MY FAVORITE POPULIST
BORROWED OPINIONSWHY NOT HEALTHCARE FOR ALL? – by Jim Hightower
Sergio Olaya is a 21-year-old college student who has had to drop out of school because of our country's messed up health insurance system.
Actually, Olaya has health coverage, for he's a federal employee. But, his mother wasn't covered when she was suddenly hit with an aggressive cancer this year. She died, and her son is now grappling with $255,000 in medical bills for her treatment. The hospital has sicced its collection agency on him - so, to pay the bills, he had to quit college and is now selling the house where he and his mother lived.
Ironically, Mr. Olaya's job is in the U.S. Senate. He runs an elevator on which our honorable solons ride everyday. Senators share a ride with him, but they share none of the health-care anxieties and financial burdens that millions of Americans like Olaya carry. Members of Congress, you see, are fully covered by us taxpayers.
Well, gosh, if it's good enough for them, I'm sure it would be good enough for the rest of us. We don't want any special coverage - we'll be happy with what Congress gives itself.
Not all Senators are boneheads about this, and they're pushing bills to provide such universal coverage. Sen. Sherrod Brown of Ohio deserves special praise, for he is refusing to accept the Congressional coverage for himself, saying he won't take it until every American is covered.
Then there's presidential contender John Edwards, who has put a strong, universal health care plan at the center of his campaign. If elected, he intends not only to push his plan in Congress, but to couple it with a bill that would strip lawmakers of their own coverage if they fail to cover everyone else.
Edwards' proposal for universal coverage also includes a single-payer alternative to compete with profiteering insurance corporations. See it all at www.johnedwards.com/issues/health-care/.
Vaughn Tolle said:
Wondering how the son was stuck with the bill of the mother, if he didn't guarantee it (that is, sign an agreement to be responsible). I'm not at all acquainted with the appropriate laws in the jurisdiction, but the fact that the house would need to be sold is similar to Kansas in a decedent's estate where a claim was filed, if the house was in the mother's name alone.
Before anyone jumps in here, I recognize that the doctrine of necessities may come into play, but usually, that is limited to spousal situations (or parent/minor child situations). Again, I scratch my head.
Before anyone jumps in here, I recognize that the doctrine of necessities may come into play, but usually, that is limited to spousal situations (or parent/minor child situations). Again, I scratch my head.
Danny said:
Vaughn,
I'm not a lawyer, I to wonder how the son is responsible for the parent unless the son had signed or agreed to be the guarantor. Something that I've noticed on hospital forms my wife and I had to sign(yes, I read those carefully).
However, whether I agree with government backed healthcare or not, I at least applaud Mr. Edwards on having put together his thoughts and ideas on his webpage. I noticed that he doesn't necessarily want to switch to full blown governmental healthcare, but uses the private system and require everybody to get coverage through some means.
I'm not a lawyer, I to wonder how the son is responsible for the parent unless the son had signed or agreed to be the guarantor. Something that I've noticed on hospital forms my wife and I had to sign(yes, I read those carefully).
However, whether I agree with government backed healthcare or not, I at least applaud Mr. Edwards on having put together his thoughts and ideas on his webpage. I noticed that he doesn't necessarily want to switch to full blown governmental healthcare, but uses the private system and require everybody to get coverage through some means.
lindainks55 said:
Health care costs are becoming more and more important to me. I'm sure everyone here faces similar (or worse) and something has got to give!
My chubby little leprechaun husband (he is gonna frown at me!) takes medicine for both high blood pressure and high cholesterol. His doctor requires blood work every six months and holds him hostage by not renewing the scripts until he comes in. The visits require blood work. So, he went in December for his bi-annual visit and the charges were $330. Luckily there was a "contracting provider" write off of $107.08 and insurance paid $72.02. We're responsible for a $20 co-pay and $130.90 towards our annual deductible. And folks, this is GREAT insurance in today's world! I don't go to the doctor. Almost never. I'm not good about those checks all women are supposed to get... So, Wayne goes twice a year and we never meet the deductible so we pay the doctor's office about $300 a year and we pay about $700 a year for prescriptions 9which mind you is quite a deal!) AND the premiums for the insurance. If one of us becomes ill or injured the picture will, of course, change. And we must continue to pay because who knows!?
