Make Insurance Cheap Again

The Wall Street Journal has never been a big fan of the Patient Protection and Affordable Care Act (Obamacare). The paper has added gravitas to even the flimsiest of the alternate plans offered by the Republicans over the last few years. But, the WSJ has also featured some of the deepest thinkers of the Conservative Movement. One of these brighter stars is John C. Goodman, president of the Goodman Institute for Public Policy Research.

The Goodman Institute has been the intellectual force behind such policies as the recent Paul Ryan “Better Way” tax reform and other tax and health initiatives promoted by Republicans over the last twenty plus years. I confess that I have not been a big fan of their work. A recent Opinion/Commentary piece from Mr. Goodman appearing in the WSJ did nothing to change my opinion. Here is the link to the article.

My initial impression was that Mr. Goodman had strung together an interesting collection of non-sequiturs. Texas, the state that had the nation’s highest rate of uninsured, 27%, prior to the inception of Obamacare, appears to be a hot mess where the insurers and providers are still trying to get onto the same page. We in Ohio are happy to not be Texans! In Greater Cleveland we have watched the Cleveland Clinic partner with New York based Oscar to form a new partnership and Medical Mutual of Ohio cement a new relationship with University Hospitals. It is a process and it is not without flaws. 2019 could be better.

I would have dismissed Mr. Goodman’s musing had it not been for this:

What’s driving this race to the bottom? The problem starts with the community rating system, which requires insurers to charge the same premiums to all comers regardless of health status.

Do you want cheap insurance? Do you want great coverage with access to the world’s best doctors? According to Mr. Goodman and the politicians promoting his agenda, all we need to do is to return to medical underwriting. We can save you a lot of money, if we are allowed to price our policies based on your health. Of course, that only works, you only save money, IF YOU ARE HEALTHY AND STAY HEALTHY. If you aren’t? Oh well.

This blog started discussed the pitfalls of Community Rating in October 2009. We, the insurance industry, can base our rates on you and the risk you present. We have the statistics. Age, gender, location, health status, hobbies, occupation, and even driving habits can impact your likelihood of having a claim. One hundred years ago the insurance companies even charged premiums based on race. The numbers, the math, determines the premium. If we, as a society, choose to ignore or minimize these factors, the premiums are deemed to be fairer, especially if you are getting a lower rate. The PPACA has insurers ignoring gender, health conditions, occupations, and hobbies. The premium ratio between a 62 year old and a 22 year old was about 5 to 1 in 2013. The PPACA limits that ration to 3 to 1. All of these changes impact premiums. Some people pay more. Some people pay less. And some now qualify for coverage when they would have been turned down a few short years ago.

Do we want to return to medical underwriting?

The Kaiser Family Foundation estimated that 52 million Americans would be declined for insurance if forced to submit to medical underwriting. G-d knows I would be declined if my insurer was given a chance to ask me health questions. And I remember what it was like to tell my clients that they were not eligible for regular health insurance coverage. Is that the solution?

Maybe it is just different in Ohio. Maybe the concept of 27% uninsured seems like a bigger deal here, a place where a Republican governor fought to expand Medicaid to provide coverage for the working poor. Taking insurance away from other people doesn’t make your insurance cheaper, not in the long run, not if we are going to treat the sick and injured. Insurance is simply the way most Americans access and pay for care. There can’t be cheap insurance paying expensive health care. The two go hand in hand. Managing health care costs, whether that is through provider networks or other limitations, will have to be part of the discussion.

Make Insurance Cheap Again? It was never cheap for some of us.

DAVE

www.cunixinsurance.com

Picture – David L Cunix - Turning Back The Clock