The key to Health Insurance- Everyone must play/pay

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Health insurance will only work if everyone plays. I have written about this several times in the past couple years. We are in the midst of multiple challenges and controversies over insurance and health care access on both a local and national level. Mandating insurance does not seem to be a politically correct position for many stakeholders. States are struggling over whether to expand Medicaid insurance, and if so, whether to simply accept the present Medicaid status quo or try to be more creative and develop and implement a better mouse trap. Meanwhile, millions of Americans remain uninsured. Exchanges are slowly working and more people than ever before are purchasing health insurance. But there are still many Americans, who despite the penalties, are not purchasing health insurance. Especially the individuals who are young, healthy, and think that they would never need it.

The simple business truth is insurance of any kind, health or property/casualty can only be successful if all participants are involved. By its very nature, the unafflicted will always pay for the afflicted, whether it is health insurance, or any kind of insurance. If your house got damaged in a hurricane, it will be paid by funds contributed by those whose house did NOT get damaged. That’s just the nature of the business.

Many people if given a choice, would prefer not to obtain insurance and simply take their chances… but it is precisely those low risk individuals that need to purchase insurance in order to pay for those who need it. When I look back on my career, I dutifully paid for health insurance every year for the last 30 or so years. In 29 of those years, my medical expenses were trivial– routine physicals, etc.,. But for one of those years, I had to undergo emergency heart surgery. I am sure my total bill for that procedure was well into the five figure range. I tongue-in-cheek say that I wish I had only paid for insurance that one year and saved the rest of the premium expenses in the bank. Just think of how much money I would have accumulated in those thirty years. Problem is, one never knows what year they will need that insurance.

I concede that insurance is in the long term a losing business; when one purchases any kind of insurance, that person is essentially betting against him/herself. Simple economics proves that if the insurance company is making a profit… and it seems like they all do big time, then in theory, being self insured has to be cheaper. The only problem is, most of us could not afford the liability of a single major insurance claim, whether it is medical or property. Yes, we are betting against ourselves, but we have no reasonable financial alternative.

The concept of mandating insurance certainly has its precedence. All fifty states mandate a degree of automobile liability insurance in order to obtain a drivers license. This was done by all fifty states mandating insurance, not through a federal initiative. But bottom line, in order to legally drive in all fifty states, the driver must obtain liability insurance. Of course, there are those who do not do so, but they are disobeying the law and are subject to penalties. Health insurance should be no different.

Bottom line, all Americans need to have health insurance. In one way or another, that has to be mandated. The mandate has to be strong because the unafflicted will always try to opt out. The present disincentives in Obamacare are simply not prohibitive enough. Whether it is funded by the public sector (taxes) or the private sector (individual and employers), every American must have some form of insurance.

There needs to be a benefit structure that is reasonable and affordable, and there needs to be some form of catastrophic opt out for the individuals who are unfortunate enough to have a major claim. There should be incentives that motivate individuals to promote healthy lifestyles. After all, if a claim is made of any kind, SOMEONE has to pay for it !!

As we move into the 2016 elections, there should be the goal of ALL Americans having access to insurance, either privately or publicly. As an industry, this would do more to stabilize increasing health care costs than anything else we could do. We need to implement the following:

Health insurance for ALL Americans
Incentives to promote healthy lifestyles
Catastrophic coverage for those unfortunate enough to have a major medical claim.

Health insurance for all Americans should be not only politically correct, but should be simply considered the RIGHT thing to do.

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