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Friday, October 23, 2009 

A Rant on Expectations of Health Insurance (Answer to Last Entries Comments)

I'm just going to throw in something that will probably make people angry.

Pure insurance, the most fundamental concept, doesn't generally include compassion and is not conceived to take on risks that have pre-existing conditions. Houses that have fucked up plumbing systems, bad fire hazards, etc. etc. will not be covered by a company. Business that run the risk of hurting tons of people will not be accepted by a company.

The differences between a house and a person is that house isn't alive and the only real obstacle to getting it insurable is the cost to fix it up. A business can change its practices to become insurable.

A person, on the other hand, when they get injured or many diseases, it's stuff that doesn't go away. A body can't get fixed up or necessarily change how it functions to make it insurable. Then there's genetic cases, etc. etc.

As my dad says: "Insurance is not a charity. These companies are in it to make money." These companies are for-profit companies, they're not non-profits or charitable organizations. They are beholden to their stockholders, their policyholders and the almighty dollar. And for the policyholders, they need to make sure they have money ready to pay eligible claims.

Even if they weren't for-profit, the other issue with pre-existing conditions and such is that without underwriting, declining, exclusions, etc. etc., premiums go sky high!

In the case of homeowners policies, they do not cover damages from floods. The government has to pick that up through the National Flood Insurance Program under the Department of Homeland Security (the NFIP was before Homeland, but that's just a part of history), and even NFIP policies have maximum limits of $250,000 on dwelling limits against floods.

The reason why homeowners policies don't cover flood and NFIP policies put a maximum limit is that floods and water damage are huge losses. If homeowners policies covered floods, premiums on the policies would be almost as much as the cost of the home. There would be no point to getting the insurance if the cost of it is the cost of your home pretty much every year.

If health insurance covered everything and accepted everyone, premiums would be sky high. It would essentially be a scheme of funneling healthy people's money to help sick people. That's not insurance. Insurance is essentially a gamble of a company accepting premiums from a lot of good risks & paying out when one of the good risks has a loss and hopefully a catastrophic loss, not a small loss. That's why there's deductibles, to discourage people making small claims & wallowing away the reserves of insurance companies or, in other words, money that other insureds paid to build up those reserves.

I still think healthcare needs some major reform and that there needs to be some resort for majorly sick people, people who have been raped, etc. etc. Nonetheless, that would be charity or some kind of government program, not private for-profit insurance.

Yeah, I think there have been some corrupt insurance companies and executives and other insurance companies have done some dumb shit (ahem, AIG). I think things get lost in the bureaucracy. I think there's a whole bunch of things that deviate away from the ideal that need to be corrected on the level of automation, processes, quality control, information management, decision making, etc. etc.

Nonetheless, I don't believe for-profit insurance companies are the place to make things better. In many ways they have done much good for their insureds. Insurance companies act in some sort as a form of collective bargaining to bring the costs down on in-network providers, which is probably the major benefit they've provided for people. I think this automatic collective bargaining has actually contributed to making people a little lazy about not doing their own bargaining, and that's what the new HSA-compatible plans are supposed to address.

As an attempt at controlling costs and trying to advance relationships between doctors and their patients, I actually think HMOs work as a good model. The consumer end user doesn't like the lack of choice, however. We also don't have enough doctors in the field to make HMOs work well.

In all honesty, I've read in industry magazines that all the different programs in private health insurance are still being explored and in something of an embryonic stage. The people have a demand for it, so the companies and the think tanks have pretty much put stuff together as a patchwork to give them something. Of course it won't necessarily work right because they need time to work out the kinks and issues.

Basically, in the long run, when the private insurance companies work right, I don't think they're meant to address the far out cases that generally get brought up in the news or the cases that stand out as the stories that seem typical. Yeah, some of the cases are dumb shit & the insurance companies do dumb shit because they're a bureaucracy.

In the long run, though, unless my conditions do get met, I believe that helping people that can't get private insurance pay their health bills should be taken up by the government or by some sort of charitable organization. Health insurance is just not conceived originally to address those cases.