This is for one really healthy person (or at minimum one in TOTAL denial) who ignores the fact that she is getting older and one person who has a few bad genes in his family history who also is pretty healthy.
Somethings gotta give folks! Pay attention!
My chubby little leprechaun husband (he is gonna frown at me!) takes medicine for both high blood pressure and high cholesterol. His doctor requires blood work every six months and holds him hostage by not renewing the scripts until he comes in. The visits require blood work. So, he went in December for his bi-annual visit and the charges were $330. Luckily there was a "contracting provider" write off of $107.08 and insurance paid $72.02. We're responsible for a $20 co-pay and $130.90 towards our annual deductible. And folks, this is GREAT insurance in today's world! I don't go to the doctor. Almost never. I'm not good about those checks all women are supposed to get... So, Wayne goes twice a year and we never meet the deductible so we pay the doctor's office about $300 a year and we pay about $700 a year for prescriptions 9which mind you is quite a deal!) AND the premiums for the insurance. If one of us becomes ill or injured the picture will, of course, change. And we must continue to pay because who knows!?
This is for one really healthy person (or at minimum one in TOTAL denial) who ignores the fact that she is getting older and one person who has a few bad genes in his family history who also is pretty healthy.
Somethings gotta give folks! Pay attention!
Tracy Phillips said:
Right now my house payment is less than $350 a month.
My co-pay on the medicines (there's only 3 of us)
is well over $600 a month.
This is good insurance too. B.C.B.S of KS.
Dental, optical, pretty good for the area I live in.
My co-pay on the medicines (there's only 3 of us)
is well over $600 a month.
This is good insurance too. B.C.B.S of KS.
Dental, optical, pretty good for the area I live in.
Vaughn Tolle said:
Yep, something has to give. Our monthly premium is low, relatively speaking, around $360 per month; the co-pay on most RX is $10 per, $30/visit to the doc, $50/visit to specialist, unsure on hospital (still waiting for all the bills to come in); but, no optical; limited dental. I know we owe Via Christi $1200 at the present, with one more billing to come from the hospitalizations in November, and not to sure about some other stuff.
Vaughn Tolle said:
BTW, not complaining; I know the HMO set up we're in is a relatively good deal on the premiums, etc. Hospital bills to date (received): >$50,000 if we didn't have the insurance. So, gotta keep insurance.
Danny said:
My insurance cost is $320/mo.
Prescriptions are covered at 50% until deductible is met which is $1000 for the entire family, $500 for a particular individual.
Medical copay is $20 for doctor/$40 for specialist, 10% co-insurance up to $1000 deductible at which point I only pay the co-pay then. Regular well-person exams are covered in full. Needed vaccinations are covered in full as well. This is much better than my previous insurance: no copay but 35% co-insurance up to $4400 deductible. Both other than that are the same and are PPO.
Dental and vision are bit more interesting.
Prescriptions are covered at 50% until deductible is met which is $1000 for the entire family, $500 for a particular individual.
Medical copay is $20 for doctor/$40 for specialist, 10% co-insurance up to $1000 deductible at which point I only pay the co-pay then. Regular well-person exams are covered in full. Needed vaccinations are covered in full as well. This is much better than my previous insurance: no copay but 35% co-insurance up to $4400 deductible. Both other than that are the same and are PPO.
Dental and vision are bit more interesting.
Wendy said:
Agreed.
