Why dental insurance is a buyer’s club

Earlier this week, I had to go to the dentist as I was having a sharp pain in the same tooth which had a root canal performed on it earlier this year. I checked in, and the basic dental coverage I get through Duke basically is a buyer’s club discount card coverage. The in-network dentist office accepts the insurer’s fee schedule as the maximum allowable rate and the insurer pays a very small percentage of the claims. I paid the rest out of pocket. Forty minutes, an X-ray and

Dr. Marika Cabel’s award winning paper on post-facto adverse selection explains why dental insurance is barely an insurance product and it is more of a buyers club card. A significant portion of dental conditions that require treatment can be delayed into a future contract year if there are richer benefits available.

Because insurance coverage is typically determined by the treatment date, individuals may have
incentives to strategically delay treatments to minimize out-of-pocket costs. The strategic delay of treatment—a particular form of moral hazard— can be an important source of subsequent adverse selection, in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously delayed treatments. This paper investigates these forces empirically in the context of the missing market for dental insurance. Using rich claim-level data, my analysis reveals that approximately 40% of individuals strategically delay dental treatments when incentivized to do so, and this flexibility in delaying treatment can explain why the market for dental insurance has largely unraveled.

When I signed up for dental insurance, I had no knowledge of my future claims probabilities besides two regular cleanings and an X-ray as I was going to be a new patient for the North Carolina practice. I was not a prospectively adverse selection risk. I could make a decision on the basis of premium and coverage.

40% of individuals have any dental coverage, and those with coverage actually have little insurance against dental risk. The typical dental “insurance” policy provides very incomplete coverage owing to a low annual maximum benefit, which is on average $1,100. Above this maximum benefit, “insured” individuals must pay the full cost of services.4 Although dental care can involve considerable uncertainty and financial cost, available policies tend to offer no coverage for
large, urgent dental expenditures.

Instead dental “insurance” is a combination of a pre-paid maintenance schedule where a significant proportion of premiums are used to pay for routine preventive office visits where the insurer leverages its membership pool to get good rates, and minimal limited insurance for bad things that surprisingly happen like the need for a root canal after tooth pain had limited me to sleeping only a few hours a night for several weeks straight.

Most dental expenses excluding root canals (as Dr. Cabel demonstrates) are deferable for a couple of months. If there was a policy that offered great benefits with a low deductible and a very high out of pocket cost, the people who are told that they need an implant or a cavity filled or anything else that can be delayed for a couple of months would delay treatment from the low cost and skimpy plans to the rich benefit plan.

She notes that most dental contracts are one year contracts. This one year contract feature offers a potential policy solution; extending the length of a dental insurance contract would most likely allow insurers to add insurance like functionality to the dental coverage. People may be willing to wait six months for better coverage to get a cavity treated but they are less likely to wait twenty three months for the better coverage to kick in. Also, fewer switching opportunities and longer shadows of the future will change behavior.

This paper has been stuck in my head for a while and as I was waiting for the dentist to check out my teeth earlier this week, I figured that I needed to share why dental insurance is mostly a buyer’s discount club card rather than decent insurance.

37 replies
  1. 1
    MattF says:

    I think dental insurance is OK if it’s part of a benefits package– but buying dental insurance on the open market simply isn’t worth it. In my own case, I inherited ‘bad teeth’ from my mother’s side of the family– so I need an extra cleaning session in a year and specialist attention every several years. Dental insurance is just a bad deal for me.

  2. 2
    eric U. says:

    I’m surprised you have an in-network dentist available to you. There was one group here in town that would take the university’s plan, the rest of them don’t. It was good for business, but that dentist stopped accepting the plan for new patients.

  3. 3
    MomSense says:

    It’s so expensive. I’m basically on a lifetime weekly payment plan just for the basics for myself and kids. This is why I’m such a nag about teeth brushing.

  4. 4
    Al Z. says:

    Thanks. That explains why I’m still paying for my root canal; a side-effect of teeth clenching that began toward the end of 2016 for some reason.

  5. 5
    Haroldo says:

    And ain’t it the truth…..just went on COBRA recently and we got rid of Delta Dental as the benefits-to-premium ratio was just not worth it.

  6. 6
    Droppy says:

    And why are our teeth and our eyes not covered by medical insurance (which is bad enough, usually, but better than dental and eye insurance)? Apparently our teeth and our eyes are not regualr body parts which might occasionally have problems. It’s like having a separate plans to cover intestines, brains, and knees (I shouldn’t be giving them ideas!)

