RICHMOND, Ky. — No! Never forget that when the government mandates that health insurers provide a new benefit, the government does not pay for the benefit and neither do the health insurance companies. You do!
The government can mandate that insurers provide more benefits, but government does not give money to the health insurers to pay for them.
Where does the insurance company get the money to pay your benefits? Unlike government, a health insurance company can’t just print money when it needs to pay for your medical expenses.
Insurers get the money they use to pay for your medical bills from the premiums paid by you and your employer.
This is called the Insurance Principle. Each insured exchanges a small certain amount to avoid the risk of having to pay a large uncertain amount. More specifically, you pay the smaller health insurance premiums to the insurer so that if you are one of the unlucky few who will get prostate cancer or have a premature baby, the insurance company will pay the larger medical expenses.
Insurance is a very risky business. The incredible thing is that insurers have to calculate your premium before they know how much it will cost to insure you. That is like a car manufacturer being required to decide on the price of the car before they know how much it will cost to build it.
To calculate your premium, insurers estimate what they will have to pay for future medical expenses, plus the cost to run the company, pay taxes and, hopefully, provide a return on the investment of those who have contributed the capital to create the company which provides the jobs to the employees and pays the benefits to the insureds.
Note that these are all guesses. Notice also that whenever benefits are increased, the insurance companies must recalculate how much to charge you to cover those increased costs.
If the insurer underestimates how much it will have to pay in medical expense costs and sets your premium too low, it doesn’t get to retroactively increase your premium. It has assumed that risk.
You must also understand that insurance can only cover fortuitous losses. This means that it should cover only losses that happen by chance. Insurance cannot cover losses that are in the control of the insured.
For example, your homeowners policy covers lots of potential losses but it does not provide benefits if you lose money gambling. This is because if gambling losses were insurable, the risk of loss is transferred from the gambler to the insurance company and the premium to all homeowners would have to be increased to cover the losses of all those folks who think they can beat the odds in Las Vegas, but don’t care if they can’t because the loss is insured.
Similarly, health insurance is intended to cover expenses from unexpected illnesses or accidents. If it covered cosmetic surgery, health club memberships, and vacations to relaxing places — all of which would likely be good for the health of most of us — there would be a lot more people getting those benefits and the health insurance premiums you pay would have to be increased substantially to cover the increased costs.
Using birth control is a choice. For some it has moral implications. But for everyone it is an expense that the user chooses to incur.
• Christensen is professor of insurance law at Eastern Kentucky University and the chief operating officer and general counsel of Concert Health Plan Insurance Co. in Oak Brook, Ill.
Comments (19)
Add commentbehind the Curtin
Stands the all powerful wizard of ID. The only way to get yo a single payer system is to drive insurers out of business. That's done thru mandated coverage and benefits. When its cheaper to pay the fine rather than provide HC insurance to employees, just makes good business sense to pay the fine. As this happens private insurers are forced to hike rates on the remaining customers eventually the market collapses and we're forced to switched to the governments system. Not the system that legislators have ( they're exempt from obamacare) rather one that's grown from 2000 pages to over 15000 pages & we still don't know what it'll provide.
@ isldandhopper
I have the reverse opinion....insurers wanted and insisted on the mandate. As far as I am concerned the insurance industry is responsible for our Healthcare FUBAR
The consumer is disconnected and encouraged to run to the doc for every little ache and sniffle cause its free...paid in advance by the collection of the premiums. We pay um...so lets just replace that knee thats ouchin us....nevermind exploring less invasive measures...and the docs ride high on the increased services.
Think about it...who is better equiped to combat fraud and waste within the healthcare industry and why don't they do it? They like us to be scared to death to be without insurance and do so very little to help streamline services, reduce redundancy and combat billing fraud. Torte Torte Torte is all we hear from them. If they used half the $$$$ to solve these problems as they spend for lobby efforts we would have a better system IMHO
It is my opinion that unless
It is my opinion that unless we fund programs like the free birth control we are going to have much higher costs in the long term. Is it less expensive to give a person the equivalent of $15.00 a month in free birth control and prevent a pregnancy or pay around $30,000 a year on average in public assistance? Don't get me wrong, I am not saying that people should not take responsibility for their actions, they should; however, most people do not. Regardless of age, gender, or a variety of other demographics most people want to blame others for their misfortunes and mistakes. Is it fair to the tax payer? Absolutely not! But I'd rather pay a little up front rather than a lot on the tail end. For the health care system to work it needs to be an all or nothing revision. Either take the government completely out of it and leave everyone to fend for themselves, or create a completely universal healthcare system like the one in Europe and Canada. There are pros and cons on both sides of the argument but the fact remains that anytime you try to combine business with government it does not work and everyone is un-happy. Both sides in this highly polarized debate need to take a step back and come to a resolution that will benefit the most people for the least amount of money. It would be impossible for everyone to be completely happy with every aspect of the program but helping the most for the least makes the most sense.
Hmm this guy I don't know
Isn't it interesting women are put in second class! Mesh mash of information here that builds up drama to make everyone think the world is coming to an end. Hmmmmmmmmm me thinks his pockets are lined with cash to say such things!
Insurance coverage
Wow! This article was shocking! Paying for coverage actually costs money? Who knew?
The gist of the argument is that you and I shouldn't have to pay for covering something someone else CHOOSES to do, like have sex.
OK, let's run with that.
I choose not to ride a motorcycle, so I should not have to subsidize the medical treatment of any idiot motorcycle rider who gets smeared on the road.
I don't smoke, so I shouldn't cover that smoker's lung cancer treatment.
I watch what I eat and exercise, so I shouldn't have to cover that lard-eating couch potato's heart bypass surgery.
