For the vast majority of US residents, they don't. According to the US census bureau, over 80% of the country is covered by group insurance or provided by government. Most of the rest are either insured already, covered but not signed up for Medicaid, or have chosen not to be insured.
For the 35 million or so who may face underwriting, it is a real issue.
So, why do insurance companies underwrite? Basically, to make sure that all policyholders have the same chance to have a claim. That's how the premium was set. They did not set it to accommodate some percent who already had an imminent loss. If they did, their premium would be higher than competitors, and they would not get the business anyway. So, they have to make sure that something that has already happened is not covered. No difference between health insurers and life insurers who are faced with someone with a terminal illness, or homeowner insurers who are faced with a house that is already burned down.
For 80% of the insureds, insurance companies do not underwrite, because the employers pay the total bill. In essence, the healthy subsidize the unhealthy within the employer group. The insurance company does not have to risk the loss. But for individual issues, there is no one to subsidize the unhealthy.
It is a reality that we should all recognize. Insurance companies have no choice about whether to underwrite. We don't like it; they don't like it. We need to work together to develop an approach that recognizes that and quit trying the simplistic dictate of telling them to stop.
Sunday, October 18, 2009
Tuesday, October 6, 2009
And the Winner Is: The US (Unless we Change)
The Nobel committee awarded the 2009 prize in Medicine to three scientists who did their research in the US. Two of the three are immigrants to the US.
The more Nobel prizes in Medicine that are awarded in a country, the more that country contributes to the health of the world. So, I looked into that. Is there any country that seems to be the home of more winners than others? Is there one that stands out as having an environment where research thrives and where important results are obtained more often than any other place? If so, we should do all we can to make sure that the essential characteristics of that place continue to nurture this vital research.
The Nobel prize in Medicine has been awarded since 1901. No one from the US won the award until 1933. Between 1933 and today someone from the US won or shared in the prize in 51 of the 74 years (not awarded in 1940 - 1942). Three out of every four years for almost 75 years, someone from the US has won the Nobel prize for Medicine!
Let's take a look at the time period from 1947 to today. Why 1947? That's when the UK adopted socialized medicine. From 1947 through 2009, the Nobel prize in Medicine was awarded to 145 individuals. Researchers from the US received 83 of the 145 awards. The next closest country received 18. Third place has 8. In the 63 years of awards since 1947, scientists from the US have received awards in 46 of those years.
The US is unique in the world. No other country is even close. Don't you think we should make sure that we know what the source of that magic is before we try to change radically the entire health care industry by introducing new bureaucracies, mandates, taxes, fees, and insurance rule changes?
The more Nobel prizes in Medicine that are awarded in a country, the more that country contributes to the health of the world. So, I looked into that. Is there any country that seems to be the home of more winners than others? Is there one that stands out as having an environment where research thrives and where important results are obtained more often than any other place? If so, we should do all we can to make sure that the essential characteristics of that place continue to nurture this vital research.
The Nobel prize in Medicine has been awarded since 1901. No one from the US won the award until 1933. Between 1933 and today someone from the US won or shared in the prize in 51 of the 74 years (not awarded in 1940 - 1942). Three out of every four years for almost 75 years, someone from the US has won the Nobel prize for Medicine!
Let's take a look at the time period from 1947 to today. Why 1947? That's when the UK adopted socialized medicine. From 1947 through 2009, the Nobel prize in Medicine was awarded to 145 individuals. Researchers from the US received 83 of the 145 awards. The next closest country received 18. Third place has 8. In the 63 years of awards since 1947, scientists from the US have received awards in 46 of those years.
The US is unique in the world. No other country is even close. Don't you think we should make sure that we know what the source of that magic is before we try to change radically the entire health care industry by introducing new bureaucracies, mandates, taxes, fees, and insurance rule changes?
Thursday, October 1, 2009
Health Insurance Across State Lines
Many advocate allowing consumers to purchase health insurance across state lines as an important way to reduce costs. It works, we are told, by avoiding some of the more onerous requirements of some states. For example, MN has 63 mandates for policies sold in its state. ID has 13. The policies sold in MN are more expensive than in ID. It is reasoned, if MN residents could buy ID policies, they would spend less.
First, policies sold in MN cost more than those sold in ID for lots of reasons, most of which would be calculated into an ID designed policy sold to MN residents.
Second, how is a policy sold by a company domiciled in ID and not subject to the mandates of MN going to be regulated? Mandates are not the only subject over which MN division of insurance protects the citizens of MN. They also approve premium rates and marketing material, arbitrate policyholder complaints, regulate required financial strength, and insure that policyholders won't be affected when companies approved in MN are unable to fulfill their commitments to customers. If the MN division of insurance has no say over the mandates, it has no say over the rest of its responsibilities to MN policyholders when they buy a policy from an out-of-state insurance company. And the ID division of insurance has no responsibility for policyholders who live in other states.
People who buy under these circumstances will not save as much as they think, and they will be without vital consumer protections.
These consumers would be protected if the federal government regulated insurance, but then all of us would have the same number of mandates, so there would be no reason for attempting regulatory arbitrage.
First, policies sold in MN cost more than those sold in ID for lots of reasons, most of which would be calculated into an ID designed policy sold to MN residents.
Second, how is a policy sold by a company domiciled in ID and not subject to the mandates of MN going to be regulated? Mandates are not the only subject over which MN division of insurance protects the citizens of MN. They also approve premium rates and marketing material, arbitrate policyholder complaints, regulate required financial strength, and insure that policyholders won't be affected when companies approved in MN are unable to fulfill their commitments to customers. If the MN division of insurance has no say over the mandates, it has no say over the rest of its responsibilities to MN policyholders when they buy a policy from an out-of-state insurance company. And the ID division of insurance has no responsibility for policyholders who live in other states.
People who buy under these circumstances will not save as much as they think, and they will be without vital consumer protections.
These consumers would be protected if the federal government regulated insurance, but then all of us would have the same number of mandates, so there would be no reason for attempting regulatory arbitrage.
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