THE REALITY OF RISK POOLS AND PREMIUMS
Let’s begin with a multiple choice question: If insurance companies are forced to offer health insurance to people with pre-existing conditions, which of the following must occur?
1. People with pre-existing conditions pay higher premiums due to increased risk to the insurers.
2. People without pre-existing conditions pay higher premiums – subsidizing those with pre-existing conditions.
3. The government (taxpayers) subsidizes the premiums of people with pre-existing conditions.
4. Insurance companies bear the cost of the added risk.
Not sure? Let’s try the process of elimination:
Should an accident-prone driver pay the same premiums as does an accident-free driver – especially if being able to do so causes the safe driver’s premiums to increase? (Assume you’re the safe driver.) Should the taxpayers subsidize his accidents? If you were the insurance company, should you be forced to absorb losses because you’re forced to offer the same coverage for the same cost to accident-prone drivers?
Or, this: Should you pay higher premiums for a life insurance policy – because, built into your premium is the cost of your insurer selling life insurance to someone who is terminally ill? Should American taxpayers subsidize the life insurance premiums of terminally ill people? Were this to be a reality – every terminally ill person in the country would buy life insurance before they die, would they not?
If your answer is “Yes!” to these questions, I can’t help you – but thanks for stopping by. If, on the other hand, your answer is “Hell no!” then you obviously not only understand the concept of risk pools – you also understand that wealth redistribution is the cornerstone objective of ObamaCare – whether the ever-disingenuous O will admit it or not. (He won’t.)
Still not convinced? Let’s look at the first example above – at a personalized level:
Assume, if you will, that you and your (assumed) spouse have two model teenagers – with impeccable driving records. Also assume that the couple who lives next door has two teenagers as well – the difference being, these hooligans not only get speeding tickets on a regular basis, they throw in an accident every six months or so just to keep things interesting. As luck would have it, you are both insured by the same auto insurance company.
One day, you get a letter from the insurer that goes something like this: “As a result of the lousy driving record of your neighbors’ children, we regret to inform you that we must increase your premiums.” Would you be okay with that? I mean, c’mon – “We’re all in this together!” Besides, it’s only “fair.” Furthermore, if you refuse to pay the increased premiums – or if you resent having to pay for your neighbors’ risky drivers – you’re being selfish. You’re not willing to “give back.” Hell – you’re practically un-American.
The reality of insurance coverage of any kind is risk management – not only by the insurance company, but by policyholders as well. While insurers manage risk in part by creating multiple risk pools – grouping together people with similar risk exposure and charging premiums accordingly (or not offering coverage at all), policyholders have the ability to manage risk as well: people who don’t speed or drive recklessly, those who exercise and eat properly, homeowners who install burglar or fire alarms and take other steps to reduce potential liability. Should these responsible people be penalized – because others are not? Should they be forced to pay higher premiums because their neighbors don’t make the effort to reduce their risks?
If you’re among the holdouts who are still unconvinced by my argument (logic) and are thinking, “But Rat – what about the people with pre-existing conditions that aren’t they’re fault? You know – congenital defects, health issues caused by accidents or other sorts of unavoidable maladies?” Tough question.
While we must – as is the case with entitlement programs – take care of those who cannot take care of themselves, we should not be forced to subsidize those who refuse to take care of themselves. This, of course, is a slippery slope. In many instances, how can it be determined which pre-existing conditions are brought about by lifestyle choices vs. being “unavoidable”? Government review boards? Doctor certifications? No easy answers, but – what a bureaucratic mess.
My suspicion is that a majority of Americans would be willing to pay a bit more – though taxes – to subsidize coverage for those who could not and cannot avoid “pre-existing conditions.” But – for those who self-inflict those pre-existing conditions? Not so much.
Spoken like a true heartless conservative, right? Too bad – change your lifestyle – or check out the high-risk pools.