Health insurance - will this work?

[huusom]

I'm currently with a small company in Socal (about 50 employees). We're paying about $300 a month on a typical HMO plan with Healthnet for myself and DW.

Here is the question:

1. Why can the goverment establish some kind of agency to let people like us purchase similar plans. Especially, I'm sure, with a lot of people who will sign up thus reducing the monthly premium even more?

2. If the goverment does want to do this, then is it legally possible for us to form a non-profit organization just for sole purpose of providing health insurance coverage for its members at a group rate? We don't need a lot overhead to run this type of operation and monthly membership can be as little as $10 to cover the administrative expenses.

 

[Rustward]

It would be nice, wouldn't it?

I'll take a shot at the answer. Groups that exist for the purpose purchasing health insurance sometimes attract only people that need health insurance -- the unhealthy. For such an arangement to work, the premiums have to be really high -- probably so high that there is no advantage to having such a group.

The industry calls this Adverse Selection.

I'm not a lawyer and don't know if it is legal, but legal or not, I doubt that many insurance companies would be willing to participate.

 

[A854321]

1. Health insurance companies are regulated, and need a special license. I think there are covenants and restrictions about ownership. I also think you need physicians on your board.

2. "We don't need a lot of overhead to run this type of organization" is hopelessly naieve. Administrative expenses are a huge expense. Computer billing systems, coding specialists, claims managers. It is a huge industry with complex regulations. You also would have no clout with providers unless you can offer a decent contract.

3. If you are only paying $300 a month for two people, how much can you expect to save? That is a low premium for anyone over the age of about 28.

 

[Martha]

I am speaking from memory here and so my information may not be accurate and I know it is not current. IIRC, a few years ago there was a move by the feds to allow employers or individuals to get together and form health insurance purchasing groups. I do know that several states experimented with small employer purchasing groups. My recollection was that it has not been successful in reducing rates for group members.