Health care reform is being pushed like never before. Nearly all sectors of our society are clamoring for it. The medical profession wants it. The insurance industry wants it. The business community as a whole wants it. The President wants it. Most important of all, I want it.
Even the people who have health insurance coverage are seeing their costs are higher than they would be otherwise if it were not for the burden of all the uninsured individuals who drive up prices for everyone else. Surely, this is the year health care reform will be passed.
Not so fast! Lots of people want something done, but they don't all agree on what is to be done. Most agree that the ideal would be some form of health care coverage for everyone. The one's who don't support this are the people who would rather exclude anyone who might get in line for medical services ahead of them if they have the opportunity. Instead of admitting their selfishness, they find more socially acceptable reasons to oppose the idea.
A major focus of opposition for many of these people seems to be around a government provided public health insurance option. There are several points they make which on the surface seem reasonable.
* They say a government venture into health insurance would be an unfair competitor to the private insurance industry. The very size of the government insurance would put that program in a position to command price concessions for health care services that private industry could not rival.
* They say the government is attrociously inefficient and a bureaucratic nightmare. They point to the typically long lines of people applying for drivers licenses or car registrations at the Department of Motor Vehicles in most states.
* Some people are simply philosophically opposed to anything that expands the role of government. They are fond of saying that a government big enough to give you whatever you want is also capable of taking everything you've got.
As I said, on the surface, many of these arguments seem reasonable. But look more closely.
First, the government's running of mail and package delivery service in the form of the postal service did not stop other companies like Federal Express, United Parcel Service and other couriers from getting a foothold and thriving. What was once a virtual monopoly in the hands of government lost considerable marketshare to private industry. It could certainly be argued that those private companies are actually all the better for having to compete against the government.
Second, comparing a possible government run public health insurance program to most states' Department of Motor Vehicles is a false analogy. Every vehicle owner or driver is required to go through their department of motor vehicles and only there to obtain appropriate licenses and registrations. There is no private option. When it comes to health insurers, there are lots of options. The DMV analogy resonates with a lot of people because we all hate those long waits. But it is a smokescreen because it does not really apply.
Third, people who embrace the philosophy that the government that governs least governs best are not thinking things through. One example: only government can really look after the nations highway system. It would be a sad state of affairs if it did not. We all benefit because government does take care of our roads. Yet the government does not tell us where to drive or ration how much we can drive. We are at liberty to traverse any open public road available. It is still a personal choice. There are other examples that come to mind, but I won't mention them here.
I am not married to the idea of a government administered health insurance program. If the objectives of having such a program can be fully met in some other reasonsable way, I am fine with that. But that other way needs to be put on the table and discussed. Meanwhile, lets steer clear of scare tactics and false analogies to demonize the public option.
Unfortunately, it seems most Republicans and some Democrats are more interested in opposing any health care reform that contains a government administered health insurance program instead of offering a viable alternative. That is dead end thinking.
That's Wade's two cents.
Wade Houston
June 19, 2009
Showing posts with label health insurance. Show all posts
Showing posts with label health insurance. Show all posts
Friday, June 19, 2009
Thursday, June 18, 2009
Why Require Every Adult to Carrry Health Insurance
Before I begin, in the interest of full disclosure, I should mention that I spent four years of my life working in the insurance industry. Initially, I was an insurance agent and later became the agency coordinator for the Quaker Life Insurance Company in Tulsa, Oklahoma. Jim Inhofe, a current Republican senator from that state was the company president. But in those days, he was the mayor of Tulsa and had not yet gone to Washington.
One of the items that was an integral component of the health care proposals made by both John Edwards and Hillary Clinton was a mandate that all individuals have and maintain health insurance. This would be similar to the requirement for vehicle insurance that exists in most states. Naturally, the insurance industry supports such a mandate.
At first glance, one might think the insurance industry's support for requiring everyone to have health insurance would be motivated by the lure of big profits. Actually, that potential cannot be entirely ruled out. However, there is another, more important reason.
Insurance companies operate by collecting money from all their customers and paying claims to those who need them. The company decides what to charge their customers based on how much they expect to need to pay the claims. They spend a lot of time and effort on statistical analysis to balance keeping their respective company's policies competitive while still reaping a profit for their investors. This actuarial science is what separates insurance plans from fraudulent ponzi schemes.
