Why is dental insurance so lousy?
March 28, 2005 10:40 AM   Subscribe

Why is dental insurance so lousy? My wife and I have managed to get decent (though too expensive) health coverage, but the only dental coverage we can find provides only a few hundred more dollars coverage per year than you pay for it. And it's not just a self-employment thing: when I worked at a pharmaceutical-related company, the medical and vision coverage was fine but the dental was similarly lousy. Is there some structural reason for this? You'd think some company would offer better service in the hope the masses would flock to it.
posted by languagehat to Health & Fitness (14 answers total)
I have often wondered about this myself since I have the same lousy insurance [you pay $200/year, you get max. $700/year] and I wonder if it has to do with the holistic nature of dentistry [like how could you tell if something is a pre-existing condition, or part of the same problem or issue... it's very hard to do], the fixed costs of a lot of the materials, the difficulty in drawing lines between cosmetic dentistry and problem-fixing dentistry, and the fact that anyone who would make money from dental insurance is already stinking rich from being in the health insurance business. I was on the board of directors of a community health clinic in Seattle that did dental work as well as medical work and was always amazed at both the high cost of dental procedures as well as the nearly complete absence of low-cost or sliding scale dental options. For people without health care, there are often clinics or emergency rooms as a last resort but if you have a dental crisis, you're SOL.
posted by jessamyn at 11:06 AM on March 28, 2005

The concept of insurance seems to make most sense when there are high-cost risks with relatively low probability (consider, for example, property insurance).

For dental care, by comparison:

* Much of the cost is for regular (ideally, twice per year) checkups and cleaning; unavoidable.

* Potential costs in the under-$500 range are significant but not worth (from the insurer's viewpoint) requiring a second opinion; it's not clear how subjective these decisions are.

*[Probably most important] - unlike medical conditions, dental problems are often untreated for years. If there were low-cost insurance available on the open market, those with significant problems would be the ones flocking to it. (Which is why, I suppose, that a lot of dental treatments require patients to pay 50% of some costs.)

Perhaps as an illustration, the dental insurance I have through my work starts with a 40% deductible in year 1 of employment, and this decreases by 10% per year IF I go to the dentist for a checkup at least once per year. So in year 4, my deductible is only 10%
posted by WestCoaster at 11:27 AM on March 28, 2005

As WestCoaster points out, insurance is basically gambling: you gamble that you will need it, the insurer gambles you won't. The betting pool is spread out among many insured, which means the probability increases toward unity that some of those insured will require the pay outs, even though we still can't tell who that will be.

But everybody (more or less) gets dental cleanings. There is no probability involved. Since everybody uses it, the only savings to be had are, essentially, in bulk purchases.
posted by orthogonality at 11:41 AM on March 28, 2005

There's no actuarially insurable risk in dentistry. Any employer dental plan is basically just pay in a different pay-packet, with added administrative costs.

Contra orthogonality, I've never seen the bulk purchase discounts ever outweight the administrative burden.

The best solution is simply to have a larger pre-tax medical deduction which one can partially ear-mark for dental needs, with a loan program for the rare expensive procedure. (Smart dentists often make good money from their participation in consumer credit programs which fund root canals and implants and the like.)
posted by MattD at 12:11 PM on March 28, 2005

The answers above coincide with what I've been told by insurers when negotiating corporate dental contracts. An insurer will not sell a company dental insurance unless it is a mandatory add-on for all employees who take medical insurance, because if they made it optional, only the people planning on major dental work like bridges and braces would take it. Everybody else would decline, figuring, like you, that the annual cost is about what you'd spend at the dentist anyway, on average. (Or they're the ones who stay away from the dentist entirely.)
posted by beagle at 1:51 PM on March 28, 2005

Paying in $200 and get back $700 in services sounds like an awesome rate of return (350%!) to me.
posted by crunchland at 2:07 PM on March 28, 2005

As a father of 3, I've found that a dental plan that covers 100% of regular cleanings/checkups, and gives you an option for a Flexible spending account (i.e. pre-tax moneys socked away for anything that the insurance doesn't cover outright), my dental coverage goes a long way.

I work for an insurance company (the largest in the world, in fact) so I may have a better context from which to judge this, but I'm particularly satisfied with my coverage.

