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Friday, December 25, 2009

The Realities of Insuring The Uninsurable - THE HEALTH CARE CRISIS IN AMERICA!

The latest iteration of the Democrats health care bill includes wording that, in effect states: "Government approved health care insurers (and they must all be "government approved") must provide insurance to those with preexisting conditions at the same premium rate as other insureds of the same demographic."That sounds wonderful on the surface, especially if you are one of those people who are currently uninsurable... but, when you look at it strictly from a business standpoint it presents quite a challenge to the insurance industry. Take just a second here to think about how you would handle the challenge if you were the CEO of Blue Cross Blue Shield, or one of the other big health insurance companies, keeping in mind that all insurance companies set their premiums based upon risk. They have people called "actuaries" (recently there has been a trend toward calling actuaries "risk managers") whose only job is to evaluate the risk factor (risk of potential payout) involved in issuing policies based upon gender, age, physical condition, alcohol or drug usage, smoking/non-smoking, occupational hazards, etc.. (I'll wait while you do that...).

Do you have a plan of action now? Well, we're proceeding regardless.

Most insurance companies are publicly traded, which means they are listed on one of the several stock exchanges, and are available to individuals, consortiums or other corporations to purchase stock. The insurance companies, as do all publicly traded corporations, have an obligation to their stock holders to show quarterly profits and pay dividends to the investors based upon the amount of money they have invested. Adding known "risk" to the group comprising policy holders increases the possibility of payouts and reduces the probability of producing those dividends. So, what are your options as CEO?

1. Maintain the status quo and do nothing. Continue to issue policies at the same premium rates even though you have been forced to accept 500,000 clients previously designated as uninsurable due to preexisting conditions. In about a year you can either ask the government for a bailout... or file for bankruptcy. Bad choice.

2. Work the technicalities of the government mandate to your favor. Government approved providers "must provide insurance to those with preexisting conditions at the same premium rate as other insureds of the same demographic." Increase everybody's premium costs to that which the previously uninsurable policy holder would have had to to pay prior to the government edict. This would probably make you oodles of profits, your stock holders would love you, and you would be "last seen" as you were forced into the back seat of a late-model black Chevrolet Suburban, with dark desert tint on the windows. Sadly, this may well be your best option.

3. Close your doors now and avoid the inevitability of financial collapse. This is the option the government would prefer you take... thus leaving a clear field for them to take over the health care industry in its entirety, and making the American people just that much more dependent upon "Nanny Government". Making it financially unfeasible - by way of draconian laws and unnecessary taxes - for publicly owned corporations to do business in the health care industry is precisely what the socialist government of Barack Obama plans to do. McDonald's is always hiring (or was... back when we had a few extra dollars to spend on a quick lunch or dinner).
Right now the insurance companies are in a lose-lose situation. They have been demonized by the government and the left-wing media since Obama began his "Change we can believe in" campaign. It's really more like...
Understand that I am not a big fan of giant corporations. Especially those selling health insurance. They've been bending us over for the last 3 or 4 decades! Most of the costs are nothing more than greed. Whose greed? The patient. Want to know why medical care is so expensive? Besides the 16 million illegal aliens that are getting it at no cost to them, because the rest of us are paying for it. Because there are no caps on malpractice lawsuits, and many doctors are paying over $200,000 a year in malpractice insurance premiums! Naturally, those costs are passed along to their patients. People are greedy... and they will sue at the drop of a hat! That's one thing that keeps our medical insurance costs high. Then there's the $800,000+ profit in one MRI machine. More corporate greed! How about those $5 hospital aspirins and the $8 band aids? Where do these hospital administrators shop for their supplies ... Neimann-Marcus? But, again, hospitals have to offset the losses from non-payment for services - and greedy vendors - somehow, so they just pass it along to the beneficiary of those goods and services.

The bottom line is that it all comes back upon those of us who act responsibly by having health insurance, or paying for our medical treatment ourselves. The bill falls in our lap either directly (paying our own medical costs) or indirectly (purchasing insurance at high premium costs or paying higher taxes). Like all businesses, the costs of doing business are passed along to the consumer. The hidden costs involved in thefts and loss prevention personnel are passed along. Any business-related expense that can be passed along is passed along (and the rest are written off their income tax)!

Probably the best approach to resolving the health insurance crisis in our country is to not just allow interstate insurance sales, but to require it. This should result in lower overall costs for health insurance due to increased competition for the available health care $$$.

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