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The Health Insurance Problem

January 13th, 2009

Health insurance is expensive. Really expensive. Why is this? There are many problems with the system, but I am going to try and point out a few of the flaws and maybe a solution (at least partial anyway).

All American Blogger has a few ideas why government run health care will fail. Duane shares this quote is from Democrat Missouri State Representative Steve Hodges who thinks that infertility treatment should be covered by health insurance:

We spend millions upon millions of dollars trying to assist people, even in terminal situations with cancer, with a lot of different things,” said the bill’s sponsor, Rep. Steve Hodges, D-East Prairie. “To me, this is a very positive medical procedure. Nothing but good things could come out of it, and I know everything has its cost, whether it’s good or bad.

This is part of the reason why health insurance is so expensive. Policy makers around the country keep adding things to be covered that simply don’t need to be in every policy.

On this same note I have seen several different articles pointing out some ridiculous costs for health care in New Jersey because of unneeded additions to their policies.

I decided to do some research and went to ehealthinsurance.com to get some rate quotes. As a side note, if you are paying too much for health insurance, do a little shopping around. You might be surprised at what you are able to find.

Anyways, while the rates weren’t as bad as some would lead you to believe, they were completely ridiculous compared to many states. Apparently the lobbyists in New Jersey have managed to add acupuncture and in vitro fertilization to the list of things an insurance policy should have to cover. Here are the quotes I got for a 25 year old non-smoking male in several different states and the District of Columbia:

New Jersey - 135/month - 1620/year
California - 50/month - 600/year
Washington DC - 49/month - 588/year
Tennessee - 37/month - 444/year
Ohio - 31/month - 372/year
Kentucky - 29/month - 348/year
Missouri - 27/month - 324/year

Clearly there is a disconnect here. Special interests lobby groups to the rescue again. Wait a minute, no, I would prefer my Congress to not be completely bought and paid for. There is no reason a 25 year old man should have a health insurance package covering in vitro fertilization. Infertility treatment is not something that most people need. If you want a package that covers that, go ahead. That is fine with me. There is no need for that 25 year old man to have to include it in his package.

This leads to the next problem. People who would normally get insurance can’t afford it or choose not to because they decide it is too expensive. The guy in Jersey wouldn’t mind paying the $324 the guy in Missouri is, but $1620 is not in his budget. You see, the idea behind insurance is that some people won’t need to use it, and those people subsidize the people that do need it, and provide a little profit for the insurance company. This goes for all kinds of insurance, car, health, house, life, and any other type of insurance you have.

That 25 year old guy will, most likely, be subsidizing the others. 25 year old healthy men usually don’t incur tons of medical costs. If the costs were more reasonable, they would be inclined to get the coverage in case of an emergency. With the costs as high as they are in some cases, many decide to take the risk of not having insurance.

Health Care Choice Act

This is from Wikipedia:

The Health Care Choice Act is a bill that proposes allowing health insurance companies to sell health insurance across U.S. state lines.
It would allow an insurer to designate a primary state whose laws would apply to individual health insurance coverage offered by the insurer, then allow the insurer to offer that coverage in any secondary state and exempt the insurer from laws of the secondary state regulating individual health insurance coverage (e.g. state laws requiring guaranteed issue, community rating, coverage of preexisting conditions, and benefit and provider mandates), and thereby allow young, healthy people to purchase less expensive individual health insurance.

This would be great. Now the uninsured 25 year old male from New Jersey can buy a $324 a year policy from the insurance company based in Missouri. This does a number of really good things. First off, now he is insured. Second, the company in Missouri is now going to have more people paying into the insurance. Specifically it is going to have more young healthy people paying into its fund. Guess what, this lowers the cost for everyone. Finally, this is going to stimulate competition and increase pressure among the states to get rid of the stupid mandates on insurance policies. This increased competition will also lower insurance rates across the board.

