[mtdewcmu]

The real question is not why is dentistry kept separate from medicine. The real question is why dental insurance is treated like a luxury, compared to regular health insurance. The problem is that so many people are unable to afford dentistry, because of poor or no coverage.

[PeterisP]

If you have a type of expense that's (a) unpredictable, and (b) rare, then it's a good fit for insurance.

Car crashes are unpredictable and rare, so it makes sense to insure them.

Regular car maintenance is predictable and tends to happen in (almost?) every insurance period, so it's not - some payment plan or bundling may be an option, but insurance makes no sense, it would only be more expensive than paying directly because of an extra middleman.

Getting a broken leg or cancer is unpredictable (there are individual risk factors, but they are just as relevant for car crashes) and rare, so it makes sense to insure them.

Dental care, on the other hand is common and regular - e.g. someone who didn't have coverage for broken leg or cancer most likely won't get a broken leg or cancer in the next year, but all the people who have been unable to afford dentistry generally almost all will need dentistry in the next year. Some payment plan or bundling may be an option, but insurance makes no sense, it would only be more expensive than paying directly because of an extra middleman. If you are unable to afford dentistry, then you'd be unable to afford the insurance price hike.

It's not a problem of insurance as such, it's a problem of who pays for healthcare of poor people. USA has a weird historical artifact in that in the last >100 years insurance has become almost a synonym for employer-funded healthcare payment plans, not as real insurance. If you want employer-funded healthcare to include dentistry, then that's not going to be solved by medical people but the employment market - industries where workers have market power (e.g. IT) will get such conditions, and industries where worker's don't have market power (e.g. fast food) won't. Also, this can't solve the manner of dentistry for unemployed or underemployed people who don't get employer-funded insurance and thus a dentistry-included insurance would be as expensive or more than just paying for a dentist.

[LyndsySimon]

> If you have a type of expense that's (a) unpredictable, and (b) rare, then it's a good fit for insurance.

That fits fine for things like cleanings, cavities, and implants - but what about impacted wisdom teeth and resultant issues? Broken teeth due to impact injuries? Even people with excellent dental hygiene have a decent chance of chipping a tooth, and even those types of things aren't covered under medical insurance.

[ethagknight]

I believe injury-related dental issues are covered by medical insurance. At least that was the impression I had from reading through my latest insurance policy from United Healthcare.

[madengr]

I work for Honeywell. They just dropped paying their share for dental insurance. It's now 100% employee paid, thus I dropped the insurance and just pay out of my HSA. The insurance makes no sense financially, short of having multiple teeth knocked out.

[ghaff]

I looked up mine. It's possibly a positive value for me if I were paying the whole amount. But, then, I probably have more dental care that the typical twenty something so I'm probably benefiting from the pool.

[madengr]

The only one that was worth it was a policy from Delta Dental. We went to sign up for it, and you were required to have a health plan through the ACA.

I have a wife and two kids. Three cleanings, a surface filling, and a sealant, was $800. This is our experiment going without dental insurance. We'll see how it goes this year.

Though I'm putting $600/month into the HSA since our health insurance through Honeywell sucks, and they have dropped dental. I'm waiting for them to drop health insurance.

[ghaff]

It's definitely marginal in most cases if your employer isn't paying in. It's not even like the annual max for most policies is all that high. It probably works out if you're getting semi-regular crowns or other work in that general vein on a semi-regular basis but it's hard to make the case in general.

[AnthonyMouse]

> If you want employer-funded healthcare to include dentistry, then that's not going to be solved by medical people but the employment market - industries where workers have market power (e.g. IT) will get such conditions, and industries where worker's don't have market power (e.g. fast food) won't.

And how is that anything useful anyway? It's not like dentistry is any cheaper when your employer pays for it. If anything it will be more expensive because of the added bureaucracy and separation of who pays from who benefits. This is one of the reasons costs have spiraled out of control in the US healthcare market. If you need money for dentistry, ask your employer for a raise, not dental insurance.

[chimeracoder]

> If anything it will be more expensive because of the added bureaucracy and separation of who pays from who benefits.

Yes, real insurance (like car insurance or renter's insurance) will always have an expected value that is negative - the expected sum of all future payouts must be less than the sum of all future premiums paid. So insuring against completely predictable events is never worth it unless someone else pays for it, and even then it's less efficient than if they gave you the extra money directly.

Not all dental and vision benefits are completely predictable and routine, but the overwhelming majority of covered benefits are, unlike health insurance (which isn't really "insurance", despite the fact that we use the term).

[mtdewcmu]

>> So insuring against completely predictable events is never worth it unless someone else pays for it, and even then it's less efficient than if they gave you the extra money directly.

