Insurance companies serve a very important function in our society. The purpose of insurance is to share risk. Risk is the amount of economic loss that someone is willing to assume in an activity. For instance, a bank would not loan money for the purpose of buying a house, unless the house was protected against losses such as fire, wind and other perils. That protection is provided by a Homeowner’s policy.
A loan to purchase an automobile would not be available unless the car was insured for losses by theft or collision. That protection is provided by an auto policy.
Health insurance is a policy that shares the risk of losses caused by injuries or illness. A share of the risk is assumed by the individual through a deductible or co-pay. In-other-words, if someone visits the doctor, that individual may be required to pay the first $15 or $20 of the visit. The health insurance company assumes the risk of the remainder of the cost.
That shared risk comes about through an exchange of ‘consideration’. Consideration is value. The insured pays a premium in exchange for the promise of the insurance company to pay certain costs associated with the insured’s health care. Which brings us to the controversy surrounding the government’s efforts to institute what some call universal health care.
No matter what side of the argument you are on, in favor or against universal health care, one issue has been settled. President Obama stated publicly that it is impossible to insure the ‘uninsured’ without additional costs. So, the idea that this will be a ‘deficit neutral’ policy has been debunked by the administration itself. Either taxes go up to pay for the program, or health care will have to be rationed to keep costs neutral, or bring them down.
In response to the public out-cry about a government health care program, the administration has called the insurance companies villains. After all, insurance companies exclude preexisting conditions for some period of time when an individual enrolls (however that is not always the case with group policies), and insurance companies are making a ‘profit’.
PreExsiting Conditions
Think about the concept of risk and preexisting conditions. An individual has a home that has been damaged by fire. Would a homeowner’s insurance company now write a policy that would cover the repairs to home caused by the preexisting fire? Of course not! That is not shared risk, that is bad business.
An individual has a preexisting health condition, say diabetes. Purchasing a policy that would exclude the treatment for diabetes for a limited period of time (usually two years), now results in a shared risk. The health insurance company will cover the person for other perils, and if that individual pays the premiums over time, that exclusion regarding the preexisting condition is then dropped.
Is it possible for the government to insure everyone in the United States and force insurance companies to provide policies without regard to preexisting conditions? It is possible, but not without driving the cost of health-care way up. After all, the money to pay the doctors and hospitals have to come from somewhere and President Obama stated that ‘We are out of money’. Since the government doesn’t earn money, its only source of revenue is taxes.
Profit
Insurance companies are being cast as the bad guy since companies make a profit. Which do you prefer, companies that are well run that make a profit, or a company like General Motors that required billions of dollars of taxpayer money to bail the company out? A profit is what allows companies to expand services and provide jobs. Companies that fail to make a profit, go out-of-business.
The government not only fails to make a profit, as a well run business entity should, it runs at a deficit. The latest example is Cash for Clunkers. Not only was taxpayer money used to subsidize auto sales, now car dealers are complaining that the government is not sending the checks for the Clunkers that were promised. It appears that many buyers will have lost their old cars and now face repossession of the new cars purchased since the money for the program did not actually exist.
This does not bode well for a government run health care system.
Tort Reform
Doctors and hospitals must practice defensive medicine. People will sue for anything. Tort lawyers use a ’shot-gun’ approach when filing a malpractice lawsuit. All doctors, nurses, technicians and hospitals involved in a case are named as a defendant, whether that party had any actual responsibility for the claimed injury and damage.
We need a loser pay system, which provides that anyone who brings a lawsuit and loses, is required to pay the other side’s attorney fees and expenses. That would do away with most frivolous lawsuits and bring the costs of health care down.
Big Government Solution
Government should be required to live within its means. It does not, and the government, not insurance companies, is the villain in this scenario.
The founding fathers did not foresee a large, powerful centralized government. That is what was the war of independence against England was all about. The US Constitution delegated specific powers to the Federal Government, and it does not specify taking over any private sector industry.
Medicare and Medicaid are government health care programs on the verge of collapse. Even President Obama admits Medicare cannot be sustained. No program can be sustained when it runs at a deficit and all government programs run at a deficit.
Universal Health Care will run at a deficit from day one and that is just bad business.
By: Michael Birzon
Posts Tagged ‘Health Insurance Company’
The Newbie’s Guide To PPO Health Insurance; Part 1
January 25th, 2010
A PPO or Preferred Provider Organization is a segment of health insurance that can be provided by an accredited health insurance company or provider. If you’re already familiar with an HMO or Health maintenance Organization then you have a good start in regards to what a Preferred Provider Organization actually is and can provide to a consumer seeking health insurance. The reason for this is because the Preferred Provider Organization is very similar to an HMO based on the fact that they have contractual agreements with many of the health insurance companies. The biggest difference is based on the fact that the Preferred Provider Organization doesn’t have as many limitations or restrictions when compared to the traditional HMO. Generally speaking this favors the consumer or individual seeking health insurance coverage through a provider’s health plan.
