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. Extending coverage to the uninsured has become a national priority.  -(Information taken from kff.org)

The number of people forced to go without health insurance is nothing less than a crisis in this country today. Over the last few decades, we have fallen into a vicious cycle in which health insurance premiums have become too expensive for even a middle-class family to afford. This, in turn, results in the inability of the uninsured to cover medical costs, which often times results in the financial ruins 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 go the premiums of health insurance higher to help cover the rising cost of health care.

Politicians on both sides of the aisle have tossed many proposals, ranging from socializing health care comparable 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 issues they bring, they also get significant downfalls. For instance, a socialized national healthcare program would eliminate the need for health insurance together, and the cost would be reduced by taxes, which doesn't seem like a bad idea. However, the downfalls to this system include a deficit in new doctors willing to get into the field due to the inevitable decline in income. At the same time, the demand would grow due to no personal responsibility. In short, if people didn't have to worry about deductibles or copays that would usually keep a person 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 to wait in lines for people with significant health problems since everyone is scheduling an appointment while at the same time, we are losing doctors due to lack of incentive.

The current battle cry by the republican Bush administration is to push HSA (Health Savings Accounts), which reduce the premium by taking a less expensive high deductible health insurance plan with a tax-deferred savings account that earns a little interest on the side that you contribute to along with your premiums each month. Any money withdrawn from the savings budget for qualified medical expenses is taken "tax-free," Unlike a flex spending account like many people is familiar with in employer-based plans, you don't lose the money you put into the understanding that you don't use. If you never used that money in the savings account, you could withdraw or roll it into another vehicle once you turn 62, 1/2 penalty-free for retirement. 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 primary treatment in the first few years of the policy, you will not have a big enough amount in the 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 biggest problems from a health insurance agent's point of view: the inability of persons 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 which basically excludes coverage for any claims related to that condition. An example of a situation I run across constantly is hypertension or high blood pressure. This condition sometimes results in a company declining an application altogether if other factors are involved, but most generally 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 the pocket claim. Consider that my father recently had a double bypass surgery 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 2 months off of work thrown into the mix. This would have ruined him financially on a modest income of $40,000 per year.

So how do we fix this problem? Obviously, the proposals thus far have been flawed from the beginning. 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, both have upsides and downsides. It seems we are doomed on this issue, and there are no fundamental ideas or light at the end of the tunnel, right? Let me tell you about a client I had in my office a few 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, had been 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, she was not eligible for health insurance benefits for whatever reason. Obviously, she still couldn't afford 5 or 6 hundred dollars per month for a plan, so she returned to the aid office and explained her situation. They worked with us to find a good private health insurance plan and reimbursed her for a percentage of the cost, which I didn't even know was possible!

Consider how many more people could obtain coverage if they could be reimbursed by the government 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. For 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, taking the actual cost to the family to $225 per month. This is now an affordable enough compensation 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 raise taxes? I don't think it would cost the taxpayers much more, and here's why: First off, we would significantly reduce the number of uninsured people who cannot pay for the medical care they get, driving down the total cost of health care. Secondly, the number of people forced into bankruptcy and coerced into Medicaid Title 19 assistance due to medical bills stemming from catastrophic medical conditions that don't have health insurance coverage would be significantly reduced. This is important to remember, considering that once someone is on Medicaid, they are receiving health care, 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 states that would not have been caught before they became severe because a person didn't seek treatment due to not having insurance coverage would now be seen before they became 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 ensures Iowa residents that can not 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 one hell of a 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 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 pleased that health care remains privatized, giving this solution a better chance at by-partisan backing.

I have faxed this idea to several senators and congressmen but always received the same standard response about how they are concerned with health care and are working hard to find a solution knowing that no one 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, these ideas will get the consideration they deserve, and if enough people like you and I demand a solution be found, then enough stress can be placed on the politicians to get something done. The number of uninsured Americans will only go up, the cost of health care will only go up, and the cost of health insurance premiums will only go up if something isn't done now! Until then, the only thing that I, as a health insurance agent, can do is to compare all of the options out there and present you with the lesser of all of the evils, which in too many cases the option that is chosen is the biggest evil of going without coverage.