My premiums are relatively low as well - I believe I pay around 175 a month for the kiddo and myself... (i would have to pull a paycheck and add to get you the actual figure and i am just not motivated to do so right now!) With a $30 copay. $75 copay for emergency room visits. problem is, that even after deductible, insurance only covers 90% of contracted dr. bills. 70% non-network providers. Granted, there is an out of pocket limit, of $2000 per year, but of course, certain items don't apply - and there are not very many contracted providers for my insurance here in Wicheetah. Have decent dental, pretty basic coverage. The health insurance covers eye dr. visits, but not contacts/glasses etc. We do have an optional rider we can add for an additional charge, but as i am the only one in the family who requires eye care and my dr. is not in their network so they will not pay ANYTHING for his care, I decided to stick with the rather basic coverage we have and utilize my FSA instead to cover eyewear...
My premiums are relatively low as well - I believe I pay around 175 a month for the kiddo and myself... (i would have to pull a paycheck and add to get you the actual figure and i am just not motivated to do so right now!) With a $30 copay. $75 copay for emergency room visits. problem is, that even after deductible, insurance only covers 90% of contracted dr. bills. 70% non-network providers. Granted, there is an out of pocket limit, of $2000 per year, but of course, certain items don't apply - and there are not very many contracted providers for my insurance here in Wicheetah. Have decent dental, pretty basic coverage. The health insurance covers eye dr. visits, but not contacts/glasses etc. We do have an optional rider we can add for an additional charge, but as i am the only one in the family who requires eye care and my dr. is not in their network so they will not pay ANYTHING for his care, I decided to stick with the rather basic coverage we have and utilize my FSA instead to cover eyewear...
Danny said:
Wendy,
I do the same for my wife as well. Utilize an FSA to cover her vision, with the exception of the one per year the medical covers.
I do the same for my wife as well. Utilize an FSA to cover her vision, with the exception of the one per year the medical covers.
lindainks55 said:
Listening to all of us list our coverages all the while each stating THIS IS GOOD, is akin to our saying how nice it is to only pay $2.80 per gallon of gasoline.
This isn't good! It's just better than something else or nothing. I applaud each of you for being upbeat and positive but think of how far we've come in our acceptance.
Shanking head and mumbling.
This isn't good! It's just better than something else or nothing. I applaud each of you for being upbeat and positive but think of how far we've come in our acceptance.
Shanking head and mumbling.
ksgrm said:
I agree with most on the cost of healthcare but have a little different take. I feel that John Edwards is part of the problem. Docs friends of mine tell about the out of sight malpractice premiums they pay. They run tests for no other reason that to CYA. This is to protect them from suits with no merit.
A few years ago I had a heart attack and was in ICU two days. The total bill was over $58,000 and insurance only had to pay just over $16,000. The rest was a write off. This isn't right. Those with no insurance get no writeoff.
Oh well thats how I see the problem. Edwards becoming a multimillionaire while creating a problem with huge lawsuits against docs and hospitals and then devising a plan to give everyone healthcare. No mention of tort reform which would be a huge step forward.
I am not against lawsuits just frivilous ones.
A few years ago I had a heart attack and was in ICU two days. The total bill was over $58,000 and insurance only had to pay just over $16,000. The rest was a write off. This isn't right. Those with no insurance get no writeoff.
Oh well thats how I see the problem. Edwards becoming a multimillionaire while creating a problem with huge lawsuits against docs and hospitals and then devising a plan to give everyone healthcare. No mention of tort reform which would be a huge step forward.
I am not against lawsuits just frivilous ones.
Vaughn Tolle said:
Linda, as you say, "good" is relative. When I was growing up, the folks couldn't afford health insurance, such as was available in those days, and I know the effects of illness, doctor's visits, etc., had on us. Thus, what the wife and I have is "good" relative to that. Similarly, I know what we had through my plan, when I could afford it here at the office; it wasn't as "good" as what we have now.
The main issue I have is the "for profit" nature of the insurance companies, most of which are publicly held. With stockholders, there is an obligation thereto to maximize income, providing a return on their investment. Thus, while I'm not against corporations as a general statement, I'm not in favor of publicly held corporations providing health insurance.