It's worth it if the government guarantees it. Dental insurance might not be a good business to be in, but nevertheless people need it. It's a market failure, and it needs government intervention.

[ghaff]

I don't understand why you think dental EDIT: care is a market failure. There are dentists people can go to and get care. Pricing is mostly not affected by if you have insurance or not. (Most dentists will just charge you if their rates exceed what insurance pays.)

If you're arguing that "someone" ought to pay for dental care that's a different matter that doesn't really have anything to do with insurance per se.

ADDED: And one actually gets into cost discussions about things like crowns and alternative treatments with dentists. It actually seems like a good model of how healthcare spending should work. Yeah, I have insurance that pays some but thats orthogonal to the cost discussion I have with my dentist.

[mtdewcmu]

It's a market failure if people are suffering due to being unable to afford proper care. It's possible that the blame lies elsewhere than the insurers themselves. Maybe dentists charge too much. But the market isn't providing what people need. The ideal solution would be single-payer, but expanding Obamacare and Medicaid to cover adequate dental services would be a big leap forward.

[GrinningFool]

> Pricing is mostly not affected by if you have insurance or not.

Based on the bill breakdown I get from my dentist, it appears negotiated rates are a thing here too. I regularly see a total price, an insurance discount, and paid-by-insurance amount. The 'discount' ranges from 10-50% depending on the service.

[ghaff]

I am not an accountant, but in the US, I'm guessing that there are tax advantages to offering employees dental insurance rather than just paying employees more. This is somewhat mitigated by the fact that employees could just put money for routine teeth care into a flexible spending account. (That said, most bigger ticket dental items like crowns are typically only covered by about 50% anyway because they're often at least partially cosmetic.)

[AnthonyMouse]

> I am not an accountant, but in the US, I'm guessing that there are tax advantages to offering employees dental insurance rather than just paying employees more.

That's just an example of bad policy, not a reason to encourage that as a solution to the problem. If buying dental insurance or dental services is tax deduction when paid by the employer but not the employee, fix your tax code.

[ghaff]

I don't actually disagree. But in the meantime I'll take the dental insurance and the tax benefit that comes with it.

[AnthonyMouse]

That's assuming there is a tax benefit. What does it do to the EITC? Does your state or spouse's employer or school have a dental program you get disqualified from if your employer offers coverage? Maybe there is a way for the employee to claim it as a deduction? The US tax code and welfare system is so convoluted that it's difficult to identify whether a given thing will actually save you money without consulting a tax attorney.

[ghaff]

>Regular car maintenance is predictable and tends to happen in (almost?) every insurance period, so it's not - some payment plan or bundling may be an option, but insurance makes no sense, it would only be more expensive than paying directly because of an extra middleman.

And your dealer would probably be happy to sell you an extended warranty or something else along these lines and pocket the nice margins.

[fav_collector]

Dental insurance isn't even really insurance so it isn't comparable to medical insurance since there are no out of pocket maximums and the maximum benefit is pathetically low. It's basically a dental care/maintenance subscription and if you need any major work, you're going to pay $$$.

[brianwawok]

I think it is cost scale.

Get cancer? That could be a million dollars in treatment. You need insurance.

Get a bad tooth? Maybe 3k max to replace it with a bridge or similar.

The idea is most people can scrouge up 3k but not a million bucks.

[morganvachon]

> The idea is most people can scrouge up 3k but not a million bucks.

The reality is far from that, though. Roughly a third of the citizens of the US would have to go into debt to secure $3K on the spot, they don't just have that laying around in the bank. Doing so could easily cause a downward spiral where one would have to choose between basic necessities or moving back in with family for months or even years to pay back the debt (I know because I've been there).

Hell, our household income is nearly $70k and while we do have enough in savings to cover such an emergency, it would still be painful and it would take us months to recover the money. Thankfully we both work for local government and have decent dental coverage, but it's a far cry from the much better health insurance we enjoy.

Also, the idea that major dental surgery is "just" $3K is amusing. My bill for removing my wisdom teeth came to nearly $12K, of which my insurance paid all but $800 thankfully. That wasn't even the total cost either; I developed a severe infection and when I called my dental surgeon he told me to go to the emergency room (another $1200) to have it drained and get an antibiotic prescribed. The emergency room gave me the antibiotic but told me to go to the dental surgeon for anything else. It's a total clusterfuck.

[AnthonyMouse]

> Roughly a third of the citizens of the US would have to go into debt to secure $3K on the spot, they don't just have that laying around in the bank.

That doesn't change the nature of the problem.

With catastrophic events, one person in 250 will incur a million dollar expense in a given year, so everyone pays four thousand dollars a year for insurance and that person gets covered.

