Misconceptions About Health Insurance 14 comments
an article to
-
Font Size:
-
Print
- TweetThis
Right now, it appears that the biggest barrier to health care reform is people who think that it will hurt them. According to a New York Times poll, “69 percent of respondents in the poll said they were concerned that the quality of their own care would decline if the government created a program that covers everyone.” Since most Americans currently have health insurance, they see reform as a poverty program – something that helps poor people and hurts them. If that’s what you think, then this post is for you.
You do not have health insurance. Let me repeat that. You do not have health insurance. (Unless you are over 65, in which case you do have health insurance. I’ll come back to that later.)
The point of insurance is to protect you against unlikely but damaging events. You are generally happy to pay premiums in all the years that nothing goes wrong (your house doesn’t burn down), because in exchange your insurer promises to be there in the one year that things do go wrong (your house burns down). That’s why, when shopping for insurance, you are supposed to look for a company that is financially sound – so they will be there when you need them.
If, like most people, your health coverage is through your employer or your spouse’s employer, that is not what you have. At some point in the future, you will get sick and need expensive health care. What are some of the things that could happen between now and then?
- Your company could drop its health plan. According to the U.S. Census Bureau (see Table HIA-1), the percentage of the population covered by employer-based health insurance has fallen every year since 2000, from 64.2% to 59.3%.*
- You could lose your job. I don’t think I need to tell anyone what the unemployment rate is these days.**
- You could voluntarily leave your job, for example because you have to move to take care of an elderly relative.
- You could get divorced from the spouse you depend on for health coverage.
For all of these reasons, you can’t count on your health insurer being there when you need it. That’s not insurance; that’s employer-subsidized health care for the duration of your employment.
Once you lose your employer-based coverage, for whatever reason, you’re in the individual market, where, you may be surprised to find, you have no right to affordable health insurance. An insurer can refuse to insure you or can charge you a premium you can’t afford because of your medical history. That’s the way a free market works: an insurer would be crazy to charge you less than the expected cost of your medical care (unless they can make it up on their healthy customers, which they can’t in the individual market).
In honor of the financial crisis, let’s also point out that all of these risks are correlated: being sick increases your chances of losing your job (and, probably, getting divorced); losing your job reduces your ability to afford health insurance, either through COBRA or in the individual market; if your employer drops its health plan, that’s either because health care is getting more expensive (meaning harder for you to afford individually) or the economy is in bad shape (making it harder for you to get a job that does offer health coverage).
In addition, there is the problem that even if you are nominally covered when you do get sick, your insurer could rescind your policy, or you may find out, as Karen Tumulty’s brother did, that your insurance doesn’t cover the treatment you need. But while important, this is a second-order problem. The first-order problem is that as long as your health insurance depends on your job, your health is only insured insofar as your job is insured – and your job isn’t insured.
The basic solution is very simple. In Paul Krugman’s words: “regulation of insurers, so that they can’t cherry-pick only the healthy, and subsidies, so that all Americans can afford insurance.” I know that there are lots of details that consume people who know health care better than I do, and I know those details are important. But as an individual who is worried about his or her own health insurance (and that is the point of this post), that’s what you want. You want to know that if you lose your job, you won’t be shut out because you’re too sick,*** and you won’t be shut out because you’re too poor.
But we won’t get there as long as people remain convinced that health care reform is for poor people. It’s for everyone – everyone, that is, who isn’t independently wealthy or over the age of 65. Because all of us could lose our jobs. (Have I repeated that point enough?)
Now, I admit that if you are over 65, health care reform is not for you, because you are in the one group in our society that enjoys true health insurance – insurance that you cannot lose, that is paid for by taxes, and that is effectively guaranteed by the government. So maybe there’s nothing in it for you, except perhaps an improvement to the prescription drug component of Medicare. But I cannot believe that, as the only people who have reliable health insurance, you would oppose health care reform that would provide reliable insurance for the rest of us.
* This doesn’t necessarily mean that all those people lost employer-based health coverage because their employers dropped their plans; some of it could be that the employee contributions were increased to the point where they couldn’t afford it anymore. 1.1 percentage points of the shift is due to people becoming eligible for Medicare or military health plans.
** If you lose your job, or you get divorced from a spouse through whom you get health coverage, you are eligible for continued coverage under COBRA. However: (a) this only necessarily applies if your employer has 20 or more employees; (b) you have to pay the full, unsubsidized cost of your health plan, which can be particularly difficult after losing your job; and (c) it only lasts for eighteen months.
*** I said earlier that insurers can’t charge premiums that are less than the expected cost of your care unless they can make it up on the healthy customers, and they can’t in the individual market. But if all insurers are prohibited from doing medical underwriting (pricing based on healthiness), then they will all have to overcharge the healthy customers, and the system could work. This is still a tricky issue – and single-payer (like Medicare) would be much simpler – but it can be made to work even in a competitive market.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
And how come insurance costs more for people who pay for it? Would a large portion of people NOT paying for it have anything to do with it? If you really think insurance companies are enjoying "windfall" profits at your expense, then buy their stocks. They aren't exactly doing that well due to your government jumping in earlier and trying to do what you want them to do more of now.
