Everyone knows that our health-care insurance system is broken.

The media focus tends to be on what government can and should do to fix the problem. And there’s no shortage of opinions on that score!

However, a paper published by the National Institutes of Health (NIH) also points out that “health-care reform is hindered by confusion about how health insurance works…several common myths about the benefits and design of health insurance undermine the development of a productive conversation on reform efforts”.

In other words, many Americans don’t understand that insurance, in its simplest form, is not there to take care of you. It works by pooling your risk with the risk of others.

Therefore, assuming that you remain reasonably healthy, in most years you should expect to pay more into the pool than you take out, just like car and home insurance. In years when a health catastrophe strikes, you’ll take out much more than you put in.

Unfortunately, many Americans have forgotten that—like car and home insurance—health insurance is for the “big stuff,” rather than for the everyday colds, scrapes and bumps.

Health insurance was never meant to pay for every doctor visit and every prescription. For that matter, it’s not even to protect your health! The role of health insurance is to protect your financial future by softening the blow from an unexpected health catastrophe such as cancer or a major surgery. Just as normal car and home maintenance come out of your budget, so should “normal” health-care expenses.

Then again, thanks to skyrocketing prices, overtreatment and high deductibles, even “normal” health-care expenses can bust a budget or lead to medical bankruptcy. There are ways to avoid that kind of financial disaster in our report—Don’t Let Soaring Medical Costs Catch You By Surprise.

We constantly blow the whistle on hospitals, doctors and pharma for unnecessarily driving up the price of health care. But to be fair, as medical consumers, we also must be responsible in budgeting for normal medical expenses and in reducing the risk for illness through lifestyle changes. Somewhere in the middle is the solution!