Most of the health care reform proposals call for eliminating the right of insurers to exclude people or to charge them higher premiums because of their existing health insurance problems. This is desirable for everyone except the insurers. As has been mentioned, insurance companies make their money by collecting money from all their insured while paying out as little as possible. Those people who have health conditions that cost more to treat than they pay in for health insurance premiums actually cost the insurance company money. Currently, the only way to control this loss is for insurance companies to be able to exclude offering coverage to those people or to charge them much higher rates. This also provides provides something of an incentive for healthy people to lock in their health insurance before something adverse happens.
If you eliminate the right of insurance companies to exclude the unhealthy, then many healthy people will wait until their expected medical expenses are greater than than the insurance premiums before getting coverage. It makes perfect sense from a personal financial management perspective. But, it will bankrupt the insurance companies!
Only requiring everyone to have insurance as a matter of law whether they are healthy or not will enable insurance companies to remain in business even if they accept people with health conditions at the sames rates as everyone else. That will guarantee the insurance companies have the money to pay the claims for those who need it. You can argue the politics, but some things are what they are regardless of how you feel about it. You cannot make health insurance available to everyone without requiring it for everyone.
That's Wade's two cents!
Wade Houston
June 18, 2009
One of the items that was an integral component of the health care proposals made by both John Edwards and Hillary Clinton was a mandate that all individuals have and maintain health insurance. This would be similar to the requirement for vehicle insurance that exists in most states. Naturally, the insurance industry supports such a mandate.
At first glance, one might think the insurance industry's support for requiring everyone to have health insurance would be motivated by the lure of big profits. Actually, that potential cannot be entirely ruled out. However, there is another, more important reason.
Insurance companies operate by collecting money from all their customers and paying claims to those who need them. The company decides what to charge their customers based on how much they expect to need to pay the claims. They spend a lot of time and effort on statistical analysis to balance keeping their respective company's policies competitive while still reaping a profit for their investors. This actuarial science is what separates insurance plans from fraudulent ponzi schemes.
Most of the health care reform proposals call for eliminating the right of insurers to exclude people or to charge them higher premiums because of their existing health insurance problems. This is desirable for everyone except the insurers. As has been mentioned, insurance companies make their money by collecting money from all their insured while paying out as little as possible. Those people who have health conditions that cost more to treat than they pay in for health insurance premiums actually cost the insurance company money. Currently, the only way to control this loss is for insurance companies to be able to exclude offering coverage to those people or to charge them much higher rates. This also provides provides something of an incentive for healthy people to lock in their health insurance before something adverse happens.
If you eliminate the right of insurance companies to exclude the unhealthy, then many healthy people will wait until their expected medical expenses are greater than than the insurance premiums before getting coverage. It makes perfect sense from a personal financial management perspective. But, it will bankrupt the insurance companies!
Only requiring everyone to have insurance as a matter of law whether they are healthy or not will enable insurance companies to remain in business even if they accept people with health conditions at the sames rates as everyone else. That will guarantee the insurance companies have the money to pay the claims for those who need it. You can argue the politics, but some things are what they are regardless of how you feel about it. You cannot make health insurance available to everyone without requiring it for everyone.
That's Wade's two cents!
Wade Houston
June 18, 2009
Wednesday, October 3, 2007
Solving the Private Health Insurance Dilemma
According to the latest polls, the number one domestic issue in the minds of the American people is health care. There is a growing push toward universal health care, and the politicians know it. I am one who strongly favors this trend.
The biggest question is how to get from where we are to where we want to be. Some people want to completely scrap private health insurance in favor of enrolling everyone in a government run program. The greatest merit to this approach is its apparent simplicity. However, that is totally unfair to those who have invested their capital and labor in health insurance businesses. These people have invested in good faith and would suddenly have the financial rug jerked out from beneath them. I would not want the government doing that to me. Would you?
We have to know that derailing the private health insurance industry is as wrong as condemning someone's house to make way for a highway and providing no compensation except for a tax write off. It screams of injustice. It is unAmerican.
But private health insurance programs have their problems. Their inherent reason for existing is to make money. There is nothing wrong with that. Making money is not a sin, but it does put them at odds with providing the best possible health care. When they pay for prescriptions, doctor visits, hospital stays, medical tests, etc., insurance companies are cutting into their profits. So, naturally, they are going to try to keep these expenditures to a minimum.
One way private health insurers keep their costs down is by refusing to accept people who already have costly health problems. They know these people are going to be spending more money on their medical needs than they would be paying to the insurance company. So, it only makes sense that the company would not want them as customers. Generally, they refuse them. Even when they do take on these people as individuals, the insurance company will charge quite a bit extra for their coverage and may impose high deductibles and exclusions. It's just good business sense.
