Future, especially first-time parents have a lot of decisions to make.
One of these decisions concerns insurances. We paid a visit to an insurance company to discuss which ones to take. Our goal for the meeting was to get insurance for the place we live in, an all-year-round travel insurance as well as to ensure some financial assistance to one of us in the unfortunate case of death of the other.
However, it turned out our most important decision to make as future parents is to purchase a private health insurance for our child. This was continuously brought up in our discussion with the salesperson. This is what our child needs. Yes, sales people know how to evoke feelings in young parents.
Finland is a so called welfare state (still) where universal public healthcare is available to all permanent residents regardless of their financial situation. Health care is not completely free, but the prices are very reasonable. For example, maternity and child care is most commonly free of charge but visiting a medical specialist or the emergency room will cost you around 20 euros. Public healthcare is financed primarily from taxation. Private health care is available for those who prefer it.
Public health care in Finland fuels many jokes: the Finnish word for health care center (terveyskeskus) is in Finnish vernacular transformed into arvauskeskus (guessing center) because people supposedly don’t always get the right diagnosis. There are also complaints about long queues.
But despite all of this, we are still offered a system in which any permanent resident will get treatment. You don’t have to be a millionaire to be operated by a top surgeon. And you won’t go bankrupt after a brain surgery.
Alright, back to the private health care insurance then. This is becoming a very lucrative business for insurance companies. Let’s do some illustrative quick math:
In 2014, 57 232 new babies were born in Finland. I haven’t found any official data on how many of these babies are bought private health care insurance, but some estimates say that over half of them have it.
Now we can continue our exercise: if, hypothetically, half of the children are bought this insurance, which on average costs 400 euros a year (the offer made to us cost 430 euros a year), we are talking about an annual business of circa 12 million euros. Then, hypothetically, let’s say that parents who buy this insurance continue to pay for it until the child turns 18 years. Then, from all the babies born in 2014, we are talking about a business potentially worth of 216 million euros. And think about how much those numbers increase if a family has more than one kid.
No wonder insurance companies sell this product with such temerity!
And this is just the cash flow we are talking about. But a kid is also a great investment because he or she potentially makes a life long customer – something all marketers know.
The parents who choose to take private health care are often very happy with it – they can seek medical treatment for their child in private practices without having to queue and usually they can reach specialists more quickly than on the public side.
I dare to challenge these parents and say that in some cases a confirmation bias happens. Because you’ve paid for the insurance, you tend to give less attention to arguments contradicting its usefulness (of course, this bias can also happen among those who decide not to take it).
Of course, insurance is always about risk-taking. If you end up having a child who gets sick very often, a private insurance will most definitely make your life a bit easier. But if your child is healthy most of the time, you would win by not paying for the private insurance.
Also, nothing stops you from using private health care when you wish to do that – in fact, with the offer we were given, we could visit the doctor at a private practice circa 8 times a year and still win by not paying for the private insurance (we would just pay one-time fees at the private practice).
Did we end up taking this private insurance? Nope. That is because we had had discussions about its importance in beforehand. We were prepared. Could we afford taking it? Yes. There is also some ideology to our decision. We still believe in this public health care system of ours.
If we hadn’t had our discussions in beforehand, we’d probably have made our decision on the spot and gone for that 430 euros a year. That is how good the salespersons are. It is very difficult to say no.
How is child health care organized in your respective countries?
The photo is taken in May 2015 in Gamby hospital in Bahir Dar, Ethiopia.