Obama Care vs. Insurance secret: it's not insurance
Today I read an article about how the Supreme Court is ruling on portions of Obama care, as to whether or not they are constitutional. Specifically the portion about requireing/forcing all Americans to buy into the Health Care Coverage. If the SC rules that it is not legal then Obama Care may be dead, as 100% buy in is THE ONLY WAY this plan works.
First, I want to talk about the concept of insurance. ALMOST everyone knows and understands why we need and have insurance, whether it's for our car, home, life, or medical. So I want to revisit the concept of insurance and NOT get into the actual "business" of insurance. We all know that there are some questionable practices out there and that is really a completely different thing altogether.
So Insurance. We buy insurance to protect us when things go wrong. We have insurance to help with the burden of costs that would otherwise be an out of pocket expense. Companys that sell insurance are making a "bet" that you will pay premiums long enough that the law of averages will work out in their favor before they have to pay a claim.. Makes Sense...We buy insurance for when we need it but hope we never have to use it. At some point EVERYONE uses their insurance.
Insurance companies assess risk and set rates according to this risk...whether it's an individual or a group of people...think "work place" insurance vs. insurance bought by an individual. Because insurance is risk based rates go up and or down accordingly. Many MANY factors and variables are accounted for when setting rates and are revisited often.
There is much debate around stories where people say they have been denied coverage or that the insurance company won't pay for "x" service. It's real easy to say BOO and shame on the insurance companies and paint them in an evil light. Again I'm not saying that shitty things don't happen, but without getting into the inner workings of a company and their policies lets look at the concept.
Starting with Car Insurance...if you are a certain age, non smoker, good driving record, and have a statistically dependable car...you get a good rate. You may also get discounts for being a student, married, taking a drivers course etc...anything that helps to improve your driving.
If you are a bad driver have lots of tickets, poor vision, may be a certain age, drive a clunker...or a REALLY nice car, your rates will be higher. Makes Sense right?
The insurance company is insuring the vehicle AND the driver/operator and assessing all the risks involved.
The same goes for Medical/health insurance companies. Person A is a young healthy, non smoker, doesn't drink, do drugs, and there are no prior medical issues. He or she will get a great rate. Person B is middle aged, has cronic back pain, over weight, smokes, etc... he or she will be covered but most assuredly at a higher rate than person A. Then there is Person C. Person C has a terminal illness and has never had insurance. They go to buy insurance and are denied due to this pre-existing condition. IS THAT FAIR? I say yes...because that's how insurance works. Person C will require daily/weekly treatments for this disease that WILL eventually kill them. An insurance company may cover this person but at a much higher (probably unaffordable) rate, and still not pay for the treatments of the pre-existing condition.
It's fair because Person A and Person B have been paying premuims based on their level of risk. Persona A less then B of course...but none the less a fair rate for each. What right does Person C have to come in and expect to have their medical bills covered for a condition they had prior to getting coverage? It's a hard line to take I know, but That's the MEAT OF THE OBMABA CARE DEBATE.
Based on Concept of insurance ...you tell me....do you cover Person C knowing that the costs you put out is possibly 1000X greater than what this person will pay in, having never paid in before?
WHAT OBAMA CARE WANTS TO HAPPEN....is exactly what I just stated.
ANYONE must be accepted or given coverage regardless of pre-existing condition. This my friends STOPS BEING INSURANCE and becomes a "fund" or medical care account that people pay into so that their medical services are covered. It's VERY MUCH like social security. You pay in and at some point, you take out what you paid in, based on your need. Also Obama care says if you don't want to buy in you don't have to, BUT you have to pay a (relatively small penalty). BUT you can buy in at any time. (cancel at anytime as well)
If you still think that it's insurance...think of it like this....lets say Obama care was home owners insurance. If you own a house and some how it catches fire....if you don't have Obama Care you can call up and get it WHILE THE HOUSE IS ON FIRE....this would be a pre-existing condition; you pay a one month premium and get a new house. (is that fair?)
Since this is eBaums....I'll assume many of you don't actually have a house....so let say Car insurance...A driver has a car that requires daily tune ups just to run, and this insurance covers this type of "maintainence" (usualy regularly scheduled) they are aware of this problem and communicate it to the insurance company. The Company has to pay and cover the driver and vehicle...(is it fair?)
Whether you think it's fair or not it's not "insurance"
So OBAMACARE says everyone must be accepted and covered regardless of pre-existing conditions, and everyone must buy or pay into this program.
OK so Actuaries...If you are not familiar get familiar, as these are the EXTREMELY smart, highly specialized people that look at all of the data, risk factors, analysis, etc... and come up with rate structures for insurance programs. These people say that OBAMA CARE can work IF AND ONLY IF 100% PAY INTO THE PROGRAM....in full. If not OBAMA CARE WILL FAIL.
Basically...you have people who pay into the fund month after month. Rates are set based on the group that pays into the fund....the problem is that there may also be a group that isn't paying into the fund. These folks aren't included in the analysis and rates...(rate will likely be higher for those that pay to off set the unknown). At any time the non payers can sign up and have coverage for any type of illness imaginable. Then once they have been taken care (if not dead) they can drop the coverage until they need it again.
This will NOT WORK AND WILL BANKRUPT the companies administering the coverage. If a government plan is created it will bankrupt the government as well.
This is why the Supreme Court ruling is so important right now....
IF they say Obama can't force people to buy in then Obama Care Dies.
If they say the law is legal then Obama Care bankrupts the nation...first by forcing "insurance" companies to charge higher rates, which will make people not want to pay until needed, thus driving the companies out of business...then the goverment option that will be created will see the same fate...then we won't have any healthcare system at all.
Like it or not this is the way it is. UNLESS 100% of Americans buy into OBAMA CARE in full. This plan will not work. FRANKLY....it should have never been created in the first place.