Programmer by day, comic nerd by night. My official job title is "Director of Janitorial Engineering"
First of all, let us put all politics aside. I don’t care if you are for or against the recently passed legislation. I just want to point out how 100% of Americans should have been against it.
It is claimed that 47 million Americans are without health insurance for whatever reason. There are 3 primary reasons for this I believe:
This legislation does a few things to address each item above. One thing is that it requires EVERYONE to purchase health insurance or face a penalty. It also requires insurance companies to treat all Americans the same, i.e. they cannot take age, nor pre-existing conditions into account when figuring out someone’s premium. The thinking is that now that everyone is required to have health insurance that 40 million (let’s face it, you will never have 100% participation especially when a $1,000 penalty is cheaper than say a $4,000 premium) new enrollees will actually provide enough money into the system to lower premiums for all.
Let’s look at how insurance is supposed to work. Basically you take a pool of people, calculate what you think you might have to pay out per person per year, and then try to charge them the premium based upon this and overhead. So simple math would say that if they had $100,000 in expenses a year and 50 people, each person would need to pay $2,000. Some people might not use $2,000 worth of services, others might use considerably more. Businesses cannot lose money (not even not-for-profit) for very long before they need to close up shop.
Now, let’s assume that the majority of Americans that do not have health insurance is because they either have a pre-existing condition, or the rates are super expensive because of other factors (i.e. age, weight, smoking, drinking, family history, etc). Based upon our simple math above, now that we are requiring roughly 20% more people to have insurance that would give us 10 more people.
Great! We now have 60 people sharing $100,000 worth of expenses thus making everyone’s annual contribution $1,667. Everyone saved $333 and now we can all go spend that money improving our economy…not so fast! Since the majority of this new group of 10 are “at risk” the actuary could think that they possibly will cost more over the long term of the policy. Maybe these 10 represent $50,000 worth of expenses. So now we have $150,000 being shared by 60 people (remember there is no more “discrimination”). Now everyone’s annual premium is $2,500. This is great news for the 10 as their premiums originally would have been $5,000 ($50,000/10). They now have affordable healthcare. However, the other 50 are now paying a 20% increase in their premiums.
This is how the current reform will increase costs. As stated previously, an insurer cannot discriminate…and they also cannot lose money. Thus every year they could have to keep raising rates x% to break even. There is only one entity in America that can afford to lose money year after year - The US Government.
This is why everyone should be 100% against this reform as it exists. Half should be upset that we even did this (my rates would increase to pay for others – socialized medicine), and the other half should be upset because it doesn’t curb costs (250+ million Americans rates will increase). There is only 1 true way to solve the problem and that would be for 100% universal health care. I am not advocating for it. I am just saying that the government will be able to fund the program and “never” go out of business.
Ultimately I think we will get there. As some insurers go out of business it will force those people onto other plans. Eventually you will have super insurers, but nothing has been done to curb the cost of health care (just sharing the cost among more people). As more and more insurers go out of business (or they become super expensive) people will shift to government plans (that can undercut private insurers because they can be funded partially with taxpayer money).
If this legislation goes into affect, I imagine that by 2025 (if not sooner) the Government will just take it over 100%.
How many insurance companies insure people over the age of 65 (the age of Medicare)? Why is this? Likely because the Government can do it at a loss (in 2008 they started paying out more in benefits than they were getting in). How do they fix this? Change benefits (i.e. make the worse), and or raise money by increasing premiums and most importantly payroll tax – again a never ending supply of money.
What I don't undestand is that car insurance is not a one size fits all plan. You pay more if you get into a wreck, or get a ticket. It is not discrimination...it is a fact that you will cost more in payouts.
How long before groups spring up that require an annual membership. One of the benefits of being a member is super cheap health insurance. Of course these groups wouldn't actually deny someone a membership because they were unhealthy...would they?
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