The Nature Of Health Insurance

The nature of health insurance is to protect us against the risk of requiring medical care.  If we get hurt or sick, we have the mechanism of insurance to protect us.  Depending on our individual circumstances, we purchase different kinds of policies.  The very young may choose a simple plan that protects against only the most extreme costs.  Those of us who are more likely to require care may purchase a plan that accommodates those contingencies.

But it’s all about managing risk.

After the supreme court upheld Obamacare, we have moved from insurance protecting us from risk to insurance offering prepaid medical care.  When an “insurance plan” covers office visits, routine tests and other incidentals, we are nt paying someone to take the risk from us, we’re paying someone to give us medical care.

And what happens when that happens?

Raleigh, N.C. — The University of North Carolina system requires all students to have health insurance coverage, but the cost of a plan the system offers has more than doubled in two years.

The insurance requirement started in 2010, and about one-third of students on the system’s 16 university campuses buy their policy through UNC’s provider, New York-based insurer Chartis. The rest of the students have other coverage, usually through their parents.

The average cost of the Chartis policy started at $695 a year, but it rose to $847 last year. Tuition bills that are now arriving in student mailboxes for the 2012-13 school year include a $1,418 health insurance premium.

Why the rise in prices?  Greedy insurance companies?

Bruce Mallette, the UNC system’s vice president for academic and student affairs, blamed the increase on a high number of claims by students on the policy.

“It was a very affordable plan,” Mallette said. “If you look nationally, the pricing we had in the first two years was very, very competitive, and students utilized it and utilized it and utilized it.”

Right.

People demand value.  When they’re forced to buy something they don’t want, they’re gonna use it.  And by using it they raise the price.  The next guy, not wanting to be left behind, uses HIS policy.  It’s a spiral.

Consider a table of 10 people having dinner.  They agree to just “split the bill 10 ways.”  The first guy orders a BLT.  The second a steak, the third wants a bowl of chili but senses that he’s paying for the prior two guy’s high priced meal – so he too orders steak.  And so on.

Prices are going up folks, not down.

 

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