Tag Archives: Health Insurance

Insurance vs. Pre-Paid Medical Plan

I may have posted this before but it’s worth repeating.

Virtually no one in America has a true medical insurance program.  Rather, they have a pre-paid medical plan.  And the thing that we call Obamacare most certainly is NOT insurance.

Insurance is an asset that mitigates risk for a cost.  In the best scenario, you never file a claim and the only thing you are out is the premiums that you pay.

Contrast this to a pre-paid medical plan which allows an individual to contribute some set amount of money and then entitles that individual to a set group of medical procedures.  Things like primary care check-ups, eye exams and routine physicals.  Perhaps even a trip to the doc for jr. now and then.

Health Insurance Acting Like Insurance – Not A Prepaid Medical Plan

Health Care

It’s long been a plank that we need healthcare reform due in part to the number of medical related bankruptcies:

A study released Thursday [pdf] by the American Journal of Medicine finds a huge increase—nearly 20 percent—in medical bankruptcies between 2001 and 2007. Sixty-two percent of all bankruptcies filed in 2007 were tied to medical expenses. Three-quarters of those who filed for bankruptcies in 2007 had health insurance.

I’ve often wondered about those numbers but haven’t taken the time to dig further into ’em.  For example, if I break my leg, incur $7,000 in medical debt but can’t work, did I really declare for protection because of the 7k or because of all the other bills mounting up as a result of no income?

Be that as it may, I was reading an NPR article when I came across these numbers:

According to an analysis by eHealthInsurance.com of one large insurer’s 2012 claims, just under 11 percent of people with a $2,500 deductible met the deductible for that year. For those with a $5,000 deductible plan, the figure dropped to just under 4 percent. Only 3 percent of people with a $7,500 deductible had that much in claims, and at the $10,000 deductible level the figure was just over 2 percent.

Just 11% of people with a deductible of $2,500 hit that amount.  That means that the remaining 89% of the folks who had such a policy didn’t have bills more than $2,500.  At least qualified bills that high.

The story is the same for the plans that have $5,000, $7,500 and $10,000 caps.

In any event, I was struck by the fact that it seems deductibles are doing their jobs.  Individuals are covering themselves for what might be described as normal day to day bumps and bangs.  Only when significant illness or injury strikes does the plan step in.

Just like insurance should.

The Cost Of Health Insurance

I am reading the morning’s internet today.  As usual these days, I’ve come across a lot of health insurance stuff.  And it got me to thinking.  If we’re now going to allow individuals to wait until they get sick to purchase health insurance, and force companies to sell insurance to folks with pre-existing conditions AND make it illegal to adjust premiums based on an individual’s health risk, there is only one thing that can happen.

The price will go up.

So, I’m gonna try and track the cost.

Right now, the laziest and best historical example I have is from a September 2009 post where I was discussing the healthcare debate:

Ah, here’s one.  $5000 deductible, Office visits are free after the deductible.  0% coinsurance.  149 a month.  Oh yeah, and you can have an HSA.

Another:  $5000 deductible, $15 office visits and 0% coinsurance.  $229 a month.

One more:  $1250 deductible, office visits are not covered and the coinsurance is 20%.  $253 a month.

I was quoting from ehealthinsurance  The above example is for a 52 year  old man in Greensboro, NC who doesn’t smoke.

Let’s see what that costs today.

$5,000 deductible, 0% coinsurance, Office visits are free after deductible:

$132.00 per month.

Before Obamacare is implemented, the price of insurance has gone DOWN $17 a month.  However, it seems to be on a policy by policy basis.  The $1,250 – 20% – No Dr. visits plan?

$292.00 a month.

Now, how expensive in insurance for a 30 year man in the same ZIP?

The plan that offers $5,000 – 0% -No charge after deductible?


The plan with the lowest deductible that is the cheapest looks like this:

$2,500 – 30% – $40 office visits:

$99.40 a month.

First, insurance isn’t that expensive today.  I may not be very happy with a plan that offers a deductible as high as $5,000, but remember, we’re crafting a policy that protects against the #1 liberal complain, medical care shouldn’t force someone into bankruptcy.  And a brake at 5k will do just that.

Let’s watch the policies in Greensboro’s 27403 ZIP code.

The Mandate And The Cost Of Insurance

Let’s set aside the debate on whether or not the mandate represents a penalty or a tax.  In many ways, it doesn’t matter; the bill was made law, the law was challenged and the law remains the law.