With dentistry, one person in five will incur a $3000 expense in a given year, so insurance would have to be $600/year. It's completely useless. If you couldn't afford the loan payment then you couldn't afford the insurance.

Insurance only works for things rare enough that most people in the pool will never incur the expense. If the event is common then it isn't insurance, it's just a prepayment plan.

Insurance never saves money, it only pools risk.

[mikeash]

I really doubt that multi-thousand-dollar dental events are as common as once every five years.

Insurance doesn't have to be for things where most people will never incur the expense. The average time between car accidents in the US, for example, is a bit over a decade, yet car insurance is very much a thing (and not just the legally mandated liability insurance, either).

[AnthonyMouse]

> I really doubt that multi-thousand-dollar dental events are as common as once every five years.

I don't have the actual numbers, but even if they were once in ten or twenty years, nothing really changes.

> Insurance doesn't have to be for things where most people will never incur the expense. The average time between car accidents in the US, for example, is a bit over a decade, yet car insurance is very much a thing (and not just the legally mandated liability insurance, either).

That isn't the average time between major car accidents. Most accidents are little fender benders that often don't even reach the deductible. What comprehensive insurance is really for is when some drunk totals your car while there is still a five figure car note on it -- and having that insurance is required by the lender. Or for liability if you maim someone and owe a million dollars. But neither of those ever happen to most people.

[mikeash]

Typical deductibles are $500-1000. It's nearly impossible to cause more than zero but less than $500 in damage to a modern car. Those little fender benders generally have price tags similar to what you'd pay for oral surgery.

[com2kid]

> I really doubt that multi-thousand-dollar dental events are as common as once every five years.

I chipped a tooth on an olive pit.

$700 of dental work later, another $300 to get my nightguard remade (my bite changed a bit).

Another couple hundred to get that work fixed (the original filling had some issues), and a single olive pit cost me over 1k.

Dental bills add up fast.

[mikeash]

I'm not casting doubt on the potential costs, merely their frequency.

[sjwright]

> My bill for removing my wisdom teeth came to nearly $12K

Seriously? You could fly to Thailand or central Europe and get your dental work performed there for a fraction of the price. You could probably fly business class, stay at a swanky hotel, and absorb the loss of two weeks work and still come out ahead. I'm serious. Dental tourism is a thing.

I was an accidental dental tourist a few years ago while travelling around Europe. I had just arrived in Budapest, Hungary when a tooth I knew required root canal suddenly started hurting intensely. Wife found a local dentist, booked me in, the procedure was done over a couple of sessions and the total cost came in well under $1k AUD.

(Your bill seems excessive even by affluent Australian standards. I had four wisdom teeth removed – one of them impacted, requiring a dental surgeon – and the total cost was under $3k AUD at my local dentist. I bet it only "cost" $12k because it was covered by insurance rather than priced by the free market.)

[chimeracoder]

> Your bill seems excessive even by affluent Australian standards. I had four wisdom teeth removed – one of them impacted, requiring a dental surgeon – and the total cost was under $3k AUD at my local dentist. I bet it only "cost" $12k because it was covered by insurance rather than priced by the free market.

It's expensive by US standards as well. In NYC, which is a high COL area, the price I've seen quoted is around $200-250 per tooth.

$12K must mean that they were complications that are being included - insurance will always be more expensive than a free market self-paying system, but not that much more.

[deong]

I'm going next week to have one removed, and it's about $500, plus some extra costs that are covered by my medical insurance rather than the dental insurance whose deductible I haven't hit yet.

[chimeracoder]

> I'm going next week to have one removed, and it's about $500, plus some extra costs that are covered by my medical insurance rather than the dental insurance whose deductible I haven't hit yet.

Yeah, I'm quoting a lower end of the range, but the point is that OP was literally paying more than ten times that amount.

[nerdponx]

This is ass backwards to me

Preventative dental work is dirt cheap and corrective dental work is relatively rare, and costs rarely spiral out of control.

That sounds like a much better deal to me, as an insurer, than insuring any other body part.

[chimeracoder]

> Preventative dental work is dirt cheap and corrective dental work is relatively rare, and costs rarely spiral out of control. That sounds like a much better deal to me, as an insurer, than insuring any other body part.

When costs are easily predictable, that's actually a terrible case for an insurance model. Insurance is about smoothing risk, not making things cheaper. In fact, for services that are relatively cheap and predictable, insuring against those events will always be more expensive than paying for them out of pocket, because of the additional overhead.

Financially, the expected value of insurance is negative (the sum of all expected payouts is less than the sum of all future premiums). The reason it's valuable is because it reduces the variance in the month-to-month payments, which is a useful product for some people.