  7. 7
    jonas says:

    Thanks for explaining this. I’ve always wondered why I pay this hefty premiums for what I’ve always described as a discount card. I have several colleagues at work who just forego coverage and just sock some money away every month in an HSA and pay cash up front for their family’s dental. Doesn’t seem like such a crazy idea.

  8. 8
    Soprano2 says:

    I only signed up for dental insurance because my husband was going to need a new bridge. We had to wait two years before they would even cover any of the expense of the new bridge. I debate cancelling it every year, because if I saved the money I paid in premiums I would have more than enough to pay for routine care, but I’m worried about the unexpected occurrence like a root canal or needing a crown.

  9. 9
    MattF says:

    @Droppy: But typical eye surgery, e.g., for cataracts, corneal lesions, glaucoma is definitely covered by medical insurance. Do you mean the cost of corrective lenses?

  10. 10
    OzarkHillbilly says:

    strategically delay treatments

    Huh, so that’s what I’m doing.

    Most dental expenses excluding root canals (as Dr. Cabel demonstrates) are deferable for a couple of months.

    In my experience they are deferable for years, decades even.

  11. 11
    MomSense says:


    Vision care, exams, glasses, etc are all not covered for most of us. You have to purchase additional coverage.

  12. 12
    Droppy says:

    @MattF: Right – as with teeth, the stuff lots of people need is the stuff that’s not adequately covered and (I suspect) at hyper-inflated rates. I mean, there can’t be any legitimate reason for a pair of glasses to cost $300-$600, right?

  13. 13
    Glidwrith says:

    @Droppy: Heh. Head to another buyer’,s club: Costco. Even without insurance, glasses are about $100.

    Went off Delta Dental as well. Cost is less to pay out of pocket for routine care and they wouldn’t cover anything extra, so what’s the point?

  14. 14
    biff murphy says:

    Also one of my pet peeves… Dental should be part of yr healthcare. The plaque they find in yr mouth is the same as in yr heart when you croke

  15. 15
    rikyrah says:

    Thanks for this post.

  16. 16

    @Droppy: There is a broader point that the health insurance is really good at covering everything below the chin and iffy above the chin.

  17. 17
    Scott says:

    Dental insurance through my employer (who subsidized both directly and through tax code) made total sense for my family of five. Now that there is just two of us it is borderline. When retired, it may not make sense at all.

  18. 18
    MobiusKlein says:

    @David Anderson: Above the chin includes ears too. Hearing aids for my daughter can cost $$$. I think ACA changed some of that.

  19. 19
    narya says:

    I haven’t had dental insurance for years–not least because my awesome dentist wasn’t in the very narrow network. However, he has set up a plan–two cleanings, exams, a set of bitewings, and 15% (or maybe 10%?) off any other work (e.g., fillings) for $350/year. If I do need any other work, i get the discount, and I can use my HSA dollars to pay for that. Still cheaper than the crappy insurance.

  20. 20
    WereBear says:

    At this point mine pays for my two cleanings and checkups per month, and it will help should I get into something more complicated. But I justify it because of the health advantages in terms of immune system and inflammation which is pertinent to my bigger health issues.

    Which, of course, is true for everyone, and why the fact that basic dental is so neglected becomes so shockingly cruel.

  21. 21
    Sister Rail Gun of Warm Humanitarianism says:


    Head to another buyer’,s club: Costco.

    I wouldn’t know. I just cancelled my Costco membership because I have never been there when I didn’t have to park halfway to BFE and the ambiance wasn’t Wal-Mart on Black Friday. I stood in the optical counter line for 45 minutes and managed to get within 10 people of the counter before I gave up.

  22. 22
    WereBear says:

    @WereBear: ACK. I meant ot say “per year” :) Though it sure would cut down on the time I spend flossing :)

  23. 23
    MattF says:

    @WereBear: The inflammation issue is the one big reason why I do all the right things with my dental problems. Constant infections of gums and teeth are very bad for you.

  24. 24
    ProfDamatu says:

    I wish dental insurance were more worth having. I looked into it, and it turns out that the plans available to me either don’t cover dental implants at all, or have a maximum of $1500 or so…for which you only become eligible after two years of coverage. I did the math, and the premium more than made up for the “discount” I’d be getting on the implant. What made it even more fun was that the accident that cost me a couple of teeth (almost got hit by a car while running – don’t text and drive, folks! – tripped and face-planted evading the car, breaking my jaw and two teeth) happened toward the end of the year, and I had to switch health insurers. So, even though technically the implants and arguably the crowns should have been covered by health insurance (because the dental work was needed due to an accident), I never managed to get anything but the extractions paid for. Result is that I’ve only been able to replace the tooth nearer the front of my mouth. Hard to justify going $5-$6k into debt for the other one.