Without going into all the mind numbing rhetoric of which I'm capable on this issue, and several others as well, I've arrived at the conclusion that "single payer" medical coverage is the most desirable outcome. Perhaps that single payer should be the government, or an entity regulated by the government.
For those who believe the competitive market is the only way to go in health care in general, I offer a hypothetical we discussed in 1978 in my anti-trust class concerning medical care. The hypothetical goes something like this: there is enough demand in a certain area for one CT scan machine. There are two competing hospitals in the same area, and it is determined by the CEOs of both hospitals that each should have a CT scan machine. Now, the fact is that there are certain fixed costs from the acquisition and operation of these scanners which must be recovered to enable each hospital to continue operation of the scanner. If both institutions have scanners, there is obviously a higher charge which must be made by each for use of the scanners than would have otherwise needed to be made if there was only one. This results in "competition" raising the costs, rather than reducing them.
I hope you can follow the above. There are other examples which can be given in a similar way to illustrate the point.
The main issue I have is the "for profit" nature of the insurance companies, most of which are publicly held. With stockholders, there is an obligation thereto to maximize income, providing a return on their investment. Thus, while I'm not against corporations as a general statement, I'm not in favor of publicly held corporations providing health insurance.
Without going into all the mind numbing rhetoric of which I'm capable on this issue, and several others as well, I've arrived at the conclusion that "single payer" medical coverage is the most desirable outcome. Perhaps that single payer should be the government, or an entity regulated by the government.
For those who believe the competitive market is the only way to go in health care in general, I offer a hypothetical we discussed in 1978 in my anti-trust class concerning medical care. The hypothetical goes something like this: there is enough demand in a certain area for one CT scan machine. There are two competing hospitals in the same area, and it is determined by the CEOs of both hospitals that each should have a CT scan machine. Now, the fact is that there are certain fixed costs from the acquisition and operation of these scanners which must be recovered to enable each hospital to continue operation of the scanner. If both institutions have scanners, there is obviously a higher charge which must be made by each for use of the scanners than would have otherwise needed to be made if there was only one. This results in "competition" raising the costs, rather than reducing them.
I hope you can follow the above. There are other examples which can be given in a similar way to illustrate the point.
Vaughn Tolle said:
ksgrm, I, too, am against "frivolous" law suits. Most of the litigation of which I am aware that Senator Edwards handled in private practice were not frivolous, IMHO.
lindainks55 said:
I don't know what part of our increased health care costs can be attributed to frivolous lawsuits, but I'm sure you are right that it is part of the problem. Lawsuits are settled or have juries. If they're settled, why? If the jury makes huge awards, again why? I think what is or isn't frivolous may also be open to interpretation. And, whether John Edwards helped or hurt another topic with at least two opinions. Seldom is there all wrong or all right. I can't erase all the other parts of Edwards and pigeon hole him and his life into one category. Just probably along the way some of the lawsuits were justified and some not so much. And I know he and his money have done much good along the way!
Along with the increased costs it seems to me we don't have the quality of care we once did. How often do you find out what isn't the problem and never identify what was was? When a person is ill they are expected to manage their own health care maze -- from doctor to doctor, test to test, lack of result to result, and which doctor gave what advice, did anything work, what's this bill and where is the matching insurance benefit statement, why wasn't this covered or was it? I could continue this line of confusion and the more serious the illness the longer and more complicated!
Lucky is the patient who has a family member to help navigate these trials. But you better have all your ducks in a row so that family member can have access to your medical info.
Along with the increased costs it seems to me we don't have the quality of care we once did. How often do you find out what isn't the problem and never identify what was was? When a person is ill they are expected to manage their own health care maze -- from doctor to doctor, test to test, lack of result to result, and which doctor gave what advice, did anything work, what's this bill and where is the matching insurance benefit statement, why wasn't this covered or was it? I could continue this line of confusion and the more serious the illness the longer and more complicated!