[maxerickson]

One thing with dental care is that it is likely financially reasonable to charge someone less for insurance if they are receiving preventative care. A small filling costs much less than a root canal.

[mtdewcmu]

I think the issue with dentistry is that half-assed dental treatment is affordable, you just pull the teeth; if you want decent work to save the teeth -- then it gets expensive.

[ghaff]

Which is presumably one of the reasons why some more expensive dental treatments like crowns are only covered at 50% or so by most insurance. They're considered at least partly cosmetic.

Sometimes extractions make sense in any case, but they're always going to be cheaper than multi-visit restorations of various sorts.

[maxerickson]

Preventative care isn't really insurable though.

[nervousvarun]

That may be true as to why the insurance is separated, but unfortunately the idea that most people can scrounge up 3K is not accurate (at least in the U.S.).

Source: http://www.usatoday.com/story/money/personalfinance/2016/10/...

[brianwawok]

Except that if you can't afford 3k, you also can't afford $600 a year for dental insurance.

[drcnyu555]

Dentist here , I agree that many people can't afford desired treatment. It's common occurrence in a Dental office. Having the insurance still makes one liable for deductible ( entry money to seek any treatment ) , co payments and other hidden costs . That's how the system is designed.

[rebootthesystem]

This is what you should do:

Fire-up Excel and develop a financial model for providing dental insurance to a million people.

On another tab, develop a financial model for providing mid-range health insurance to a million people.

Finally, develop a financial model for providing automobile insurance to a million people.

This will answer all your questions.

[rcthompson]

Perhaps you'd like to enlighten those of us who are not experts in developing financial models for insurance scenarios?

[chillacy]

I know nothing about insurance, but treating this like one of those crappy interview questions, I'd say you multiply the probability of an incident with the cost of that incident times 1 million people, and that's your expected cost per year. Then you look at how much you charge each person and see if they're willing to pay.

Probably as someone else mentioned, dental insurance is expensive because even though routine dental work is cheaper than getting cancer / breaking a bone, it happens 100% of the time.

[rebootthesystem]

I generally assume the HN audience to be composed of entrepreneurs or would-be entrepreneurs. Understanding finance and forecasting is a very important skill. The math is very, very simple. It's a matter of breaking down a business into costs and income to calculate profits. Again, simple math. All businesses, from a local coffee shop to a multinational share a simple equation that can be summarized through "EBITDA" analysis:

https://goo.gl/A5nGML

You could start with expenses. I won't develop a comprehensive model here but here's a small list of what could cost an insurance company money.

  - Average number of claims per client per year
  - Average cost of claims
  - Regulatory compliance costs
  - Administration costs
  - Structural costs (buildings, desks, computers, cars, phones, etc.)
  - Cost of sales
  - Personnel costs (salaries, health insurance, benefits, taxes, HR, etc.)

Spending some time on Google would reveal lots more detail on how to create a model on the expense side. If you can find a publicly traded insurance company their SEC filings would contain lots of useful information on cost drivers in that industry. I would definitely look for these filings if available.

Next do income.

Simple version: How many clients? How much do they pay on average?

Complex: You need to divide clients into layers with different risk profiles. Each risk profile is likely to have to pay different premiums, etc. This connects with the cost side of the equation. I listed average cost of claims above, this isn't likely to be a realistic cost model. It might be OK for a quick first stab but you really need to model cost of claims in tiers with some relationship to statistical risk, etc. This requires some thought. Google, again, could be your friend here.

In some ways, to talk in programming terms, you almost want to create a class to represent an individual client (with all the relevant variables) and then instantiate a million of them by using realistic distribution criteria to decide how these variables, well, vary. For example: Out of a million people, in any given year: What's the likelihood of a non-fatal heart attack? What's the likelihood of broken bones? What's the likelihood of hospitalization? You then have to attach costs to these events.

You would then have to add a matrix of plans with different coverage structures, deductibles, etc. These plans will interact with the above to generate actual costs. Some people will have very low premiums but huge deductibles and light coverage. Others will opt for very higher premiums for more coverage and still have a deductibles structure. Google can provide ideas on what's out there.

This can get very, very complicated. The simple version can give someone a basic understanding of what's at play. Bottom line, there's a reason for which comprehensive dental insurance isn't commonplace and this kind of analysis reveals it.

To those of us used to the financial analysis of businesses the answer to this question is clear. I think it is important for people to try and understand how money works. A lot of the issues out there boil down to the masses not having this understanding. Every day politicians promise things that are firmly rooted in fantasy, a fantasy that is easily revealed with a quick dive into a spreadsheet. This is a huge problem.