  25. 25
    StringOnAStick says:

    Dental is another area where corporatization is really hitting hard. Here in Denver there are two major chains and they take the cheapest, least coverage dental insurance so a lot of people without much money end up with these as their providers. Unfortunately there are well-founded rumors that the people who work in those offices (especially the dentists) are under a de facto quota system so you could be the lucky winner of the “I need to make my quota on crowns and root canals for this month” whether you actually need it or not. I’ve seen two cases last year where a patient was told “OMG you have a huge cavity, you need root canal therapy and a crown”, when the decay wasn’t even through the enamel (so just a small filling was needed), so totally, obviously over treating for $. The same is true with their dental hygiene departments in these places, they need to diagnose a certain amount of periodontal disease in order to score the much higher paying “deep cleaning” (scaling and root planing). I know dentists in private practice who refuse to even interview potential new employees who have significant time working at these two chains because they know what kind of ethics are required to be employed there. There are “stealth chains” too, offices that have a place name instead of the dentist’s name; one I unknowingly applied at turned out to be a prosperity gospel corporation; the guy interviewing me said their dental hygienists made nearly 50% more than I do now because they got a cut of the production they brought in, meaning the more periodontal disease you diagnose, the more $ you make. Obviously for an ethical person this isn’t an issue, but if you don’t make your required production numbers, you are out of a job. The first dentist I worked for told me to add 3 mm to every probing depth so that ALL the patients coming in would be diagnosed as having periodontal disease and thus eligible/sellable for $5k worth of laser therapy.

    The days of the one or two dentist, privately owned office are drawing to a close. Dentists getting out of school who didn’t go in with big family financial help are getting out with $300,000 in debt or even double that for specialties like orthodontics; fewer and fewer are able to buy into a practice once they graduate with that kind of debt load pressure, forcing more into the corporate office world. Dental materials are so much more expensive now, equipment is expensive, sterilization costs are a huge part of office overhead, and just like in a medical office even a 1-2 dentist practice needs one employee who does nothing but try to get insurance companies to pay up. The tradition was that an older dentist would slowly sell their practice to a new associate, and retire on the equity they built up over the years from their labor; that’s getting harder to do for all the same reasons. This is why many older dentists are reluctantly selling their practices to a corporation that will very likely institute the “extract as much production from each patient as is humanly possible” model while working the employees like rented mules. When people ask me about this field as a career path, I point out all this stuff and make sure they know that in general it has been heading in the wrong direction as far as employee satisfaction goes. The only good thing about the big corporations is that they can offer better health insurance options to their employees.

    Also: floss; it’s the main thing to reduce your risk of decay and periodontal disease, period. End of “why my field is becoming more dysfunctional by the day” rant.

  26. 26
    StringOnAStick says:

    @ProfDamatu: Sorry about your accident, it sucks your insurance didn’t cover what was obviously from injuries you suffered. It is very rare for any dental insurance policy to pay much, if any at all, for implants in non-accident situations. I suppose if you have the kind of Cadillac plans like Ted Cruz’s wife gets from Goldman Sacs, you have implant coverage but that’s it; of course those are the kinds of people who can pay the entire thing out of pocket, but like the Wilbur Ross story about grabbing handfulls of Sweet n’ Low to avoid buying his own, seems like those folks DEMAND and get benefits that pay 100%. President Obama was right to tax these plans for pay for the ACA.

  27. 27
    Ang says:

    My plan’s max coverage is just about equal to the premiums annually. But I exceed the cap regularly enough that the plan is worth keeping just so that when I go over it I only pay the insurer’s negotiated discount price instead of full cost. The difference can be huge!

  28. 28
    ProfDamatu says:

    @StringOnAStick: Thanks! Yeah, I figured out pretty quickly that even if I’d had dental insurance at the time of the accident, it would have been just about worthless for the purpose. The language in my health insurance contract was pretty specific that dental treatment subsequent to an accident was covered, so I spent a lot of time trying to make that happen. It’s actually the only bone I had to pick with that insurer, who paid for very expensive chemo and radiation treatments when I had lymphoma a few years before the accident. I made sure the provider who did the extractions (as part of a sinus surgery I otherwise needed) used the right codes, got a police report to substantiate the accident…and kept getting denied. Turns out the insurer had an accident report form that they asked everyone involved to submit…except for me, the person who was supposed to fill it out. Curious oversight, that. By that point, I had already gotten the one implant using a CareCredit card, and was no longer covered by my original health insurer, which had gotten out of the health insurance business. I was just gearing up to try to get my new insurer to pay for the crown at least…when I got diagnosed with breast cancer. Hence my walking around for a year and a half with an implant but no crown!