"The basic solution is very simple. In Paul Krugman’s words: "
Are you really citing Paul Krugman?
Who is John Galt?
1st If you lose your job plus you lose your health insurance, its impossible to get a private insurance plan if you have a pre-existing condition. This happens a grat deal.
2nd The health insurance companies pick & choose what they will pay on serious illness or injury. You are left stuck a major bill.
On Aug 06 02:24 PM John Galt wrote:
> "in the individual market, where, you may be surprised to find, you
> have no right to affordable health insurance."
>
> And how come insurance costs more for people who pay for it? Would
> a large portion of people NOT paying for it have anything to do with
> it? If you really think insurance companies are enjoying "windfall"
> profits at your expense, then buy their stocks. They aren't exactly
> doing that well due to your government jumping in earlier and trying
> to do what you want them to do more of now.
>
> "The basic solution is very simple. In Paul Krugman’s words: "<br/>
>
> Are you really citing Paul Krugman?
>
> Who is John Galt?
To add to these points, we need:
1) Mandates for coverage for all citizens (unless we the taxpayers want to continually foot the bill for the uninsured who receive care in emergency rooms).
2) Torts reform. Two factors these days determine your health care - what the insurance company will pay for, and what the doctor feel needs to be done to protect his rear end should you decide to sue. Forget about what's best for your health.
3) Medicare overhaul. Expanding it is a nice idea, but the current program is rife with fraud and waste. We the taxpayers know this. Clean up the system, and then MAYBE we the people would not get bent out of shape by proposals to expand.
On Aug 06 02:54 PM JPSmith wrote:
> Wrong. The solution is to sever health insurance from employment,
> make individual policies tax-deductible to the buyers, expand tax-free
> personal medical savings accounts for small expenses, and remove
> all coverage mandates and interstate policy sales restrictions on
> health insurance to establish a truly competitive private insurance
> market.
I have employer-subsidized health care for the duration of my employment and it's better than nothing. I am shocked that there is anyone that thinks the current system is broken. Our health care system is clearly hurting our county's ability to be competitive in the world.
I think the main problem is that there aren't enough doctor's in the USA and that insurance executives are making way too much money.
Oh well, thanks again for the post.
Health care is bankrupting American business. The insurance companies have been getting ALL of the employee salary increases the last 10 years and most of the increases sincee 1970's.
This chart shows the extent that healthcare costs have swallowed up all the business resources:
www.businessinsider.co...
We need to pop the health-care bubble (and the higher education bubble) -- these bubbles are also crippling the American consumer and devastating the middle class. University tuitions are up about 2500% over the last two decades.
Healthcare earnings are still climbing, having passed construction and soon to pass both real estate and the fiinancial industries. Healthcare should not be creating billionaires while illness creates thousands of bankruptcies.
webmail.earthlink.net/...
On Aug 06 02:54 PM JPSmith wrote:
> Wrong. The solution is to sever health insurance from employment,
> make individual policies tax-deductible to the buyers, expand tax-free
> personal medical savings accounts for small expenses, and remove
> all coverage mandates and interstate policy sales restrictions on
> health insurance to establish a truly competitive private insurance
> market.
The second chart, showing growth of health-care earnings, is actually found here:
www.businessinsider.co...
On Aug 07 09:10 AM YoYoMama wrote:
> Umm...clearly you are not on personal insurance. My special needs
> son has no right to insurance. I guess that's the America you want.
>
Do these problems exist with car and homeowners' insurance, which are freely marketed to individual consumers? No.
At least with a private market you have options if you don't like how your insurer is treating you. What options will you have in a single payer system?
"What's to keep the insruance companies from fixing prices are they have been doing for decades now. You'll pay $15,000 a year for your own and spouse's coverage in the private market -- and then they won't pay you when your get sick. They'll fight you every inch."
On Aug 07 09:17 AM YoYoMama wrote:
> >
> > 2) Torts reform. Two factors these days determine your health care
> - what the insurance company will pay for, and what the doctor feel
> needs to be done to protect his rear end should you decide to sue.
> Forget about what's best for your health.
>
For example, what if:
Everyone paid a tax (like Medicare) for catastrophic health problems: serious deseases, illnesses, and accidents. that would be what insurance is for. Poor who could not afford the the tax could get a subsidy.
Routine care would be paid out-of-pocket, but individuals could buy prepaid plans to pay for that.
Regarding the high costs near end of life, a panel of doctors (possibly 3) could determine life expectancy. If they agree a patient only had 12 months to live, the catastrophic insurance could deny 50% of the cost meaning the family has to pay the other 50% of high cost procedures to extend life for a short term. This makes the pateint share the cost in high cost medical procedures near the end of life.
The issue of "end of life counseling" (defined in healthcare bills) should definitely NOT be a decision for government bureaucrats, as the government has a vested interest in "killing off seniors" so the government can reap the benefit of paying out less in social security benefits. It is a conflict of interest which should be invalidated by the courts.