Lucky is the patient who has a family member to help navigate these trials. But you better have all your ducks in a row so that family member can have access to your medical info.
lindainks55 said:
I was typing and then answering the phone and then back to typing while you were posting interesting and better written posts than mine, Vaughn.
As usual, your insight is deeper and greater.
As usual, your insight is deeper and greater.
Vaughn Tolle said:
Linda, which is why the family member (or, in the case of many, a trusted friend) needs to be appointed as the patient's agent on a Durable Power of Attorney for Health Care Decisions.
lindainks55 said:
I liked your example of the two CT machines. And I congratulate you for using English! ;-)
I think I've mentioned before that in Chad's work due to the can / cannot use federal funds there is great waste. Many highly expensive pieces of equipment and even human resources must be duplicated rather than shared and come in on the wrong side of what's legal and what can be funded this way and that.
I think I've mentioned before that in Chad's work due to the can / cannot use federal funds there is great waste. Many highly expensive pieces of equipment and even human resources must be duplicated rather than shared and come in on the wrong side of what's legal and what can be funded this way and that.
lindainks55 said:
I should wait to see if you post something that would change my post if I were reading.
Need badly to make that appointment! For that legal thing you mention and the others. Have you noticed that I'm not quick to act?
Need badly to make that appointment! For that legal thing you mention and the others. Have you noticed that I'm not quick to act?
Vaughn Tolle said:
The issue with many folks on the issue of "frivolous" law suits is the damage award. There are many who see these large damage awards as evidence that the litigation was frivolous, as the amount awarded seem so large given what is reported about the litigation. An example of this is the notorious McDonald's case involving the hot coffee. On its face, it seems outrageous, but as one delves into the facts, etc., it loses some or all of that label. On WEBlog, GMC70 has discussed this to a great degree, and I won't try to replicate that here. Needless to say, he and I are in agreement on this one.
As to premiums for malpractice insurance, yes, the same are high. Some part of this is due to the performance of the investments into which excess premiums are invested; not all is due to "malpractice lawyers".
As to premiums for malpractice insurance, yes, the same are high. Some part of this is due to the performance of the investments into which excess premiums are invested; not all is due to "malpractice lawyers".
Danny said:
Linda,
I think part of my argument for "good" coverage is that I have found a pretty good doctor who does take the time to explain what he wants to do up front. He goes through all reasons a test should be performed, why a test may not find something, what further things would happen(if necessary) and generally does a good job talking to me. It is finding doctors who do this that makes the "game" annoying. Guess in that sense I was lucky.
For my insurance, I call it "good" because I don't pay a large amount out of pocket, at least in my opinion. I've seen worse(I had worse last year). However, generally being in good health this affects my opinion.
Now on to other things, I don't know that full blown government run healthcare is the best option. I base my opinion solely on listening to doctors who are friends of mine in other countries. One such is from New Zealand, where they don't hire enough doctors, so wait times increase. This could be a good thing for something like the common cold, one may be over it before seeing a doctor.
I think I recall reading(and I'll do my best to find a link to a credible news source or correct myself if I mis-speak here), Tony Blair had a running point of lowering Britain's wait time to 18 weeks(could have been from 18 weeks to 12 weeks) for some medical procedures(I assume surgery related). If I don't find where I had read that I'll retract it.
I know these are the common arguments against a government run plan. However, I think a possible alternative, and it may be nice to see how this works in Massachusetts(I think I spelled this right) is to require companies to provide insurance to workers and to require individuals to have insurance. The theory being that if everybody is carrying insurance then prices go down. I don't know enough time has passed to get a good understand on how that is working though yet, but I understand the basic principle is that those who are healthier ofset the cost of those who are less than healthy.
Then there is lifestyle changes that probably need to occur. Exercise being one of those things that need to increase and probably cutting back on some fast food, could work to increase the health of Americans overall. It is difficult for that reason to compare the U.S. healthcare industry to other countries as other countries generally seem to have better lifestyle choices.