    And the worst thing is, most people in my situation (adjunct faculty) don’t have nearly the amount of privilege I do, and probably would have been on the hook for $1k or more for the extractions (which had to happen; the teeth were cracked down to the roots), forget getting the implant. And we know what happens to less than privileged people with visible missing teeth when they try to get a decent job!

    I totally agree; dental coverage needs to become part of health care coverage generally, and on the narrower point about taxing Cadillac plans.

  29. 29
    Soprano2 says:

    @MomSense: I know; our dental insurance is a separate policy that you can electively sign up for, and we don’t have any effective vision insurance at all. We do have a cafeteria plan for unreimbursed medical expenses; I usually put around $1,000 in it for stuff I know insurance won’t pay for. Our health insurance is in the Dark Ages, because it won’t pay for chiropractic care at all. I work for a city government, and our health insurance isn’t that good, although my deductible is still $500, so there’s that.

  30. 30
    mskitty says:

    Don’t think there ARE answers for dental insurance problems – in this reality, anyway. But Costco is good for glasses. Go at 3:30 to 4pm, parking paces are available and lines are short-to-nonexistent, and in every Costco I’ve seen there’s also an optometrist office with a separate door, but not even a separate roof. Decent ones. too. I lose glasses so frequently, this is serious experience talking.

  31. 31
    smintheus says:

    @StringOnAStick: I have a local dentist, who seems to try to keep costs down for patients, who told me after my latest cleaning that I should expect to need one or more crowns on molars within a few years. (I had one or two large fillings in molars a year ago, which stabilized a bad situation.) Presumably he was signalling that I should look into my insurance situation. Are there any dental plans that will pay for a significant proportion of the cost of crowns after you’ve been enrolled in them for a couple of years? I doubt that my current plan covers more than routine stuff, but I haven’t looked into it yet.

    Should I ask another dentist to weigh in on the question of whether to have crowns, given that my dentist generally doesn’t seem to push unnecessary treatment?

  32. 32
    ProfDamatu says:

    @smintheus: I know you weren’t asking me, but… The plan that I briefly had through an employer (enhanced dental coverage) a decade ago paid for half the cost of a root canal and crown (fortunately, I knew I was going to need the treatment when I signed up for benefits, so went with the enhanced dental). On the individual market, though, I didn’t find anything that would pay for half the cost, unless of course the cost was twice the annual maximum of like $1200 or whatever. And yeah, many of the plans I looked at a couple years ago did require that you be enrolled for a couple of years before they’d pay anything toward any treatment at all – in other words, they were functionally only a prepay-for-cleanings plan for the first two years, with the occasional exception of a simple filling. With any luck, your current plan does cover beyond routine stuff, because then you’ll be that much closer to satisfying the length of enrollment requirement, if any.

    I’d say that a second opinion couldn’t hurt, but the problem is that a second dentist may want to put you through the whole new-patient workup, which often runs a few hundred dollars at least. I’ll be honest, I didn’t seek a second opinion after my accident, when my general dentist told me that at best, my cracked teeth could be saved for a few years, but would have to be extracted and replaced eventually, and the delaying treatment would be over $2k per tooth. I felt like I could trust his rec to go ahead with the extractions and implant right away, because (a) if it really were about money, he could have done a hard sell on the treatment, and (b) he wasn’t going to be doing the extraction and implant, instead referring me to an out of town guy. So if it’s that kind of situation, the dentist might be trustworthy.

  33. 33
    smintheus says:

    @ProfDamatu: Thanks for the advice. I didn’t even think to ask my dentist whether he’d be doing the crown or referring me.

    Otherwise your impressions of the insurance options are close to what I’d expected would be the case.

    Maybe we can hang on and get a Democratic president who will add dental and eye care to the ACA.

  34. 34
    StringOnAStick says:

    @smintheus: I would love t o see dental and vision in the ACA someday. As for your other questions about crowns, even pretty good insurance only pays 50% at best. Your dentist sounds like my boss, not into pushing treatment at all but warning you so you can plan for it financially. I worked for rmany years as a temp hygienist and I saw the full range, from over treatment to very conservative in approach.

