What Did You Say?

I’ve Had it With the Health Insurance Diatribe

Once again the subject of health insurance has hit the topics of discussion with the anniversary of President Obama’s Socialist Medical Program. During the original arguments, I got real tired of hearing the pundits on all sides make statements that were not true, misleading, and down-right ignorant of the Health Insurance Industry. Today, I heard more conversation and the same misinformation.Let’s discuss some facts you have NOT heard on television, radio are any news outlet;

1. First fact: Insurance, of any kind, is purchased to give you coverage against a loss. NO INSURANCE COMPANY WILL INSURE A BUILDING WHILE IT IS BURNING. You might say, “Well of course”. Remember that when you hear any discussion of preexisting conditions. Some of those preexisting conditions are the equivalent of a BURNING BUILDING. You’re asking the Insurance Company to BUY CLAIMS IN ADVANCE OF COVERAGE. You wouldn’t so that, and neither do smart insurance companies.
2. The first question all these pundits need to be asked is, “Do you know how a health insurance premium is determined? What is the formula”? No, they don’t know and that is why they are talking out of their hat.
   1. The formula is M – I + L = Gross Premium. Mortality minus Interest made from investing a determined amount of the premium (it’s the interest off the investments that pay the medical bills. You can’t collect a dollar of premium and pay a dollar of medical bills. That’s bankruptcy) plus the Loading which is the cost of doing business.
   2. Actuaries establishes the statistical probability of medical claims based on age, sex (proven statistic that women use medical practices more than men and THAT is the reason they cost more to insure), ZIP CODE and other factors. that gives the insurance company the Mortality number they need to start the formula.
      1. Before you say anything about the ZIP CODE. It is a fact that some Zip Codes use more of the Medical Community than other Zip Codes. For example, the 900 set of Zip Codes (Los Angeles) are some the most expensive Zip Codes in America. They have one of the largest population of illegal immigrants, legal immigrants from countries that offer social medicine and people in general who cannot afford medical care. All of them use the Emergency Departments of Hospitals for their primary care. That drives up cost, because someone has to cover that cost. It is added to all of us through the Actuaries who use that as one of their statistics.
      2. That is why Health Premiums to cover the same person or family in one Zip Code will be less than another. For example, I had some clients leave Southern California and move to Arizona. Their premiums went down almost half. That’s why you hear these ignorant pundits cry about not crossing State lines to buy insurance. You can do that now, however, you’ll have to drive to Arizona to get your care.
   3. Every State has its own Department of Insurance to regulate who sells what in their State. This is supposed to protect the citizens from false companies selling a product that is no good. However, some of these DOI’s are themselves corrupt seeing to it that only the companies they like can sell in their State.
      1. Each DOI also determines what has to be covered. That varies from State to State, which also determines the prices Health Insurance Premiums. Most pundits don’t want that, and think it corrupt of the insurance industry to charge more to cover more. REMEMBER THE BURNING BUILDING?
      2. That is also why your health insurance coverage might not cover you while you’re traveling. Check the fine print.
   4. The only time health insurance covers you Nationwide is GROUP Coverage. Here the DOI’s have cooperated in the coverage. A Company want to provide health coverage for their people, and they have offices within the State (Zip Code issues), and in other States (Coverage issues). In the company are people with preexisting conditions. So the negotiation begins. The Insurance Company agrees to take a certain amount of risk on those preexisting people in exchange that the company provide coverage for everyone. The Insurance company knows that 20 somethings rarely use their coverage and know they will have less LOSS with them.
      1. Organizations like the NASE have Lobbied Congress aggressively to allow business associations across America to be able to buy Group Insurance. That would allow self-employed people to organize a common association to buy Group Health Insurance Coverage. The larger the group, the better the price they could negotiate better premium rates, and cover their uninsurable employees. This is a GREAT idea, and a major solution to our National Health Coverage Crisis. It is also one of the simplest solution that would cost our government NOTHING. Congress has not budged yet. If they (the Socialist) did, they would lose one more control over American business. By the way. The Self Employed (1 to 8 employees) are the number one employer in America. What a group if anyone got them organized.

Any Insurance Company, insuring anything, has to accept a certain amount of risk in underwriting coverage. Remember, the claims you file are paid with the ROI (Return on Investment) of the part of the premium you gave them to cover your possible loss. I’ve always maintained that the Insurance Companies with the highest cash reserves (ROI) is the company best able to pay a claim in any emergency. I can’t trust a company that is constantly reorganizing because of internal financial problems. They can’t pay their bills, how are they going to pay my claims?

Yes, Health Insurance Companies are in business to make money, and yes some have gone from profitable to greed. The market usually takes care of them because of competition. However, when any State DOI manipulates competition by corrupt practices by allowing only certain companies to sell in their State, that means those citizens are usually not getting the best return on their health care coverage choices.

The solution is simple. Get the Federal Government OUT of the Health Insurance Business. Pass the law allowing self-employed people to form national organizations for the purpose of negotiating for Group Coverage. Elect State Department of Insurance Heads that will drop the unfair competition restrictions, elect State Representatives that will get OUT of the Health Insurance Mandates.

I do not represent that I’ve covered everything about this subject. I have tried to cover the relevant. I welcome your reaction.