To me, it is confusing, and I think it would go a long way to improving our healthcare industry if things just made sense. I think some of that needs to start not with the insurance companies entirely, but doctors themselves. Insurance companies need to make things more clear as well. I do think some of the convolutedness comes from lawsuits(necessary and otherwise) and perhaps those need to be looked at more closely.
This is all solely my opinion, except where otherwise stated though. :D
I think part of my argument for "good" coverage is that I have found a pretty good doctor who does take the time to explain what he wants to do up front. He goes through all reasons a test should be performed, why a test may not find something, what further things would happen(if necessary) and generally does a good job talking to me. It is finding doctors who do this that makes the "game" annoying. Guess in that sense I was lucky.
For my insurance, I call it "good" because I don't pay a large amount out of pocket, at least in my opinion. I've seen worse(I had worse last year). However, generally being in good health this affects my opinion.
Now on to other things, I don't know that full blown government run healthcare is the best option. I base my opinion solely on listening to doctors who are friends of mine in other countries. One such is from New Zealand, where they don't hire enough doctors, so wait times increase. This could be a good thing for something like the common cold, one may be over it before seeing a doctor.
I think I recall reading(and I'll do my best to find a link to a credible news source or correct myself if I mis-speak here), Tony Blair had a running point of lowering Britain's wait time to 18 weeks(could have been from 18 weeks to 12 weeks) for some medical procedures(I assume surgery related). If I don't find where I had read that I'll retract it.
I know these are the common arguments against a government run plan. However, I think a possible alternative, and it may be nice to see how this works in Massachusetts(I think I spelled this right) is to require companies to provide insurance to workers and to require individuals to have insurance. The theory being that if everybody is carrying insurance then prices go down. I don't know enough time has passed to get a good understand on how that is working though yet, but I understand the basic principle is that those who are healthier ofset the cost of those who are less than healthy.
Then there is lifestyle changes that probably need to occur. Exercise being one of those things that need to increase and probably cutting back on some fast food, could work to increase the health of Americans overall. It is difficult for that reason to compare the U.S. healthcare industry to other countries as other countries generally seem to have better lifestyle choices.
To me, it is confusing, and I think it would go a long way to improving our healthcare industry if things just made sense. I think some of that needs to start not with the insurance companies entirely, but doctors themselves. Insurance companies need to make things more clear as well. I do think some of the convolutedness comes from lawsuits(necessary and otherwise) and perhaps those need to be looked at more closely.
This is all solely my opinion, except where otherwise stated though. :D
Danny said:
The link for Tony Blair's plan:
http://www.bmj.com/cgi/content/full/321/7257/317
I think that is a reputable source. :D
http://www.bmj.com/cgi/content/full/321/7257/317
I think that is a reputable source. :D
Vaughn Tolle said:
Danny, thanks for the link, which I surely shall read at a later time.
On the Massachusetts plan, two things I recall reading/hearing; one, there is great difficulty in getting the residents to "sign up"; two, the cost is higher than earlier estimated.
On the Massachusetts plan, two things I recall reading/hearing; one, there is great difficulty in getting the residents to "sign up"; two, the cost is higher than earlier estimated.
Vaughn Tolle said:
On former Prime Minister Blair's plan as set forth in Danny's link, given its age, was it adopted as set out? Was it amended and then adopted? If adopted in either its original form or as it may have been amended, what results have accrued therefrom in the approximately four years following its proposal?
Danny said:
Vaughn,
That article was old and I didn't realize just how much time had passed since I had read it, and I'm not certain how well that played out, his changes, etc. I'd like to find more information on that as well because it would be key in understanding at least one implementation of government run/subsidized healthcare. I've been unsuccessful in finding anything that states whether this was implemented, amended then implemented, or just dropped altogether.