A question occurred to me as I was watering failing to save my flowers Saturday:

Given that individuals are offered the choice of purchasing health insurance or paying a penalty, and that penalty is paid to the federal government of the United States, what will this do to health insurance premiums?

The answer is, of course, “Insurance premiums will go up.”

Individuals will make a value based decision on whether or not to purchase insurance or pay the penalty/tax.  The problem comes into play when you consider that the organization making the determination, and receiving the money, of how much that penalty/tax will be is NOT the same organization that is required to insure people who decide not to purchase insurance.

In short, the insurance company has to cover uninsured individuals while the government keeps the penalty/tax.  What this means to the insurance companies is that they have to cover uninsured people for free.  And since coverage of medical costs isn’t really free, they will have to raise the rates of everyone to cover those costs.  As those costs rise, more and more Americans will conduct value propositions and conclude that purchasing insurance isn’t worth it.

And costs will rise.

And costs will rise.

And costs will rise.

Healthcare Data: Supreme Court Case


I’m reading a NY Times article on the lead up to the Supreme Court hearing of the case; some interesting facts surrounding a 1987 ruling regarding taxes and lawsuits.

Anyway, I come across this anecdotal story:

Some activists came with their own stories. Henrik Erslev, 58, a carpenter from Maryland, said he had come out to support the bill because his daughter, who just turned 26, was allowed to stay on his insurance policy through a cyst removal last year that Mr. Erslev said would have forced her into bankruptcy.

Now, assuming his daughter would have had to obtain her own insurance, something she’ll have to do in a year anyway, how much would it have cost her?

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How Much Does Health Insurance Cost?

I haven’t posted this in awhile.  How much does health insurance cost?

In my ZIP code, a 30 year old man with no wife or kids can get coverage for $66.05 a month.

Are the uninsured really uninsured because they CAN’T be insured or because they CHOSE not to be insured?

A Thought Occurred To Me

The bedrock principle that the authors of Obamacare used to legally justify the federal government regulating health insurance is the “Commerce Clause”.  Basically, this clause states that the federal government has the right to regulate all interstate trade to ensure that the economic interests of America are met.

Except, health insurance is not allowed to be sold across state lines.

It’s not inTER-state trade.  In’s inTRA-state trade.

Ahhh….but I forgot.

Wickard v. Filburn, 317 U.S. 111 (1942), was a U.S. Supreme Court decision that dramatically increased the power of the federal government to regulate economic activity. A farmer, Roscoe Filburn, was growing wheat to feed his chickens. The U.S. government had imposed limits on wheat production based on acreage owned by a farmer, in order to drive up wheat prices during the Great Depression, and Filburn was growing more than the limits permitted. Filburn was ordered to destroy his crops and pay a fine, even though he was producing the excess wheat for his own use and had no intention of selling it.

The Supreme Court, interpreting the United States Constitution’s Commerce Clause under Article 1 Section 8 (which permits the United States Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”) decided that, because Filburn’s wheat growing activities reduced the amount of wheat he would buy for chicken feed on the open market, and because wheat was traded nationally, Filburn’s production of more wheat than he was allotted was affecting interstate commerce, and so could be regulated by the federal government.

Long ago the Leftists felt that they had the answer to the Great Depression.  And they passed many laws intended to help us through this great time.  However, they were illegal laws and the Supreme Court struck them down.

Then FDR:

…sought to counter this entrenched opposition to his political agenda by expanding the number of justices in order to create a pro-New Deal majority on the bench.

{His} legislation was unveiled on February 5, 1937 and was the subject, on March 9, 1937, of one of Roosevelt’s Fireside chats. Shortly after the radio address, on March 29, the Supreme Court published its opinion upholding a Washington state minimum wage law in West Coast Hotel Co. v. Parrish by a 5–4 ruling, after Associate Justice Owen Roberts had joined with the wing of the bench more sympathetic to the New Deal.

So, because FDR was a thief who stole the right of a citizen from growing enough wheat to feed his animals, we now have to live through a law that seeks to regulate inter-state trade of a commodity that is illegal to sell inter-state.


I am Going Shopping

When I was young, my dad told me that I needed health insurance.  I kinda laughed it off.  However, through my 20’s, I went through periods where I did and then did not have coverage.  Looking back, I should have maintained coverage for the duration; I never should have taken insurance “holidays”.  But where I was right when I did have coverage was the type of policy I bought.

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