Healthcare Reform

There are many aspects of the current healthcare debate that give me cause for concern. Part of this hinges on the fact that I see far too many television commercials in which insurance companies are marketing healthcare products. Hence, there must be some products out there that ARE affordable. Otherwise, these companies would only be marketing to people that wouldn't be potential customers.

Even if a particular insurance plan doesn't cover all possible medical emergencies or situations, it would still provide some coverage.

And some of these products even allow for customization.

Thus, insurance providers see a way to sell insurance and make a profit within a competitive marketplace (search for health insurance quotes" online and you'll get about 38 million hits). Based on careful cost analyses, detailed actuarial considerations and other fiscally sound business practices, these providers work to provide the products they market within a framework that ensures they remain solvent. Without solvency, there would be no profit and eventually they would go out of business.

Let's be clear. Even though all of the above are good business practices, it does not mean that the insurance company is altruistic. In fact, it probably means the opposite. But, the insurance policy that they sell is designed to provide certain coverage and sometimes what we think the coverage should be or what we'd like it to be is excluded or limited. It's happened to my family and I didn't like it. But in the scope of what my insurance policy does provide, it offers pretty solid coverage and it has been there for me far more often than it hasn't.

Congress To The Rescue

Now comes a new proposal from Capitol Hill that would require an insurance company to insure anyone even those with pre-existing conditions. Sure, if one loses insurance due to a layoff, business closure or transfer to a new job, it can create hardships...possibly incredible hardships. And this is where a catastrophic insurance fund could come to the rescue. But forcing an insurance provider to assume the risk associated with a pre-existing condition goes against all of the sound business practices noted above. This could easily translate into a business failure that would lead to even more people being denied insurance coverage. Could this be a backdoor attempt at guaranteeing that the Federal government MUST insure everyone?

Buried in the proposal, I believe, are also words that negate any ability to charge different rates for people with different needs (e.g., men versus women). As a guy, this distinction worked against me in the car and life insurance arenas, but for me in health coverage. It's part of those good actuarial practices described earlier.

Expanding on the Health Care Concept

With this background, I now have to wonder if there could be other venues in which such efforts to force coverage (even under threat of penalties, fines and incarceration) may surface?

Suppose that the government passes legislation that forces health insurance providers to insure anyone, regardless of pre-existing conditions. Can forced automobile insurance be far behind? Imagine GEICO and other auto insurers being required to insure anyone, even those with a history of DUI's or a conviction of vehicular homicide. And these people would pay no more than drivers with an excellent driving record!

It's bad enough that state governments require everyone to have automobile insurance now. No, I don't relish being struck by an uninsured driver, but there are uninsured drivers out there and I already have to buy additional insurance myself to cover situations should their automobile and mine have an unfortunate meeting.

If health and automobile insurance become required and if insurers have to insure anyone, even without actuarial considerations, what else will follow?

How about homeowners or rental insurance? How about life insurance? Could you imagine a life insurance company being told that they have to insure a 20 year old at the same premium as an 80 year old or that they must be insure someone with terminal cancer?

Pretty soon, enough companies would go out of business that only the government would be able to offer life insurance coverage.

In the homeowner's amphitheater, this already happens in the flood insurance program. One can only buy flood insurance from Uncle Sam because private insurers were basically forced to provide it and they balked.

If it works for insurance, then it should work elsewhere. So, let's give mortgages to people, regardless of their ability to pay them back. Oops, we've already done this and that was one of many reasons for our current dire economic downturn.

We could also extend the rationale to sports - everyone has to be allowed to try out for a position on a sports team and be given the same consideration, even without the natural skills or ability.

In schools, everyone should be given good grades, even without any knowledge gain. Oops, again, we are already doing this.

In the salary department, everyone should be paid equally (or there should be salary caps), even if some workers provide different benefits to their employer. Oops, this is the pay czar's domain already.

It doesn't take long for one to see a landscape littered with a society bathed in socialism. Everyone and everything will soon be treated the same even if they are different (i.e., unless we need a special tax on suntanning or a special tax break such as was just given to the state of Iowa).

Beware, If It's Too Good To be True...

Another aspect of the health care reform legislation is "how good it is." It will expand coverage and even reduce the deficit. If this is indeed the case, then it becomes "too good to be true." And anyone knows what that means. Based on past Congressional efforts, benefits will expand overall, but the cost savings will be replaced by losses. After all, the Social Security and Medicare Trust Funds are almost always running out of money and require infusions of cash from the Treasury or additional taxes, fees and copayments. I can't believe this effort is going to be any different.

Also, everyone starts paying for the reform now, but "benefits" don't kick in until several years down the road.

Unintended Consequences

But there are other aspects of this health care reform that can wreak havoc with it. And I am firm believer that "unintended consequences" must be considered before rushing to solution. Yet, the Senate seems intent on passing the bill with almost no review and no debate.

One possible factor is that some may pay the penalty and not pay the premiums until they need the insurance. This further hurts the insurance companies, since the fines go to the Federal government not the insurance companies.

And what happens if a group of people with pre-existing conditions dumps on a certain insurance company? What is to prevent them, enmasse, possibly with political or other agendas, of rushing to a particular company for coverage in attempt to bankrupt it?

As for reducing benefits as Medicare cuts kick in, only those seniors will know for sure what they have had to pay to allow others to get on the Federal governments health care payroll. If you cut such a large amount from Medicare, it can't just be eliminating fraud and abuse. But, if it is, then what does that say about Congress that has allowed the fraud and abuse for dozens of years.

Buying Votes and Other "Transparencies"?

What is especially disturbing is how the Democrats obtained the needed cloture-killing 60 votes. Certain states (Iowa and Louisiana) received certain benefits and exclusions at the expense of other states and groups. Negotiations, which were supposed to be transparent, were everything but. Backroom politics are alive and kicking in the halls of Washington, DC.

Elusive Solutions

I don't have the answer to how to deal with those unfortunate enough to lose their health insurance coverage while carrying around pre-existing conditions. But, there has to be a better way to handle such situations without throwing out the basis of an entire medical insurance system that works pretty well for the most part. The analogy I am most used to is, "don't throw the baby out with the bathwater."

Maybe Congress and the President need to rethink this healthcare push, especially since a growing majority of citizens are finally starting to see the light and don't like what they are seeing. There is still time to this as House-Senate negotiations ensue.

My fear is that once a health care bill passes, the stage will be set for future inroads into personal decisions.