A New Idea To The Health Insurance Crisis In America

A New Idea To The Health Insurance Crisis In America

The lack of health insurance coverage for over 41 million Americans is one of the nation’s most pressing problems. While most elderly Americans have coverage through Medicare and nearly two-thirds of non-elderly Americans receive health coverage through employer-sponsored plans, many workers and their families remain uninsured because their employer does not offer coverage or they cannot afford the cost of coverage. Medicaid and the State Children’s Health Insurance Program (SCHIP) or HAWK-I here in Iowa help fill in the gaps for low-income children and some of their parents, but the reach of these programs is limited. As a result, millions of Americans without health insurance face adverse health consequences because of delayed or foregone health care, and extending coverage to the uninsured has become a national priority. – (This information was obtained from kff.org.)

The number of people who are forced to go without health insurance is nothing less than a crisis in this country today. Over the last few decades, we’ve fallen into a vicious cycle in which healthcare premiums have become prohibitively expensive for even middle-class families. This in turn results in the inability of the uninsured to cover medical costs, which oftentimes results in the financial ruin of the family, and in turn results in the continuing loss of income by the medical community, which in turn drives the cost of medical expenses higher, finally cycling back to the insurance company, which then must drive the premiums of health insurance higher to help cover the rising cost of health care.

Many proposals have been floated by politicians on both sides of the political aisle, ranging from socializing health care similar to the Canadian system to endorsing health savings accounts and cracking down on frivolous lawsuits against the medical community. Many of these proposals have good points, but along with whatever good points they bring, they also bring major downfalls. For instance, a socialized national healthcare program would eliminate the need for health insurance altogether, and the cost would be taken on by taxes, which in theory doesn’t seem like a bad idea. However, the disadvantages of this system include a shortage of new doctors willing to enter the field due to the inevitable decline in income, while demand would increase due to the lack of personal responsibility. In short, if people didn’t have to worry about deductibles or copays that would normally keep them from seeking medical treatment for minor things, they would simply go to the doctor every time they had an ache or pain. So now we have waiting for lines for people with major health problems since everyone is scheduling an appointment, while at the same time we are losing doctors due to a lack of incentives.

The Republican Bush administration’s current battle cry is to promote HSAs (Health Savings Accounts), which reduce premiums by combining a less expensive high-deductible health insurance plan with a tax-deferred savings account that earns a small interest on the side and to which you contribute monthly along with your premiums. Any money withdrawn from the savings account for qualified medical expenses is taken “tax-free,” and unlike a flex spending account like many people are familiar with in employer-based plans, you don’t lose the money you put into the account that you don’t use. Basically, if you never used any of that money in the savings account, you could withdraw it or roll it over into another vehicle once you turn 62 1/2 and are no longer subject to a penalty. This is a viable option for some people; however, for many, the premiums for these plans are still too expensive, and the problem remains that if you need major treatment in the first few years of the policy, you will not have a large enough amount in your savings account to help cover the gaps, leaving that person responsible for a large portion of the cost out of pocket.

Now we come to what I believe is one of the most serious issues from the perspective of a health insurance agent: the inability of people with pre-existing health conditions to obtain coverage. From the number of people that contact my office searching for health insurance coverage, I would have to say that about half of them have a health condition that will either result in an insurance company declining that person’s application or result in an amendment rider that basically excludes coverage for any claims related to that condition. An example of a condition that I run across constantly is hypertension or high blood pressure. If other factors are present, this condition may result in a company rejecting an application entirely, but it is more likely to result in an amendment exclusion rider. You may think that this isn’t that big of a deal; after all, blood pressure medicine is about the only thing they would have to pay for out of pocket. But what many people don’t realize is that this rider will exclude ANYTHING that could be considered part of this condition, including heart attacks, strokes, and aneurysms, which would all result in a huge out-of-pocket claim. Consider the fact that my father had a double bypass surgery recently that ended up with a final bill of around $150,000. This whole amount would have had to come out of pocket had he had a hypertension rider on his health insurance policy, not to mention the added cost of taking 2 months off of work. On a modest income of $40,000 per year, this would have ruined him financially.