That article was old and I didn't realize just how much time had passed since I had read it, and I'm not certain how well that played out, his changes, etc. I'd like to find more information on that as well because it would be key in understanding at least one implementation of government run/subsidized healthcare. I've been unsuccessful in finding anything that states whether this was implemented, amended then implemented, or just dropped altogether.
Vaughn Tolle said:
Danny, one other thing you mentioned concerning insuring all lowers the cost to everyone. It is part of the process of actuarial risk which is used by the underwriters to set premiums for the insurance; if the healthy are covered, then the excess premiums earned help offset the higher costs incurred as the result of paying benefits on behalf of those who are not "healthy". This, then, lowers the overall costs of the coverage. Somewhat simplistic statement, I know, but that is generally the thought behind it all.
A client of mine has given great thought to all this, as have many. His proposal is to mandate the feds provide the reinsurance for all private companies, with the private companies bearing the burden of the basic coverage. Kind of complex, but the reinsurance costs are a component of the overall costs charged to policy holders through premiums, and, reinsurance companies make nice profits.
I hope the following will aid understanding. All basic insurance companies recognize the risk of catastrophic claims. Thus, these companies buy insurance against this from other insurors (reinsurance). As the reinsurers bear the risk of these infrequent but very large dollar amount claims, the premiums charged for this coverage are "healthy". If one removes these reinsurers from the equation, this eliminates the costs these firms bear in doing business, the return to owners, etc., all of which in theory would reduce premiums on the individual policy holder level. Depending upon the type of insurance, these reinsurance costs may be from 10% of the total premium costs to over 50% thereof. Lots of information out there; Google is your friend.
A client of mine has given great thought to all this, as have many. His proposal is to mandate the feds provide the reinsurance for all private companies, with the private companies bearing the burden of the basic coverage. Kind of complex, but the reinsurance costs are a component of the overall costs charged to policy holders through premiums, and, reinsurance companies make nice profits.
I hope the following will aid understanding. All basic insurance companies recognize the risk of catastrophic claims. Thus, these companies buy insurance against this from other insurors (reinsurance). As the reinsurers bear the risk of these infrequent but very large dollar amount claims, the premiums charged for this coverage are "healthy". If one removes these reinsurers from the equation, this eliminates the costs these firms bear in doing business, the return to owners, etc., all of which in theory would reduce premiums on the individual policy holder level. Depending upon the type of insurance, these reinsurance costs may be from 10% of the total premium costs to over 50% thereof. Lots of information out there; Google is your friend.
Danny said:
Vaughn,
That makes sense. I partly, at least with not everybody being insured in some form, understand this reinsurance business. However, I would think that if the insurance companies themselves just bit the bullet and took the risk on themselves because the big claims are going to be more or less infrequent compared to other claims, one may see the cost of insurance decrease, but perhaps not the full cost of the amount of them insurance themselves against large claims. If 10% of the premium goes to reinsurance then, if taking that away we might see a 5% increase instead of 10%.
That makes sense. I partly, at least with not everybody being insured in some form, understand this reinsurance business. However, I would think that if the insurance companies themselves just bit the bullet and took the risk on themselves because the big claims are going to be more or less infrequent compared to other claims, one may see the cost of insurance decrease, but perhaps not the full cost of the amount of them insurance themselves against large claims. If 10% of the premium goes to reinsurance then, if taking that away we might see a 5% increase instead of 10%.
Vaughn Tolle said:
OK, just reread my 11:45 AM post, and realize that my dialogue on reinsurance is about as clear as mud. So, I'll give it another go, trying to keep it more clear, and use some numbers as opposed to general concepts so y'all can get a feel.