Now compare that with the idea of universal health care subsidized by the government. That will cause people who already have insurance to drop it because they qualify for the subsidy. It will cause a huge rush by the special interests lobby groups to get their procedures covered by law. If the government is going to pay for it why not. This will cause health insurance rates to go up. Now, you will not only have to pay for your own health insurance, but you have to subsidize other people who dropped their coverage to get the government (i.e. John Q. Taxpayer, or YOU) to pay for their coverage.

If you don’t think this is how it will be, check out what happened in Hawaii:

Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.
Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan. People who were already able to afford health care began to stop paying for it so they could get it for free, said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. I don’t believe that was the intent of the program.

The system went bankrupt in 7 months, and it was only trying to cover children. If you think universal health care covering everyone in the country will work, you are being a bit naive. You think your health insurance is expensive now, just wait until you have to pay for your neighbor’s insurance as well.

  1. January 13th, 2009 at 20:41 | #1

    “Socialized Medicine” is primarily an ideology championed by the Democrats. However, contrary to popular belief, a nationalized health care system for all American’s has never actually been on the agenda for President Elect Obama. http://healthpolicyandmarket.blogspot.com/2008/03/detailed-analysis-of-barack-obamas.html His agenda instead has always been to assist those who are rendered uninsurable and or are in need of assistance in obtaining health care coverage due to low income.

    Part of his plan is to expand the role of SCHIP and State Insurance Risk Pools so that those who are rendered “uninsurable” on the individual major medical market have guaranteed insurability through their respective State Risk Pools. Many states already have this option. However states such as Arizona and Florida do not. These states desperately need such Risk Pools. Unfortunately, until now they have not been able to receive enough Federal funding to expand this much needed role. States that do have risk pools are listed here: http://www.naschip.org/states_pools.htm

    President Elect Obama wishes to provide more Federal funding to these existing risk pools to drive the premiums down, thereby making this option more affordable for those rendered uninsurable.

    One of the reasons that a “nationalized” health care system has never been on Obama’s agenda is most likely due to the terrible failure of such programs in countries such as Canada. A common example used to further the cause of “socialized medicine” in the United States is to point out how well it is working in Canada. However, those living in Canada know full well that their government run health care program is most certainly not working.

    As a matter of fact, many Canadian citizens choose to hire high priced brokers to find them quality health care right here in the United States because of the terrible bureaucracy that controls all forms of health care in Canada. For more about what is really going on with the Canadian health care system please watch these short but very informative documentary videos:


    The number of actual uninsureds in the US has been grossly inflated as well. For the real numbers watch: http://www.freemarketcure.com/uninsuredinamerica.php

    The truth of the matter is we already have an enormous amount of entitlement programs available to those who find themselves unable to pay for their health care. Often times these entitlement programs are offered to those who are here legally and illegally as was the case in the State of Illinois: http://www.sbisvcs.com/healthinsuranceblog.htm

    Most recently, the State of Hawaii tried to emulate the Medicaid Expansion programs that were enacted in Illinois. It took less than 7 months to render their program bankrupt: http://www.breitbart.com/article.php?id=D93SBEUG0&show_article=1

    All things considered, the best way to offset the high cost of health care in the US is to adopt the initiatives set forth over a decade ago by Senator Bill Archer (R) of Texas. The Health Savings Account (commonly referred to as a “Medical IRA”) is a unique option that maintains high quality health insurance coverage for the policy holder whilst also building a tax deductible, tax deferred interest bearing account for the insured to use for future medical expenses. Even if these expenses would not normally be covered by the policy holder’s health insurance plan. For more about the “intelligent health insurance choice” (HSA qualified HDHP’s) please click here: http://www.sbisvcs.com/HSA%20&%20HDHP.html
    In the end consumer education and retention of existing Federal entitlement programs (via a legitimate needs assessment test) will go a long way towards not only maintaining our current health care system, but also towards keeping the bulk of our nations risk where it belongs namely, with the private health insurance sector. In light of the recent $7 Trillion “Bail Out” and many other failing corporations coming to the table with their hats in their hands (and their private jets on the tarmac) the last thing our government should do is start cutting more blind “bail out” checks in an effort to “reform” the U.S. health care system

  2. January 15th, 2009 at 19:08 | #2

    On top of that, take a look at this latest piece of insurance news, where thousands of patients have to find a new hospital

    Mark’s last blog post..CIGNA Responds to the Economic Downturn

  3. June 23rd, 2009 at 12:36 | #3

    A fantastic read….very literate and informative. Many thanks….what theme is this you are using and also, where is your RSS button ?