    Big fillings in molars leaves them weakened and prone to cracking; you’ll know if this happening when you get a sharp zing on chewing. If you wait too long you may need root canal theraoy, which will double the price, or worse, it cracks below the gum line and then it can’t be saved and the next step is an implant (much more than a crown or even a crown plus root canal treatment). Your dentist was warning you to be planning for it and to not ignore symptoms so it can be fixed as cheaply as possible. n

  35. 35
    ProfDamatu says:

    @StringOnAStick: Yeah, I agree with all of this. Especially the part about the implants. (And the part about dental and vision being added to the ACA!) For me, the implant alone was over $3k, and when I finally got the crown made and installed, it was an additional $2600 or so. By contrast, the root canal and crown I had (12 years ago, admittedly) ran something like $2k or a bit more total.

    As an aside, do be sure to find out, if your dentist is going to do the root canal him or herself, how many s/he has done, and what the success rate is. My root canal was done by a general dentist, and it eventually failed – I ended up with another infection (which is why I eventually needed sinus surgery – the infection spread up into that sinus. Fun times.). By contrast, when that root canal finally did fail, my current dentist sent me straight to a specialist (endodontist) to find out if re-treatment would be an option. (I ended up having that tooth extracted along with the broken ones, because I wasn’t about to risk needing another sinus surgery if the re-treatment failed.)

  36. 36
    StringOnAStick says:

    @ProfDamatu: Good comments about root canal therapy; going to an endodontist to have that done is always a good idea just because they do so many of them. They’ve got more specialized equipment; some even have rolling tripod-mounted microscopes for the best possible visual investigation (these things are stunningly expensive, in the $100k range). The best ones also have 3D imaging which can be priceless if you’ve got a weird shaped root or a low sinus floor (that’s probably what contributed to your infection, your own particular structural variation). Sometimes root canal therapy only works for awhile, but then fails later due to the root finally cracking all the way, even with a crown on it. Once a tooth has had root canal therapy, it is no longer alive because the nerve and blood supply have been removed and replaced with a rubber material; if that stays nicely sealed up then the work can and often does last a lifetime. No longer being alive means the tooth tends to become brittle and since it no longer has a nerve supply, you won’t feel it going bad until it is pretty far along that “bad” spectrum. Often that shows as a new abscess that may or may not be painful (yet), or the gums suddenly recede a lot and localized periodontal disease sets in; both are huge hints that a crack has propagated to below the gumline and the tooth is now unrestorable.

    One thing I truly appreciate about my boss is that he will go through in detail with a patient what the options are and what the costs are, plus the odds of success. Mostly he sends out the root canal treatments unless it is the lower jaw (no sinuses there) and films show no weird root shapes; if he sees anything suspicious he kicks it up to the specialists. A very few cases he does because the person is dental phobic and simply will not go see another dentist, period; he finds those frustrating but he does what he can. You can lead a horse to water, etc.

  37. 37
    ProfDamatu says:

    @StringOnAStick: Yeah, I think in my case it was just individual anatomical variation that made the sinus issue possible. Having seen quite a lot of human skulls (I’m a biological anthropologist), I’m actually surprised it doesn’t happen more often, because the plate of bone between the sinus and the tooth crypts is so thin in general! I actually have the tooth (I sometimes show it in one of my classes :-)), so in my case I know that none of the roots cracked. It was the seal that failed, apparently; films that my current dentist took showed what looked like a gap between the tooth and the crown, and eventually that gap widened to communicate with the inside of my mouth. So I guess the fault committed by my previous dentist was more about crown placement than the root canal itself. We were watching and waiting on the crown issue, but it apparently failed close enough to the last “okay” x-ray that there was time for a new infection to develop before the next time it would have been checked. And yeah, sure enough, there was very little pain, just an occasional throbbing sensation, and more pressure than usual in the affected sinus, but not to the point that I had any idea what was going on. In fact, the films taken by the endodontist didn’t look too bad, so we actually had planned to do the re-treatment after I ran the marathon that I was going to run that fall, lol. But then I broke my jaw, had a head CT, and wow…much worse than my symptoms suggested!

    My dentist does the same thing; anything very complicated tends to get referred out, and he’s very transparent about costs and odds of success. I suspect that he makes his real money on all the elective cosmetic procedures and treatments he does – it’s interesting; he doesn’t push that stuff on patients – at least he hasn’t with me – but his promotional materials are about 2/3 cosmetic, 1/3 “family dentist” type stuff.

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