3 Yrs to Go said:
Well, I guess this is what I see a lot in my business, because my state is not a guaranteed issue state, and I deal mostly in the small group market vs. large group market where coverage is guaranteed, and insurance carriers cannot turn the small groups down regardless of health. The small group market has gotten killed, pricewise, in our state, in part due to this phenomenon of healthy individuals and/or their dependents foregoing the group plans for cheaper, individual policies.
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3 Yrs to Go said:
Here in New Jersey, where they can't turn you down, I'm told comprehensive insurance for me and my wife (ages 35 and in good health) will run around $11K. Not exactly affordable when considering the median family income is somewhere around $42K before taxes.
This is a perfect example of why guaranteed-issue and community rating do not work. Even with a large population of people contributing to the pool, insurance carriers cannot accurately assess risk in a guaranteed market, so they just charge everyone, including the majority of people who are healthy, much higher rates, forcing even the healthy to abandon coverage and leave the risk pool.
3 Yrs to Go said:
Elsewhere, insurance is less expensive if you're healthy, but perhaps not available to everyone.
Well, this is true, but which is the worse of two evils? ... Having insurance be so expensive that almost noone can afford it, or having the ability to get insurance, albeit at different ratesfor the healthy vs. the unhealthy?
3 Yrs to Go said:
To the larger point, when companies discontinue health care coverage they discontinue it for the healthy and sick alike. The young and healthy are welcomed by the insurance industry as profitable customers. The rest, well, tough luck. Oh, and about those pre-existing conditions, tough luck. That is until we see you in the emergency room.
In a scenario like this, in the current system, many of the "uninsurables" will find other jobs to provide coverage for them (thus facilitating the self-perpetuating cycle of higher prices in the group market), some will enter high risk pools, and some will forego coverage or go into the medicare system. I don't know the best solution, but I like to theorize that consumer-driven health plans like HSAs and HRAs are a better way to reduce the inelastic demand and facilitate less inflation in the industry rather than universalizing care and making the quality of the system worse for everyone.
Martha said:
You want to attack root causes of high cost of healthcare. But too many things are off your table. Insurance companies and their huge profits for one. Ever think that maybe part of the root cause is that insurance companies do not compete on price but instead compete for the most healthy?
What you are saying is not logical to me. Naturally, insurance companies are competing for whatever business will bring them profits. And naturally, the competitors with the lowest premiums will win the business. If we were dealing with a situation where there were no competitors, then I could see how corporate greed could get out of hand and become a root cause of the problem, but that is not generally the case here in the U.S.A, unless you live in an area that forces competitors out of the market with guaranteed-issue and community rating.
Quite a few years ago, several insurance companies left the state of Colorado because loss ratios were 1.65 to 1. $1.65 was going out in claims for every $1.00 that came in. This happened right after Colorado decided to adopt modified community rating in the small group market and insurance carriers were required to charge flat age-banded rates, regardless of gender or health status of the group. About half of the big players left our market at that time. (Aetna and Pacificare were two of the biggest to leave). Because competition dropped so much, insurance rates went through the roof, inflating at 20-50% per year for several years. As soon as new legislation was passed, allowing carriers to rate small groups up to 25% lower for "healthier" groups and up to 10% higher for "sicker" groups, several new players came into the market, creating new competition which helped hold rates much steadier over the past few years.
I don't think corporate greed is a root cause of the healthcare problems in the U.S. I'm not saying it doesn't exist at all, but I lean more toward 3 yrs' opinions about inelastic demand and consumers having been sheltered from the cost of their care for so many years.
Martha said:
When I ran our business of 75 employees, we could get only one insurance company to bid on us for a number of years, only because our group tended to be a bit older. All in all we were very healthy.
Hmmm...it's hard for me to believe that the insurance carriers were declining to quote because of the overall age of the group, because I'm fairly certain it is against the law for insurance companies to decline to quote based on the age of the group. I have, however, seen large groups be declined due to being in a high-risk industry (such as nursing home care - yes, people who work in the nursing home business tend to be heavy utilizers of healthcare), and I've also seen large groups be declined because of the overall disclosed health status of the group.
It always kills me when people say, "I really am healthy...the insurance company just doesn't want my business because...." It's simply not true. Whether or not a group or individual is accepted for coverage depends purely on a logical, statistical analysis of the risk of taking them on as customers.