Mexico’s care for travellers is only marginally lower than Canada’s—which explains the popularity of medical tourism to Mexico.

There is no doubt that one should carry insurance when travelling to the USA, since even basic diagnostics are much more costly than in Canada, and our health system, for every province, only covers costs up to what would be paid out in your province of origin. Even travelling between provinces warrants buying insurance for high-risk persons since each province sets and pays its own rates for each medical service. You are buying insurance to cover against extraneous costs.

But that does not justify or explain the flat, unvarying premiums and fees charged by carriers for travel to countries like Cuba and Mexico, or even other Latin American countries where service might be inferior but costs for care are much lower than in Canada and the US.

If the Canadian health system is paying out a flat rate to every country for specific treatments, many of these countries actually gain financially, since they are paid more than they would be receiving if paid based on their own fee schedule.

Most health insurance providers, however, pay the country where the illness occurred at the local rates. That means that, if our medical system pays and covers all the costs, the health insurer has no liability, but still gains the premium. So, one could almost make the analogy that this insurance is not dissimilar to the “insurance” provided by gangsters to “protect” businesses from those same gangsters torching the establishment of the owner does not pay.

A fair and balanced system would see different premiums based on, not only health and age, but the country of origin and country that you are visiting. However, the insurers do not see the necessity for “fair” so long as there is no pressure to do so. Indeed, the high premiums we pay to go to Cuba, for instance, are used to offset the much higher costs that other travellers (mostly local) within the US incur when they visit a doctor or hospital.

There are options. Buying insurance when one arrives in Cuba, buying Mexican insurance online, or establishing tour own reserve fund to cover emergencies when travelling outside of the USA are all viable, but the only true value for your insurance fees is to always buy insurance when travelling to the US, and, if you travel often, buying an annual plan.

The truth is that most travellers do not know or care about the underlying factors behind insurance rate. They only want to travel with peace of mind, so insurers, knowing this, make policies simple, one-size-fits all, boilerplate packages that require little thought. That lack of research and lack of activism against predatory pricing, though, means we are being offered protection against a cost that really originates with the profit-driven American insurance industry, supported by a lack of will to protect us, the citizenry, by our governments.

We are paying high and unfair premiums because we do not fight back. It is not because we are old, or because statistics show that certain groups of people are at greater risk. We pay high premiums because we allow it, and no one in power is prepared to take a stand on our behalf.

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