HOW WILL HEALTH CARE AFFECT YOU?

How will Health Care reform affect you? Unfortunately that is impossible to answer primarily because we don’t know what are the specifics of any Health Care measures. I will try to mention the results of some of the proposals.

Guaranteed Issue Policies with no pre-existing condition clauses. – This is the reform that my clients have needed for a long time. I have for a long time believed that this is possible. It certainly could be used as a reason to raise premiums, as the claims for people with current health condition will be larger than the claims of the healthy. Two ingredients are necessary to make this work without a great increase in premiums. Number one; everyone needs to be required to have Health Insurance just as they are required to have Car Insurance. From an actuarial point of view, all people need to participate to generate the lowest possible premium.

Secondly, we need to allow Insurance Companies to offer “Minimum Coverage” policies for those people who need to have low cost options. People want to be covered for basic medical care but they should have the option to reduce some of the other coverages such as Policy Maximum Coverage, mental health, durable medical equipment, and some of the other less frequently used coverages. Those that want those coverages would pay more to include them.

Limiting out of pocket maximums for insureds. This proposal would by definition raise the cost of coverage.

Taxing Insurance Companies for rich benefit plans. This would have the effect of lowering benefits to the insureds.

Removing subsidies for Medicare Advantage plans. This will be cheaper for the government and taxpayers. It will provide weaker benefits, higher co-pays and higher premiums to Medicare beneficiaries.

Will reform lower my premiums? Throughout all of this discussion people are really trying to figure out this one question. We are being told the answer is yes. Common sense says that no matter who insures you, the Government or Insurance Companies there are only certain ways to lower cost.

  1. Increase paying participants
  2. Limiting payments for treatment. This can be done through reducing unnecessary testing and administrative inefficiencies. It also can be done by limiting payable benefits and rationing, which can be done by either the Government or Private Insurance, if allowed.
  3. Cost shifting doesn’t really lower cost it just shifts the burden from one group of people to another. If you are on the saving side of this measure it feels good. If you end up paying more it will be less desirable for you.

In answering the question about cost, please remember the pizza principle.

“IF YOU WANT TO LOWER THE COST OF PIZZA TAKE INGREDIENTS OFF THE TOP OF THE PIZZA, USE CHEAPER INGREDIENTS, OR STOP PAYING SOMEBODY ELSE AND DO IT YOURSELF.”

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