President Obama’s health care reform, the Affordable Care Act (Obama Care) is needed to avoid an implosion of the healthcare system but it can be avoided with one simple change. How? If you don’t buy health insurance, you don’t get medical treatment.
It should be noted that there is nothing new about requiring everyone to purchase insurance. If you want to drive a car, you have to buy car insurance. In fact, there is nothing new about requiring everyone to purchase medical insurance. It’s being done right now in every state which has No-Fault insurance. In a No-Fault state, every car owner is required to buy No-Fault medical insurance. It should also be noted that Obama Care does not require everyone to buy insurance. It does not require poor people to buy insurance and only requires people to buy insurance if they have sufficient funds to do so.
What’s wrong with not requiring everyone to buy health insurance (the GOP position)? The answer is very simple and is the reason why the healthcare system will soon fail, if nothing is done to make sure that everyone pays into the healthcare system.
First, it is necessary to understand that any type of insurance only works by spreading the cost of claims among a group which includes contributors who do not make claims. If all contributors of a group make equal claims, the cost of insurance will exceed the cost of claims. Insurance is sold by a profit-making company which has to cover the cost of claims; cost of administering claims; cost of overhead; commissions; salaries; pensions; and profit.
Second, it is necessary to understand the truth about the reasons for the increased cost of health coverage. Republican politicians like to blame the cost on medical malpractice, defensive medicine because of medical malpractice, and the cost of new and advanced medical equipment and testing. Doctors like to blame the cost on medical malpractice. The truth is that the cost of medical malpractice is barely measurable. While defensive medicine practices might be slightly measurable, it is not significant and would not go away if medical malpractice was ended. The real cost comes from three types of people: 1) Sick people who do not pay for medical insurance and receive medical treatment in hospital emergency rooms; 2) Healthy people who do not pay for medical insurance because they are healthy and would rather buy other things but will eventually one day end up receiving free medical treatment in the hospital emergency room (I know lots of these people); and 3) People from either of these groups who just cannot afford health insurance because they are not part of a group at work and individual coverage has already become unaffordable.
The Problem
As healthy people drop their health coverage because it’s too expensive, the cost of claims are spread among a smaller group of people who are still paying for the insurance because they are making claims. Eventually, premiums will equal the cost of medical care plus the cost of administering the health insurance and the profit earned by the health insurance companies.
As the cost of medical insurance increases as healthy people drop out, even people making claims will start dropping out as the cost of medical insurance becomes more than their claims. I have seen this happen with United States Life Insurance Company when it wanted to get out of the group health insurance business. US Life started increasing premiums and companies started dropping the policies. My father’s company stuck with it for a long time because I have a sister with brain damage. Eventually, there were almost no groups left except those like ours and the premiums grew to more than the cost of medical care for my sister. My father dropped the insurance policy and Medicaid, funded by tax dollars, now takes care of my sister.
As I wrote in my previous article, my health insurance premium (single/individual non-group) was approximately $225 in 1998. By May 2001, my monthly health insurance premium with Empire Blue Cross Blue Shield was $337.65 per month. By April 2008, my monthly premium with Empire Blue Cross Blue Shield was $861.99 and in April 2009, my health insurance premium was increased by $215.79 per month to a total of $1,077.78 per month. The premium for 2012 is $1,520.45!
That’s a 575.55% increase in only 14 years. At that rate, the premium in 2026 will be $10,271.39 per month! The even bigger problem is that the increase accelerates as people drop out because they can no longer afford the premium or it no longer makes financial sense to pay it. At some point, almost no one can afford the health insurance premiums or if they can, it will cost more than directly paying for medical care so no one will have medical insurance.
The argument against the Individual Mandate, the most controversial part of Obama Care, is that the federal government should not be able to require individuals to purchase something they may not want to purchase. One analogy was made with exercise. Since exercise is known to be good for health, should the government be allowed to require everyone to exercise? That justifies common sense and is now correctly being dealt with by health insurance companies offering rebates to people who prove they went to the gym. As previously mentioned, governments require people to purchase insurance if they want to own or drive a car. There should be no right to free health care.
The problem is that the United States is a great country which provides free medical coverage for people who do not have health insurance. If you do not have health insurance, you may not be able to see a private doctor but you can be treated by going to the emergency room at your local hospital. It has been reported that the cost of treating people without health insurance is currently adding $1,000 per year to the health insurance premium of people who are paying for health insurance. This amount will continue to increase as the cost of health insurance increases because people are no longer paying for health insurance.
If someone chooses not to purchase medical insurance, why should that person be entitled to free health coverage by going to the hospital emergency room for treatment? Why shouldn’t people who choose not to purchase medical insurance be required to pay the $1,000 per year cost to everyone else?
I personally know a great many people, both friends and clients who can afford health insurance but choose not to pay for it. In fact, I know people living in expensive houses and driving expensive cars who do not have health insurance.
The implosion effect is snowballing rapidly. In the 1980s, I was licensed to sell health insurance and when I saw this occur with United States Life Insurance, I predicted that the entire health insurance system would fail within 20 years. I was way off with my prediction. It may just take another 20 years but it will happen sometime.
How can the health care system be saved if not everyone is required to pay for health insurance? The answer is simple. Do not require hospitals to treat people for free if they are not poor and require hospitals to maintain inexpensive clinics, with a lesser degree of care, for poor people. Just like driving a car, if you want to receive the best health care and you file a tax return, you should have to buy health insurance.
The Supreme Court should either allow President Obama’s health care reform (Obama Care) to stand or hospitals should not be required to treat people for free in their emergency rooms, forcing everyone else to pay for it. The law will lower health insurance premiums for every individual and business who currently pays for health insurance.
A little about me: I am a registered Republican and a personal injury lawyer. I do not take medical malpractice cases and really couldn’t care if laws are passed to place caps on medical malpractice or even eliminate medical malpractice because I do not earn a living from that. However, to do so would be a travesty of justice for people hurt by medical malpractice; it would result in a lower quality of medical care; and wouldn’t save any money because someone has to pay for the cost. My sister has brain damage and received only a small amount of money from a medical malpractice insurance policy which was insufficient to pay for her care. Consequently, taxpayers are now paying for her care. Philip L. Franckel, Esq.