Reinsurance in medical insurance situations works like this. Assuming that the underwriting statistics reveal that the average total amount in claims which may be paid on any one policy is $250,000; assuming further that the total "lifetime" coverage amount is set at $2 million under the policy; and further assuming that 25% of the policy holders will exceed the $250,000 average, then:
The base premium that covers the risk of paying $250,000 on each policy issued is computed; the insurer contacts a reinsurance company for coverage up to $2 million on said 25% of the policies, and is charged the premium therefor as set by the reinsurance company. The premium charged to the policy holder is then determined by adding the basic premium amount to the pro rata share of the reinsurance premium (spread over 100% of the policy holders), which then represents the total premium charged the policy holders. In arriving at the basic premium and the reinsurance premium, both companies determine the costs of operation as an insurance company, etc., which is a part of the premium charged. Thus, if one eliminates the premium charged by the reinsuror, with the government being the "reinsuror of last resort", this removes a substantial part of the reinsurance premium from the computation, it being assumed for this purpose that the government would only "charge" the actuarial cost of the reinsurance being provided and an administrative cost similar to that of Medicare (about 3%, from memory, contrasted to 25 to 30% borne by a private entity).
Hope this makes sense to someone.
Reinsurance in medical insurance situations works like this. Assuming that the underwriting statistics reveal that the average total amount in claims which may be paid on any one policy is $250,000; assuming further that the total "lifetime" coverage amount is set at $2 million under the policy; and further assuming that 25% of the policy holders will exceed the $250,000 average, then:
The base premium that covers the risk of paying $250,000 on each policy issued is computed; the insurer contacts a reinsurance company for coverage up to $2 million on said 25% of the policies, and is charged the premium therefor as set by the reinsurance company. The premium charged to the policy holder is then determined by adding the basic premium amount to the pro rata share of the reinsurance premium (spread over 100% of the policy holders), which then represents the total premium charged the policy holders. In arriving at the basic premium and the reinsurance premium, both companies determine the costs of operation as an insurance company, etc., which is a part of the premium charged. Thus, if one eliminates the premium charged by the reinsuror, with the government being the "reinsuror of last resort", this removes a substantial part of the reinsurance premium from the computation, it being assumed for this purpose that the government would only "charge" the actuarial cost of the reinsurance being provided and an administrative cost similar to that of Medicare (about 3%, from memory, contrasted to 25 to 30% borne by a private entity).
Hope this makes sense to someone.
Vaughn Tolle said:
On the surface, Danny, your observation makes sense. If this was, in fact, the case, there would be no reinsurance market. It seems to me from limited knowledge that if the "basic" company assumed all the risk, rather than reinsuring it, the premium would likely be higher, rather than lower. I know this seems counterintuitive, but is the result.
A simplistic example from "way back in the day". It was cheaper to carry a modest auto insurance policy (say $100,000/300,000 pi limits, $50,000 pd limits) with another, separate $1 million "umbrella" liability policy, than it was to carry an auto insurance policy that had $250,000/$500,000 pi limits with the aforesaid $50,000 pd limits with no umbrella. I don't know if this continues true, but I think it does, from conferring with clients.
A simplistic example from "way back in the day". It was cheaper to carry a modest auto insurance policy (say $100,000/300,000 pi limits, $50,000 pd limits) with another, separate $1 million "umbrella" liability policy, than it was to carry an auto insurance policy that had $250,000/$500,000 pi limits with the aforesaid $50,000 pd limits with no umbrella. I don't know if this continues true, but I think it does, from conferring with clients.
lindainks55 said:
I only had to read it twice. Does this mean hanging around with someone smart is making me smarter? lol
It makes perfect sense! Is this option on somebody's table?
It makes perfect sense! Is this option on somebody's table?
Vaughn Tolle said:
Linda, for now, it's a discussion point which has been shared with a number of folks in a position to get it to someone's table. Since it's his baby, not mine (I'm a sounding board, editor of writings, contributor on the fringe) I'm not directly in the loop. I know interest has been shown in it by some of the aforementioned folks in a position, but reality also forces me to say the opposition to this by those with a lot to lose and with a lot of money invested and to invest in retaining the status quo will be formidable, if it ever gets onto a table.
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