Why is Health Insurance Different?
- By Doug Coleman
- Published 02/24/2008
- Insurance
- Unrated
Doug Coleman
I like simplicity. I write about simple things like easy (simple) time management and customer service without slogans, just good sense. I enjoy auto racing, opera, jazz, puppies, and sunsets. There's nothing better than a glass of wine watching a brilliant sunset listening to Oscar Peterson's piano. Life is good.
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I think of myself as an average person. I own a house and have Homeowners' Insurance. I own a car and have Auto Insurance. I have a life and have Life Insurance. The underlying premise of insurance underwriting is to crunch numbers like how many houses are there and what has been the insurance experience with those houses in different parts of the country. This tells the insurer what the probability is that their insured customers will have a fire or damage and how much that might cost the insurance company. The premium the insured person pays is based on that kind of calculation. It is based on your house being a one of all houses having nothing to do with how many houses you might own or whether you are employed by a large company.
The concept of Group Health Insurance was new when I started my adult employment many years ago. At that time, I thought the purpose was to get a volume purchase discount like getting a discount when you bought a case of cola rather than one bottle at a time. Time has failed to prove the discount theory because, to my way of thinking, if you insure one person alone or as part of a group of 1,000 people, the probability of that person having a health claim isn't influenced in any way by the other 999 people.
If that person is going to have a heart attack, what influence does the group have in causing or reducing the expense that person will face? None. So, why do insurance premiums differ for the same person depending on the size of the group?
A good example is the cost to the employee when employed compared with the cost to that employee for the same, often less, insurance coverage when retired from the company. The difference is outrageous. One day the employee is part of a group and the next day is an individual without the group and the insurance premium is not just a few dollars more expensive, it is many times, yes times, the cost when in the group. Does this mean that people are healthier when they are employed compared with when the retired or unemployed? I think the question is as ridiculous as the answer. Of course their employment status has nothing to with their health risk to an insurer.
I feel that a major step toward revamping our health care system would be to force the insurance companies to set premiums based on individual risk underwriting tables so that all people with the same factors would pay the same rates. My car insurance is calculated that way as is my house insurance. Why is health insurance different and why hasn't this quirk been discussed? I smell something I can't identify. Can you?
The concept of Group Health Insurance was new when I started my adult employment many years ago. At that time, I thought the purpose was to get a volume purchase discount like getting a discount when you bought a case of cola rather than one bottle at a time. Time has failed to prove the discount theory because, to my way of thinking, if you insure one person alone or as part of a group of 1,000 people, the probability of that person having a health claim isn't influenced in any way by the other 999 people.
A good example is the cost to the employee when employed compared with the cost to that employee for the same, often less, insurance coverage when retired from the company. The difference is outrageous. One day the employee is part of a group and the next day is an individual without the group and the insurance premium is not just a few dollars more expensive, it is many times, yes times, the cost when in the group. Does this mean that people are healthier when they are employed compared with when the retired or unemployed? I think the question is as ridiculous as the answer. Of course their employment status has nothing to with their health risk to an insurer.
I feel that a major step toward revamping our health care system would be to force the insurance companies to set premiums based on individual risk underwriting tables so that all people with the same factors would pay the same rates. My car insurance is calculated that way as is my house insurance. Why is health insurance different and why hasn't this quirk been discussed? I smell something I can't identify. Can you?