So how do we fix this problem? Obviously, the proposals thus far have been flawed from the beginning, and even if one of these plans gained support from the American people, chances are it would never be passed into law simply due to political infighting. One side wants to keep health care privatized, while the other wants to socialize it, which, as we discussed before, has upsides and downsides. It seems that we are doomed on this issue, and there are no real ideas or light at the end of the tunnel, right? Maybe not. Let me tell you about a client I had in my office a couple of years ago.

A young woman came in wanting to compare health insurance plans to see if there were any options for her and her family. She had several children, was on Title 19 Medicaid, and had been going to college paid for by the state. She had recently graduated from college and had gotten a job with the local school system; however, for whatever reason, she was not eligible for health insurance benefits. Obviously, she still couldn’t afford five or six hundred dollars per month for a plan, so she went back to the aid office and explained her situation. They eventually collaborated with us to find an acceptable private health insurance plan and reimbursed her for a portion of the cost, which I had no idea was possible!

This got me thinking: consider how many more people would be able to obtain coverage if they could be reimbursed by the government for a percentage of the premium according to their income. For example, take a young married couple in their 20s with one child. Let’s say that their family income is $25,000 and that the average premium for a $500 deductible health insurance plan for them is $450. Just as an example, let’s say that the government determined that a three-person family with an annual income of $25,000 is reimbursed 50% of their premium, bringing the actual cost to the family to $225 per month. This is now an affordable enough premium for the family to consider.

With this merging of private insurance with government assistance, we get the best of both worlds. Of course, the next question goes to cost: how much more would this cost the American taxpayer, and how much would this raise taxes? I don’t think that it would cost the taxpayers much more, and here’s why I think that: First and foremost, we would significantly reduce the number of uninsured people who are unable to pay for the medical care they receive, lowering the total cost of health care. Secondly, the number of people that are forced into bankruptcy and driven to Medicaid Title 19 assistance due to medical bills stemming from catastrophic medical conditions for which they don’t have health insurance coverage would be significantly reduced. This is important to keep in mind considering that once someone is on Medicaid, they are receiving health care that is basically 100% covered by the government, so there is no more incentive to not seek treatment for minor or non-existing conditions. On the flip side, many conditions that would have not been caught before they became severe because a person didn’t seek treatment due to not having insurance coverage would now be caught before they turned into a catastrophic claim. Finally, if the government allocated a certain amount of money to help cover claims by people that have pre-existing conditions, the private insurance companies could do away with exclusions and declines due to already existing health problems. This is already done in some states, such as the HIPIOWA Iowa Comprehensive Plans, which insures Iowa residents that cannot obtain coverage elsewhere.

You may be sitting there thinking that this is all just wishful thinking and that these ideas could never be implemented, but all of these ideas are already being implemented. The problem is that only some states do some programs, and not even most health insurance agents know that some low-income families can get reimbursed for health insurance premiums. If these programs were all standardized and put into effect on a national, well-publicized level, I believe it would put a huge dent in the uninsured population in this country. Now, I don’t pretend to know what the reimbursement levels should be for what income levels, but I do know that anything is better than nothing, and in my opinion, this is the best middle ground we could find. The Democrats would be happy with the socialized aspect of the reimbursement, and the Republicans should be happy that health care remains privatized, giving this solution a better chance at bipartisan backing.

I have faxed this idea to several senators and congressmen but always received the same type of standard response about how they are concerned with health care and that they are working hard to find a solution, knowing full well that no one really even read my letters. The only way to get these ideas out to the public is for you that read this to pass it on to others by word of mouth, by email, or by linking your websites to this webpage. If enough buzz is created, then these ideas would get the consideration that they deserve, and if enough people like you and me demanded that a solution be found, then perhaps enough stress can be placed on the politicians to get something done. The number of uninsured Americans is only going to go up; the cost of health care is only going to go up; and the cost of health insurance premiums is only going to go up if something isn’t done now! Until then, the only thing I can do as a health insurance agent is compared all of your options and present you with the lesser of all evils, which in too many cases is going without coverage, the greatest evil.

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