I am part of the problem. But I have my reasons. I don't
have health
insurance, and I refuse to buy any. Why? Because I don't trust
health
insurance companies.
My fear is that after paying my premiums
as agreed, they will find a
technicality by which to dump my policy in a time
of need. Thus, all of
those premiums were just money down the toilet. This
isn't an
irrational fear, I've heard of too many cases of this happening to
be
naive enough to assume that it couldn't happen to me.
Where does
this leave me? Financially better-off for starters. I've
saved tens of
thousands of dollars by not paying for heath
insurance; I've never spent more
on doctor visits in one year than
insurance would have cost.
However,
it also leaves me vulnerable: What happens if someone in
my family gets
seriously ill? After my assets are depleted and I have
declared bankruptcy, I
guess that I'll be eligible for Medicaid. Then
my bills will become
everybody's bills (via taxes). Of course, there
will be paperwork delays
during my financial-status transition
(conceivably, life-threatening
delays).
I don't like these options.
I don't know if the following
has already been suggested, if it has, it
ought to be
explored.
Current proposal: Forbid health insurance companies from
denying
coverage based on pre-existing conditions.
Problem: This is
insane from a business perspective; it is
equivalent to the government
forcing the insurance companies to
commit financial suicide.
The
current proposal sounds good from a simple-minded
compassionate viewpoint
because it seems to fix the moral
dilemma between profitability vs. human
life; However, if insurance
companies are FORCED to take on bad risks with
guaranteed huge
expenses to follow, the companies will be FORCED to raise
rates
for all.
New Proposal:
(1) Define the federal governments
role in health care as being a
safety net for major claims only. By "major
claims" I mean illnesses
that incur expenses greater than some arbitrary
fraction of the
family's taxable income. There is already a provision for
making
medical expenses deductible after they exceed 7.5% of your
adjusted
gross income, my proposal is to augment this by defining
a higher threshold
above which the government covers all of the
expenses on a yearly
basis.
I'm not sure what percentage of taxpayers qualify for the
current
deduction, but I have never qualified for it, so I'm assuming
that
most don't. So, if the government used the aforementioned
higher
threshold to determine eligibility for federal assistance,
the
government's liability would consist of handling only the big
cases
that are forcing individuals into bankruptcy and insurance
companies
to cancel policies and raise rates.
(2) Also allow insurance companies to
hand off expensive cases to
this federal safety net if their cost exceeds
some arbitrary multiple of
the premiums. This will take the most expensive
cases off the
books of private sector insurance companies and allow them
to
better predict what their total worst-case liabilities are. If the
private
sector companies are allowed to do this, they must also
reduce
their premiums to reflect the removal of their most
expensive
liabilities. Enforce this by establishing a federal minimum
"loss
ratio" (percentage of premiums being used to cover clams);
some
states already have this, it prevents price gouging.
This lets
the private sector companies focus on non-life-or-death
issues like $25
co-pays and discounted prescriptions, etc. If the
federal safety net for
major cases is also available to private
insurers, they will still able to
maintain their profit margins by selling
policies for so-called "Cadillac"
options.
The goals:
* Don't drive private sector insurance
companies into bankruptcy by
forcing them to take on unprofitable
policies.
* Don't force private sector companies to raise rates for
everyone
because of forced acceptance.
* Force private sector
insurance to lower rates as a result of
diminished liability and minimum loss
ratios.
* Minimize federal involvement to major cases only. Once the
federal
government has assumed handling of major cases only, the
actuarial
domain for federal liability has been more narrowly defined
(i.e. they are
only liable for expenses above the threshold). The
pooled risk for the
"catastrophic cases only" will be more evenly
distributed and the tax impact
can be minimized.
* Allow people who don't want insurance to continue
paying cash for
mundane services, but make sure that they are at least paying
into
the major-illness distributed-risk pool.
If this is done
correctly:
* People who already have insurance should come close
to
breaking-even because the drop in private insurance premiums
should
offset the federal tax increases.
* Uninsured middle class working
taxpayers (who, like me, currently
don't pay health insurance premiums) will
be out of pocket a bit
more at tax time than in previous years because we'll
finally be
making our fair share of contributions into the
major-illness
distributed-risk pool.
* The elderly and indigent will
see no change because the taxpayers
are already financing their health care
costs.
The only financial losers in this scenario: People like me; but
that's
OK with me as long as the specter of going bankrupt due to
major
illness is removed.
If this sounds like a good idea to you, feel
free to share it.
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