And, this is after going through one set of braces on a child, already. I've still got 2 more to go. *sigh*
posted by thanotopsis at 2:37 PM on March 28, 2005

I was a dental assistant/insurance haggler for a while in college. I found that the most standard coverage was 100/80/50. They pay 100% for routine cleaning, X-rays, etc., 80% for restorative (fillings), and 50% for major (crowns, bridges).
posted by kamikazegopher at 9:02 PM on March 28, 2005

Another reason is that the big insurance companies have found that people don't sign up for dental coverage, so it doesn't add value for them.
posted by BackwardsHatClub at 9:06 PM on March 28, 2005

I've been told by my dentist that it's not just a matter of coverage (mine, like most plans, is 50%), it's also a matter of how insurers define procedures. For instance, my plan specifies amalgam fillings as standard, although white composite fillings are more aesthetic, especially in highly visible parts of your smile, and wear comparably to amalgam. My dentist, as many others, doesn't even work with amalgam anymore, so if I followed the policy strictly I wouldn't be able to work with my preferred dentist nor many others in my network. As a rule, the cheapest and therefore best covered dentistry tends to be the least aesthetic, and that's a problem when you're making choices about your face.

Oh, and one thing to watch for with Flex accounts, which I have used in the past and also recommend: it's best to get a plan defined with your dentist the year before you commit to one, because you are not permitted to carry a balance from year to year. If you overestimate, the excess money is not refundable.
posted by melissa may at 9:47 PM on March 28, 2005

I've found discount programs to be more valuable than dental insurance - at least for a self-employed person like me. I belong to some scheme where i pay 14 dollars a month and all my dental procedures are half off. So for $168 I save 400 dollars on a root canal - i have a lot of major work coming up this year, so it's definitely worth it. With insurance, i'd pay about the same in a year and still only get about half off. So it's basically the same system - just less paperwork.
posted by muddylemon at 12:40 AM on March 29, 2005

A main reason dental insurance doesn't work on an individual basis is that people are savvy consumers when it comes to dental work. If you know you're going to have to have a crown, you'll put it off until you have coverage. This is why individual coverage is so watered down (with waiting period for major services, etc.).

An insurer will not sell a company dental insurance unless it is a mandatory add-on for all employees who take medical insurance, because if they made it optional, only the people planning on major dental work like bridges and braces would take it. Everybody else would decline, figuring, like you, that the annual cost is about what you'd spend at the dentist anyway, on average.

This is absolutely not true. A lot of companies tie dental to medical but it's not because the insurance company makes them. (That is often true for vision plans, by the way, but not dental). Insurance companies do have some underwriting provisions in group plans to prevent people electing coverage only for the years they expect to have high dental claims. I mentioned waiting periods above, but in addition some plans will charge extra premium (i.e., it will increase the cost of the plan by something like 5%) for the ability for the group to have an open enrollment once a year. Otherwise, you make your dental election at date of hire and you're stuck with that election until you have a qualifying event. If you come onto the plan late, you can expect not to have major services covered for some period of time.
posted by MarkAnd at 6:51 AM on March 29, 2005

Vision plans seem very similar, and I'm surprised the coverage is as good as it is. I know I will get new glasses each year, and I know they will cost more than my total payments, so I will come out ahead. If I don't want glasses every year, I'll drop coverage on the off years. And someone who doesn't wear glasses probably won't get coverage at all. I don't know how it makes sense to offer for the insurer.
posted by smackfu at 7:52 PM on March 29, 2005

smackfu, it probably makes sense only because most people don't take advantage of it. It's like using rebates to "discount" the price of a product.

In my opinion the best way to make dental coverage effective for both insurers and their customers is to make it part of standard health plans. That way the insurer gets to cover a larger pool and reduce their expenses, and in turn they can offer their customers improved dental coverage by doing away with the strict annual and lifetime coverage limits most plans seem to offer today.

I like what WestCoaster's plan does by reducing costs (or increasing coverage) if the insurer gets recommended preventative care. Similar things could be done in other areas of health care. It would be a good way to encourage people to get recommended cancer screenings, for instance, which could reduce the risk of paying for treatment of advanced cancer among a large pool of insured customers. Encouraging their customers to get flu shots in this manner would help to limit the worst-case costs (to the insurer) of a flu epidemic.

Of course the downside to this idea is that it discriminates, cost-wise, against those who for whatever reason choose not to follow the standard medical advice (those who have a different opinion about hormone replacement therapy, for instance, or mammograms, or those who oppose immunization and vaccination).
posted by Songdog at 11:05 AM on March 30, 2005

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