Reply #23: I don't see the point of splitting it into primary insurance and secondary insurance [View All]

[HamdenRice]

The argument seems to be that it would be cheaper for people to have two policies:

1. Health insurance for most procedures and costs, with the insurance company having no liability for anything over $10K -- the so called "cap." Supposedly this makes it cheap because the insurer doesn't have to worry about covering catastrophic costs.

2. Secondary insurance with a $10K deductible to cover catastrophic illness or accidents. In the commercial sector this is called secondary insurance.

But I don't see why it is cheaper to split coverage into two companies -- more paper work, more insurance company executive compensation, more transaction costs.

Can you explain why splitting the coverage into to policies is cost effective?