I'm guessing I can find a way to blame pretty much everyone else's medical problems on their own poor choices so I shouldn't have to be responsible for them.
Good thing I'm beyond reproach.
Please....
the person who wrote this piece is either employed by the health insurance industry, or getting paid under the table by them.
Would I rather have government, who's mandate is to care for all people, and who's makeup I have some say in at the voting booth, deciding on quality of care - - - or the CEO and board of a for-profit, private insurance company, who's mandate is to increase the bottom line, payments to shareholders, and bonuses for the CEO?
Hmmm........let me think........
Not to mention the fact that insurance companies are riding on 3+ years of record profits - - - http://www.nytimes.com/2011/05/14/business/14health.html
Talk about 'chicken little'
Also - agree with Dr. Mallard - preventative health care. It cracks me up all the men that say 'then women just don't have sex' - - - ah, if you're married, that means YOU aren't having sex either!
@Lat
I understand what you're saying, but your comparisons are for after care as opposed to preventative care. Should health care cover helmets and protective gear for motorcycle riders, treadmills and jenny craig for couch potatoes...?
Don't forget that this is a
Don't forget that this is a "for Profit" business . I would rather spend the money on preventing pregnancy, thus saving society the cost of paying for a pregnancy and 18 years of medical aid, than to be funding the CEO's million dollar salaries that they get for denying coverage for people that pay their premiums. The poor insurance companies? they are in the business for profit , not health care. They are gambling that they can work the odds, does anyone think they are not making lots of money.....just check out their top salaries.
complete missrepresentation
Apparently the writer has paid no attention to the information provided by insurance companies during all the controversy over the BC issue. When asked if the BC provisions would increase or decrease the cost of HC policies insurance companies indicated there would be no savings or increases in their policy cost. For it is a matter of scale where millions of insured individuals are all placed together in the pool to determine premiums. As the policies now include such BC coverage no decrease in policy cost would be seen by employers who did not want BC included in their employees coverage. Again it is a matter of how the cost of HC coverage is based on millions and millions of insured individuals.
Yes every HC policy does base cost on what is provided. It is based on risk assessments and probability. Following the argument of the writer one could just as easily say any medical procedure cover by insurance is being paid for by everyone. Policy cost considers some individuals will require treatment for things other policy holders may never need. The only way to not have everyone paying for things they may never need is to not provide any coverage for anything.
mt
Sounds like we're making the same point, governments proved it can't prevent redundancy & waste. GSA ring a bell? So please let me know which letters in the alphabet soup government has benefited the public in fiscally responsible way?
We are all human
We all have our sins....and theres plenty of yours that might cost me money
MY GOODNESS we have to cooperate and in a compasionate and civil society.
Smoking was once an accepted, encouraged practice. I used to smoke, started in the late 60's and recently quit after ten years of trying!
Why have we not outlawed this very dangerous substance?
If you are serious about not paying for someone elses bad choices, why would you stand still for your government rewarding the industry and punishing victims? Where is your outrage about their subsidies?
http://www.opensecrets.org/pacs/pac2pac.php?cycle=2012&cmte=C00042002
http://www.opensecrets.org/index.php
and FYI
It's the GOP taking the lions share of the tobacco industry money while blaming the smoker for the cost of healthcare. There is something morally wrong about that kind of mentality and it's why I won't be voting the Grand Old party
They really think we are this dumb?
questions
still out there mt?
we have to
Have term limits on professional politicians
swimmergirl
Having some experience during a catastrophic illness with private insurance and the federal government (who is mandated to care for all people): The insurance company started pumping $ at the point of diagnosis until the end, little over three years.
The federal government required proof of imminent death within one year but benefits from SSI would not kick in for two. (Saved them two years in cash payouts.) But of course my government offered solace in the amount of $250 upon death. (No, wait, that was rescinded because of a S.S. overpayment.)
huh?
Let me get ths straight.
The ACA mandates that if a woman chooses to have birth control insurance companies must cover it. Why is it anyone's business what a person's health care choices are if they are not that person and their health care provider? What is more costly, an unplanned pregnancy or birth control?
We all know the answer.
What this “debate” is really about is that one side considers sex for anything but procreation immoral and an abortion. Yes, they consider The Pill, IUD's, Plan B, etc... to be an abortion. This belief that birth control is immoral/abortion is based upon their RELIGIOUS beliefs. These are the same people who say “Keep guvment outta my Church!” and “Keep guvment outta my body!” while demanding the ability to deny women access to control over their own bodies through government rules, regs, and laws without so much as a blush at their blazing hypocrisy.
Oh and btw...
My vasectomy was covered 100%. If I wanted Viagra or Cialis? Covered.
Pills for hypertension, cholesterol, and insomnia because I choose not to exercise and eat better? Covered.
If I fall when repairing my roof instead of paying someone to do it? Covered.
If I break my leg skiing? Covered.
If I get in a wreck choosing to drive my car? Covered.
Insurance covers lots of things that happen because we CHOSE to do one thing over another. The fact that it is a woman choosing to control her own body should not make it any different.
@no consequence
Good questions.
The difference between a motorcycle helmet and The Pill is that the latter requires a doctor's involvement and a prescription. Thus it's a medical procedure.
Last I saw, helmets don't require a doctor's intervention, though anyone riding a motorcycle without a helmet should have their head examined by a mental health professional.
Note that condoms don't get insurance coverage either...they're in the helmet league. Perhaps I'm being too quick to judge those motorcycle riders - maybe they're wearing their little 'helmets'.
mama t
It has historically been the Democratic Party members, (Southern Democrats in particular) who have introduced, industrialized and reaped the benefit of tobacco. Why do you believe the Grand Old Party is responsible for 'pushing' this product? Just curious.