The advantage that a Preferred Provider Organization offers its clients is the ability for them to freely choose their own health care doctor or physician. This is particularly beneficial for an older person that has seen a regular doctor for many years. Naturally a bond of familiarity and trust builds up between a doctor and long time patient allowing for a comfortable feeling to take place during a routine medical appointment. The PPO allows this professional relationship to continue to exist ensuring better medical treatment. However, while the opportunity to seek medical care from the family physician or local doctor sounds nice it does usually mean that a higher out-of-pocket cost will be incurred by the individual consumer, although a referral isn’t normally needed to see a medical specialist.
As you can expect HMO’s are usually much cheaper due to the restrictions they place on who an insured patient can see and how they go about obtaining a referral to a health specialist for additional medical treatment. The PPO does offer more control over the providing of an individual’s health care needs so in this instance your health as opposed to money may be the final determining factor in regards to which health care plan you choose to apply for.
The Preferred Provider Organization’s main goal has been to provider health insurance coverage to large groups at a lower then normal rate or premium. They have been extremely successful at this endeavor by providing better information to the PPO network of doctors and by providing cheaper rates for medical insurance. In fact they were so successful that the PPO was the main driving force behind a dramatic drop in medical expenses throughout the last decade.
Based on the complex nature of the current health care system any plan, such as the Preferred Provider Organization, is a welcome sign of relief for many consumers needing and wanting adequate health insurance coverage at a very reasonable and affordable price.
By: Sharlene Raven
Pre-Existing Conditions in Florida Health Insurance
January 13th, 2010
Pre-existing conditions in Florida health insurance is an area of health insurance that seems to suffer from a murky cloud of confusion. What is a pre-existing condition? How are pre-existing conditions handled in Florida? Are there differences in how pre-existing conditions are handled depending on whether it is a Florida group health insurance plan or a Florida individual health insurance plan? All of these are valid questions concerning pre-existing conditions and their effect on obtaining health insurance coverage in the state of Florida.
The obvious first question is, “What is considered a pre-existing condition in Florida?” Typically, most health insurance companies in Florida will look at an applicant’s health history going back as far as 10 years to determine an applicant’s health status (in the case of an application for individual health insurance; group health insurance in Florida will not levy quite as much scrutiny towards a pre-existing condition). Therefore, in the strictest type of scenario; any adverse medical conditions or medical issues within the 10 years prior to the application being submitted is considered a pre-existing condition. (This is not the case for all areas of pre-existing conditions as in the case of certain conditions the health insurance company is only concerned with say high cholesterol [just an example] or nicotine use [just an example] in the past 5 years or 2 years rather than the full 10 years). Generally speaking, any type of medical condition or issue that happened further back than 10 years ago does not exist for the sake of the Florida health insurance application.
The obvious follow up question is, “How are these pre-existing conditions handled by the health insurance company that one is applying with?” The classic attorney answer happens to fit in this instance, “That depends.” The way that a specific pre-existing condition is handled in an application for individual health insurance in the state of Florida is solely at the discretion of the underwriting department of the health insurance company. Of course, common sense would tell us that a pre-existing condition of cancer will be treated much differently than a pre-existing condition of the tendency to develop a cold: just as Diabetes will be treated much differently from hay fever.
There are probably 3 main general groupings of pre-existing conditions in the state of Florida when it comes to individual health insurance. There are the pre-existing conditions that will signal an automatic decline by the health insurance company such as diabetes, cancer, extreme obesity, and rheumatoid arthritis (only a few examples), those that will prompt the insurance company to either not cover the particular pre-existing condition (exclude that specific condition but cover everything else – a “rider”) or charge an additional premium (“rate – up” or rate increase) such as asthma/allergies, back disorders, and high cholesterol (only a few examples), and then there are those pre-existing conditions that present a risk so minor that the health insurance company will cover everything and not charge an additional premium (such as infections, disorders, or surgeries where there has been a Doctor certified 100% recovery, common cold, common childhood ailments, etc) (again, only a few possible examples).
The important thing to do if you have a serious pre-existing condition and have health insurance is to NOT cancel your health insurance coverage! There may still be other options available to you such as a HIPAA guaranteed issue plan (cannot be declined due to pre-existing conditions) or a group health insurance plan. There are a number of criteria that you must meet in order to be eligible under HIPAA. Consult with a knowledgeable Florida independent health insurance agent that will be able to assist you in finding appropriate Florida health insurance coverage.
By: Joel Ohman