Talking about Insurance

Jeff Miller writes about insurance:

This is really a remarkable chart. First, look at the two areas of progress. More people ages 18-25 are covered than before. That’s great … kind of. People this age are the healthiest—they need coverage less than people of virtually any other age. Why did their coverage go up: The ACA required insurance companies to let parents keep their kids on their policies until they were 26. This is why this is one of the few groups that gained, not lost, coverage. But it’s also insane. Again, this is the group that needs coverage least. It should not have been a priority of health care legislation. So why was it? I suspect this was just a payback to Obama’s tireless legion of young supporters. Really. I mean that. It was a kickback. Thanks for your hard work; as a result, I’ll place you above the poor in terms of health care priority.

Second, let’s look at the poor. Fewer people who make less than $90,000 a year are covered by health insurance than before the ACA. Health insurance is more expensive than it used to be, and the ACA is at least part of it. By forcing companies to insure twenty-somethings and people with pre-existing conditions, the ACA drove up the cost of health insurance generally. So who does this really hurt? People making under $90,000 a year. Right?

Um… I’m not so sure—but then maybe I’m missing something.

Let’s start with insuring the youngsters who don’t need insurance. They’re healthy, so they rarely use the insurance coverage that they pay for, correct? …But they do pay their share of the insurance premiums (or their parents do). Isn’t that actually a good thing?

I thought that was the whole premise of insurance: collect modest sums of money from everyone, and use that money to pay for whoever falls sick (and incurs a large expenditure). To offset the people who actually get sick (and use the money collected) you’d need people who were part of the scheme, but rarely needed to actually use the money—in other words, healthy people. This is why people who are deemed to be more likely to fall sick are either asked to pay higher premiums or are kept outside the system completely (for example, people with pre existing conditions).

Wouldn’t having young people in the insurance system actually help the system, and bring insurance premiums down for everyone? They’re paying their share of the premiums but not using any insurance money since they’re healthy—which means there’s more money available without having to increase premiums for everyone else. Right?

So, as I see it, even if including youngsters into insurance plans was a ‘kickback’ from Obama (I wouldn’t know), it was also beneficial to the system as a whole, helping to reduce insurance costs of everyone else who are more likely to fall sick.

Let’s talk about the pre existing conditions too. I agree, including people with pre existing conditions increases the insurance premiums for everyone—as I said above, if there are people who are more likely to fall sick, it strains the contributions of everyone. But is that really something that you’re against? Isn’t a modern society one that takes care of everyone that is part of it? What good is an insurance system that excludes those that need it the most?

When you say:

By forcing companies to insure twenty-somethings and people with pre-existing conditions […]

you’re actually talking about two opposing forces—including people with pre existing conditions increases premiums for everyone (but which I think should be done anyway), but including youngsters actually brings insurance premiums down for everyone.

Am I missing something?

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One thought on “Talking about Insurance

  1. I haven’t done any kind of economic analysis of this, but this is what I suspect:

    1. The additional cost of adding a 25 year old to a family policy is less than the cost of buying an individual policy for the 25 year old. (if the reverse were true, parents would just give their kids money to buy their own policies).

    2. The risk factors for a 25 year old did not change.

    3. So where are those extra costs? Most likely, spread among all policy holders. And as a result, everyone with health insurance is subsidizing health care for the young.

    Again, I haven’t done this analysis, and I don’t know if anyone has. But it’s my best guess.

    I don’t see how adding 25 year olds to family policies can bring the cost of insurance for everyone. Although they are much healthier, their insurance rates have always reflected this. (Before Obama, a 25 year old could get a good health insurance policy for less than $100 a month, in many states).

    Here’s one more thing to consider. If more 25 year olds are covered under policies, it means that they are much more likely to see the doctor for non-serious ailments. This increases demand for medical services, which drives up medical costs. Which, in turn, drives up health insurance costs.

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