And being in the insurance industry, I can also cite the case of Massachusetts as an attempt to both cut costs and to try cutting down on the cases of people trying to take advantage of the insurance industry by trying to get it when they need it to pay for something. That is not the intent of insurance. Intent of insurance is to have it before anything arises that needs to get paid.

It's not a black & white issue. There's expectations on both sides and both sides have also abused their responsibilities in the matter.

I really just had to get some of that out after having been exposed to people this morning having expectations for insurance higher than reality can meet.

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Entry By The_Lex

A few years ago, my wife and I moved down to LA from Seattle. We had a great opportunity to better ourselves by taking over a house that my mother-in-law owned, in a housing market known to be expensive. We could not put this off, it needed to happen right away....so we did. And we just so happened to be expecting our first child. We both had good health insurance which was taking care of all our health expenses, and would provide for my future daughter. Unfortunately, being linked to our jobs the health insurance would not follow us down to LA. I researched insurance rates for individual coverage and thought that we could pick up coverage again. The health insurance companies all advertise individual plans. So easy...

So we get to LA and proceed to be turned down by every insurance company out there. We had coverage before, we didn't do anything untoward, we didn't have any major catastrophes, I'd barely used mine, etc. We're married and having a child...what would be so risky about that?

It turns out that pregnancy, regarded by the insurance industry as a medical condition, is a pre-existing condition and makes anyone attempting to purchase an individual policy ineligible.

What? Let me say that again. Pregnancy is a pre-existing condition. One cannot buy individual coverage with any pre-existing condition. You can, however, get coverage immediately if you enroll as part of a large group plan. Large group plans are only available to corporations which meet specific enrollment numbers. I was working for a very small business, definitely not group policy fodder.

By ourselves, we have the free choice to be rejected based on a pre-existing condition. Working for a corporation, we have the option to either accept or deny coverage so that we may be more productive. With so many options available to us in our democratic society, I think it's about time for some goddamned good-times old-fashioned socialism.

(rant)

This is just one of the many reasons why I think it's pathetically stupid not to have universal coverage. My well-being should not be dependent on a large corporation's freedom to deny me coverage based on profit margins. I have the freedom to move and change jobs as I see fit, and corporations being treated as individuals by the government seriously affects my freedoms as a real individual. Besides, Canada might like us more if we had universal coverage. Maybe people would stop sneaking over the border for healthcare from a REAL healthcare system.

One last thing.

If everyone had insurance coverage backed by the government then society as a whole just might be more productive. It wouldn't matter if one were working at Wal-mart or at the utility company, the doctors would be paid and people would be healthier.

Pie in the sky...

Agree with you there, helio.

I'd even go as far to say that I think McCain had a pretty good proposition of how to deal with health insurance, at least as a transitional stage. Keep the policy between the individual and the insurance company.

Don't put the employer in the middle. Still give the employer the option to pay premiums, though.

And yeah, the whole health insurance debate is philosophical. Group insurance and individual insurance are treated differently. The government puts a lot more requirements on group insurance, and there's not as much regulation when it comes to the individual insurance.

Philosophically, I can understand why they do it: Our country wants people to work, so give working people an advantage over the non-working people. It's the fucked up work ethic that it has inherited from the Boston Calvinists. If you're not working, you're not a human being. Beggars in Spain, novel by Nancy Kress, poses these types of questions as an ancillary issue, especially when the economy can't provide jobs for people. . .why do people who would work if they could get punished?

On the technical level, group coverage generally can't deny enrollments except for administrative reason. If someone doesn't enroll at the right time, though, they have to wait until they get their chance to enroll again. That's how insurance carriers underwrite individual enrollments. . .then they medically underwrite rates at renewal time for the whole group.

Of course, the group has to maintain certain levels of enrollment as another form of underwriting. But what happens when the group can fulfill those requirements because not enough people want to enroll. All the other eligible employees have to get screwed because a few people don't want to be part of it.

So yeah, insurance is relatively screwed and can't handle those unique situations. Either something else has to come into play or the McCain plan would probably be the next best thing. . .and probably more likely to make to pass in the government.

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