Our health insurance system is broke and needs fixing
As a life and health insurance agent for the past 38 years, the selling of medical and hospital coverage was not only embarrassing but also frustrating. I avoided it as much as possible because there were built in ways for the providers (usually insurance companies) to either increase the cost prohibitively or cancel the coverage.
There are all sorts of policy designs. Most are based on profit motive, and this requires an initial low premium to attract buyers in large numbers in the beginning. Already, the policies are doomed for the long run. During the first several years the health claims against these policies will be low because the questions asked to underwrite the coverage prevented high claims because only the healthy could qualify for coverage. The low premiums were ample. But, as time goes by the claims increase to meet the normal rate of morbidity. To meet this, the rates are increased. The minute this happens some of the insured in the plan will shop for lower cost coverage in another plan that is just starting. Under the current system there are always new plans starting to give agents and companies new insurers and new commissions.
The above is all well and good except, what about the persons in the old plan who have had major health problems and can no longer qualify for new coverage with lower rates? They will stay with the old plan and cause its rates to increase faster because they cannot leave. It is a vicious cycle. As healthy people leave the old plan the costs go up at an increasing rate because those remaining have major health problems and cannot qualify for new coverage at lower rates.
Another problem that occurs is there is a large portion of our population who do not have medical or hospital coverage. There are three reasons for this. Either they can’t afford it, or they believe they don’t need it, or they have poor health and are denied coverage. Regardless, when these people have a health problem they go to the out-patient section of the hospital and seek medical help. Our society does not turn these people away. The medical care is provided. How do our hospitals afford to give coverage? If the medical care is given to people of means the hospital will attach their assists until payment is made or will foreclose, if not made. However, most of those without medical coverage usually have little in the way of assets and will simply take bankruptcy, leaving the hospital with nothing. The hospitals understand this well in advance and have overcharged those with medical coverage to set up a fund to pay for those without medical coverage. This is called cost shifting and causes the cost of health coverage to move higher at a faster rate. I suspect Valley View Hospital already has the money for next years cost for the nonpayers. It may be nonprofit, but the hospital knows how to survive and should be commended.
If Medicare for those 65 and older weren’t around this whole system would really be a mess. Now the Bush Administration is lowering payment to doctors for Medicare and the doctors in many areas are refusing to provide service to those on Medicare. Just peachy wouldn’t you say? Our medical delivery systems need a major overhaul and our leaders have their heads in the sand. Nobody wants the system put on a social system and run by the government. However, since everybody gets coverage one-way or the other, it makes sense to set up a system that has one authority. Everyone who benefits from the system should pay something up front even if it is only $5 a month. It is not right for healthy young people without family or assets but working to not pay something and yet rely on coverage through the out-patient clinics. Since the coverage bought through an insurance company costs the same based on age, gender, or health habits and goes to help pay for those without coverage, how does the fact that some people have benefits paid by their employer factor into personal cost? I guarantee you that under the current system there are some people making out like bandits. The system is broke and needs to be fixed!
President Clinton tried to address this problem and failed because everyone was opposed to his ideas as being socialized medicine. All right, it is time for the great thinkers in Bush’s administration to step up and take their heads out of the sand and come up with an equitable plan.
J. Steven Randol, CLU, MSFS
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