  4. February 12th, 2010 at 19:56 | #4

    Great reply Steve, had to save that one

  5. February 12th, 2010 at 19:57 | #5

    Great reply Steve, had to save that one again.

  6. Vistahealth
    April 6th, 2010 at 12:49 | #6

    Health insurance annual premiums are on the rise every year lately. Many families and individuals are finding it becoming more difficult to locate medical insurance that will fit into their household budget. In some cases the annual medical insurance premium is costing them, more than their apartment rent and mortgage payment. This in itself should trigger that something, somewhere is not quite right.

    Many today are wondering where to turn to find medical insurance they can afford for themselves and for their family members. Families today are paying upwards of thirteen thousand dollars a year for a mediocre medical health insurance policy. The risk of anything-catastrophic weights heavily upon their minds because they are all too well aware this would wipe out all they own.

    Single people are facing the same difficulties because many of them who must purchase their own medical health insurance policy are paying about six thousand five hundred dollars per year for the same mediocre policy. In this case, they have the same concerns as those with families. Locating affordable health insurance is almost next to impossible unless you are fortunate enough to know where to look and what to look for to cover your specific needs. A few of the important details that an individual will want to keep in mind when searching for an affordable health insurance plan is the following.

    1. The effective date beginning medical health coverage

    2. The waiting period involved in the case of pre-conditions

    3. The actual benefits covered for you and your family members

    4. The list of limitations and exclusions, for example, pregnancy

    5. The average monthly cost for health insurance to cover you and your family members

    Yes, floating in the sea of pre-conditions is pregnancy. Young couples who find they are expecting a child need not apply for medical health insurance coverage until after the baby is born because pregnancy is considered a pre-condition along with an entire host of other medical afflictions that the mass population is coping.

    Unfortunately, this is a reality of life that all individuals must understand before they even try to research the various insurance companies to find out what type of medical coverage they are able to sustain. The more pre-conditions a person is inflicted with the higher the health care premium will rise and the waiting period extended. Many of the insurance providers include a disclaimer for pre-conditions between twelve months and eighteen months.

    Understand that you will continue to have medical health insurance coverage for all other ailments that your new insurance policy offers in your behalf, but there will be a delay in medical reimbursements when it applies to your specific pre-condition until the wait time has been fulfilled.

  7. June 7th, 2010 at 07:54 | #7

    When people start talking about health insurance reform and how to bring health insurance to the American people, they inevitably end up in a ridiculous discussion about how to negotiate the cost of drugs, how to provide drug discounts to senior citizens, or how to engage in a system of managed care that denies medical services to certain groups. It’s all a rather useless exercise in shifting paperwork, blame, or money from the pockets of one organization to another. And in the end, it helps no one.
    Smile Travel Insurance

  8. November 16th, 2010 at 21:45 | #8

    health insurance should only be taken from reputable companies, you really don’t want to get it from fly-by-night companies ‘;.

  9. Janet Shephard
    February 24th, 2011 at 12:39 | #9

    I have pancreatitis and diabetes and im having a real hard time finding insurance can you help me

  10. May 30th, 2011 at 00:48 | #10

    Thanks a bunch for the post, It had a lot of info on it, I learned a bunch

  11. June 28th, 2011 at 00:00 | #11

    A fantastic tips. I had a lot of information on it, I learned a lot. its really important to get a health insurance to protecting ourself , our assets in the event of a medical situation.

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