Federal health care

09/10/09 by admin.

There are certainly problems with the health care system in the U.S. The problem with the current government position is that government has been the problem all along and now they want to cause more problems. Most Americans like even the least favorite insurance companies enough to stick with them. This is no surprise because often their employer is paying the deductible or a portion thereof. Also, the health insurance industry is highly competitive and hence, even the lowliest must provide decent coverage to remain viable. What people don’t like is the cost. High premiums or high out of pocket expenses and deductibles are where consumers feel the negative side. As we delve into why costs are so high, try to remember the part of the Constitution where the Federal Government has responsibility for individual’s health insurance.

Employer provided health insurance is a major problem today. Before jumping  to the idea that everyone would take it in the shorts, consider that when an employer decides to hire someone, the overall compensation for that person must be available. That necessarily includes insurance benefits. In a free market,those funds would still be provided to the employee, who then uses those dollars to purchase private health insurance. This would make insurance companies compete on the individual level rather than for large companies. This brings the question; Why do companies provide health insurance anyways? Government is the answer to this problem, although not directly (at first). Wage and price controls instituted by FDR were the beginning. By limiting the top wage allowed to be paid by private companies during times of war (WWII and Korea), companies could not attract the best people with wages alone. So they found another way to compensate those they wanted in a competitive market; benefits including health insurance. Prior to that, people purchased insurance individually. Once the ball was rolling, Nixon not only re-instituted wage and price controls but went even farther toward institutionalizing employer based coverage. The Health Maintenance Organization Act of 1973 mandated offering insurance by companies with 25 or more employees. While that act expired in 1995, the seed had been sown. The populace had become accustomed and conditioned to expect insurance benefits from employers. Now insurance companies are going for the big fish and competing for group policies in companies. So the group policies cost less due to built in risk pools? No. Once again, the government mandates what minimum coverage a company provided policy must contain if they offer insurance. So if a company has employees that are almost all men and older women, (construction, auto repair shop, etc.) they still may have to pay for maternity and well-baby coverage. If your small painting company wants to provide insurance to the all male crew, they still pay for mammographies. The all female companies still pay premiums for prostate exams. Health insurance is not a commodity that should be intimately related to employment any more than car insurance or homeowner’s insurance. Those last two are legally required and contractually required respectively. Health insurance is not either of those yet, although unless a person has a lot of money, it is a good idea. If your house catches fire, you generally want to have insurance much in the same way you want health insurance if a serious accident or health issue arises. If you change jobs, you don’t normally change your car insurance. Why would we want to have to change health insurance. Eliminating this relationship would provide a very good start in getting the government out of the way and improving the quality of the insurance available to individuals by allowing the tailoring of policies to suit them. Resolving the risk pool situation is another matter.

To be continued…

AX

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