Even with group insurance, small groups will find their aggregate premiums raised when there are very many claims. Even a single claim for a high cost procedure, such as a liver transplant, can dramatically raise the premiums for the entire small group. The group may seek to reduce this premium increase by raising the deductibles and out of pocket expenses. But this can have the effect of discouraging preventive medicine and creating more costly expenses down the road.
The private health insurers face a dilemma as well. If they pay all the medical claims too readily, they lose money and end up going out of business. If they don't pay the medical claims reasonably well, they will lose their customers and end up going out of business. Under present laws this balancing act can only work to the insurance industry's favor if it is allowed to exclude higher risk customers.
What if a health insurance company acting alone decided to accept everyone regardless of medical history? What if it just decided to raise its premiums enough to stay in business? Two things would happen.
First, those people with no known health problems would leave that insurer to find someone else who had lower premiums. Second, those with serious health problems would rush to get coverage by that insurer. The company would be unable to keep pace with the expenses and would fold. Everyone loses.
What if a law were passed requiring ALL health insurance companies to stop considering pre-existing medical conditions? This would avoid the flight of the healthy to the lower premium companies since all the companies would be in the same situation. However, it would create another problem.
People who are able to get health insurance generally do so to avoid potential devastating out of pocket medical expenses somewhere down the road. If pre-existing medical conditions are excluded from consideration, then more people will wait until they know they are going to need the insurance benefits before they will spend the money on the premiums. This is especially true for those without much disposable income. Unfortunately, this would bankrupt the insurance companies.
The only way the insurance industry can work is if people pay for the coverage before they need it and even if they don't. It has been described as a gamble. The insurance industry is betting for you, and you are betting against you. The odds must favor the house or they don't play.
One intriguing proposal to resolve this problem has been to both require health insurance companies to stop eliminating pre-existing health conditions from coverage and at the same time require everyone to have health insurance. We resist this idea because it means the government intrudes even more upon our lives. Those who are healthy certainly don't like being forced to pay for something that is not providing an immediate benefit. But this proposal could work.
That's Wade's two cents.
Wade Houston
October 3, 2007
The biggest question is how to get from where we are to where we want to be. Some people want to completely scrap private health insurance in favor of enrolling everyone in a government run program. The greatest merit to this approach is its apparent simplicity. However, that is totally unfair to those who have invested their capital and labor in health insurance businesses. These people have invested in good faith and would suddenly have the financial rug jerked out from beneath them. I would not want the government doing that to me. Would you?
We have to know that derailing the private health insurance industry is as wrong as condemning someone's house to make way for a highway and providing no compensation except for a tax write off. It screams of injustice. It is unAmerican.
But private health insurance programs have their problems. Their inherent reason for existing is to make money. There is nothing wrong with that. Making money is not a sin, but it does put them at odds with providing the best possible health care. When they pay for prescriptions, doctor visits, hospital stays, medical tests, etc., insurance companies are cutting into their profits. So, naturally, they are going to try to keep these expenditures to a minimum.
One way private health insurers keep their costs down is by refusing to accept people who already have costly health problems. They know these people are going to be spending more money on their medical needs than they would be paying to the insurance company. So, it only makes sense that the company would not want them as customers. Generally, they refuse them. Even when they do take on these people as individuals, the insurance company will charge quite a bit extra for their coverage and may impose high deductibles and exclusions. It's just good business sense.
Even with group insurance, small groups will find their aggregate premiums raised when there are very many claims. Even a single claim for a high cost procedure, such as a liver transplant, can dramatically raise the premiums for the entire small group. The group may seek to reduce this premium increase by raising the deductibles and out of pocket expenses. But this can have the effect of discouraging preventive medicine and creating more costly expenses down the road.
The private health insurers face a dilemma as well. If they pay all the medical claims too readily, they lose money and end up going out of business. If they don't pay the medical claims reasonably well, they will lose their customers and end up going out of business. Under present laws this balancing act can only work to the insurance industry's favor if it is allowed to exclude higher risk customers.
What if a health insurance company acting alone decided to accept everyone regardless of medical history? What if it just decided to raise its premiums enough to stay in business? Two things would happen.
First, those people with no known health problems would leave that insurer to find someone else who had lower premiums. Second, those with serious health problems would rush to get coverage by that insurer. The company would be unable to keep pace with the expenses and would fold. Everyone loses.
What if a law were passed requiring ALL health insurance companies to stop considering pre-existing medical conditions? This would avoid the flight of the healthy to the lower premium companies since all the companies would be in the same situation. However, it would create another problem.
People who are able to get health insurance generally do so to avoid potential devastating out of pocket medical expenses somewhere down the road. If pre-existing medical conditions are excluded from consideration, then more people will wait until they know they are going to need the insurance benefits before they will spend the money on the premiums. This is especially true for those without much disposable income. Unfortunately, this would bankrupt the insurance companies.
The only way the insurance industry can work is if people pay for the coverage before they need it and even if they don't. It has been described as a gamble. The insurance industry is betting for you, and you are betting against you. The odds must favor the house or they don't play.
One intriguing proposal to resolve this problem has been to both require health insurance companies to stop eliminating pre-existing health conditions from coverage and at the same time require everyone to have health insurance. We resist this idea because it means the government intrudes even more upon our lives. Those who are healthy certainly don't like being forced to pay for something that is not providing an immediate benefit. But this proposal could work.
That's Wade's two cents.
Wade Houston
October 3, 2007
Monday, September 24, 2007
Don't Just Sick There
A lot has been in the news recently about health care. Political candidates are talking about their health care programs, about how their solution is better than someone one else's, etc. This morning's news carried a report of a major labor union calling a strike largely over health care issues. There is no question that we're concerned about health care.
The fact that so many presidential candidates from both the Republicans and Democrats have been talking about how to improve the healthcare situation in this country has been encouraging to me. We have lots of uninsured people in this country whose employers do not provide health insurance. Many of them cannot afford the premiums for individual health insurance policies. Some have pre-existing medical problems that make it impossible to get individual health insurance even if they can afford it. Something needs to be done.
There are lots of proposals on the table. There are lots of complex issues to consider. My greatest fear is that our government will be so caught up in the "paralysis of analysis" that nothing will be done. That would be tragic!
As I have looked at the different proposals being made, I have become convinced that just about any of them are an improvement over what we have now. The last thing I want to see is a legislature so deadlocked over competing plans that it does nothing. But that is often what happens.
One side will want reforms with provisions A, B, C, G, and H. Another side will want reforms with provisions A, D, E, F, G, H, and I. Both sides have provisions A, G and H in common. Do they pass a single bill with just the parts they agree on so that something gets done? NO! They each hold those parts hostage trying to get everything they want for their side. So, nothing gets done!
The only winners in this type scenario are the pharmaceuticals and insurance companies. I have nothing against these businesses. I am so grateful they exist, and I want them to make money. I just don't want our society to be exploited by them. Unfortunately, it is in their interest to block change, and that is what they will try to do.
Bringing about health care reform will be extremely difficult regardless of whom gets elected. No matter what, some people will be unhappy. Debate and discussion are critically important. I just hope and pray they actually do something, and do it soon.
That's my two cents.
Wade Houston
September 24, 2007
The fact that so many presidential candidates from both the Republicans and Democrats have been talking about how to improve the healthcare situation in this country has been encouraging to me. We have lots of uninsured people in this country whose employers do not provide health insurance. Many of them cannot afford the premiums for individual health insurance policies. Some have pre-existing medical problems that make it impossible to get individual health insurance even if they can afford it. Something needs to be done.
There are lots of proposals on the table. There are lots of complex issues to consider. My greatest fear is that our government will be so caught up in the "paralysis of analysis" that nothing will be done. That would be tragic!
As I have looked at the different proposals being made, I have become convinced that just about any of them are an improvement over what we have now. The last thing I want to see is a legislature so deadlocked over competing plans that it does nothing. But that is often what happens.
One side will want reforms with provisions A, B, C, G, and H. Another side will want reforms with provisions A, D, E, F, G, H, and I. Both sides have provisions A, G and H in common. Do they pass a single bill with just the parts they agree on so that something gets done? NO! They each hold those parts hostage trying to get everything they want for their side. So, nothing gets done!
The only winners in this type scenario are the pharmaceuticals and insurance companies. I have nothing against these businesses. I am so grateful they exist, and I want them to make money. I just don't want our society to be exploited by them. Unfortunately, it is in their interest to block change, and that is what they will try to do.
Bringing about health care reform will be extremely difficult regardless of whom gets elected. No matter what, some people will be unhappy. Debate and discussion are critically important. I just hope and pray they actually do something, and do it soon.
That's my two cents.
Wade Houston
September 24, 2007
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