Saturday, July 7, 2012

Group Insurance and "Bogus Choices"

So here is a comment I ran into a few weeks ago on NARAL OH's page:

I find it ironic how people demand freedom of choice to have sex using birth control and then get an abortion while in the same breath demanding that it be funded by others who do not hold the same values. Why is it that one group feels it can force another to violate its moral conscience. If people want to use birth control and or get an abortion why can't they pay for it on their own dime. People need to stop making other people pay for their bad choices and actions and start taking responsibility for their own actions. This ultimately is what the real issue is here, but it seems that folks who demand pro-choice don't want to hear that. Instead what they hear when subsidized funding is going to be taken is that their rights are being violated allowing them to make their own decision. But really if people want to make their own decisions then they should get to pay for them to.
This was my reply:

Actually -- when we participate in all insurance we pay for things we may or may believe in. For example, I don't for one minute think people should consume any artificial colors or favors and fake sugars or  high fructose corn syrup. I am pretty sure a huge portion of my health insurance dollars are going to cover diabetic treatments and hypertension drugs for people who have failed to look after their weight and health appropriately. But that is part of deal. Don't even get me started on people who choose to smoke, knowing the risks and then want me to cover their O2 supplies and or cancer treatments. Hello, it is scientific fact that smoking leads to lung cancer and other lung diseases. But because I understand how insurance works-- I pay my premium-- even though I really do not approve of those other people's choices.

Maybe people who don't want to pay for birth control or abortion as standards of ob/gyn care as approved by the FDA and various medical boards and medical ethics committees should, oh I don't know go find your own insurance and leave the test of us who get how group insurance works alone.

Let's indulge in a little Business 101-- which I am qualified to teach-- seeing as I have earned an MBA...

Insurance Company Profit = earned premium + investment income - incurred loss - underwriting expenses.

So this is the basic business model for ALL insurance. The idea behind insurance is transferring or sharing risk. We can quibble all day-- about earned premium and how to define it, in terms of health insurance it is the money we pay in premium from our pay combined with our employer contribution (which is why COBRA is so blooming expensive-- you pay the whole entire amount... yours and your former employers.)

When a independent business owner(solo practitioner) or freelancer goes to an insurance provider, often times they purchase an individual contract, the rules for those are different, there is more risk to the insurance company, they are insuring one person or one family. Group insurance, like what most of us have at work, the rates are based on the pool of people and not the individuals. As such this is why there are no physicals and many of these plans are covered by ERISA-- which is a complex set of Federal guidelines which cover all manner of employee benefit plans. (Big Gov't is already nosing around your insurance. Has been since the 60s.)

So even though I am fit and active and eat a super healthy mostly organic diet, the person two cubes over might well smoke, gobble Doritos, never drink anything but Coke, and refuse to climb stairs. They might well choose to do drugs on the weekends or on the flip side engage in weekend warrior behaviors that their body is really not up for... I get no say in that. They get to make their own choices. We all pay a premium based on the group's overall costliness annually.

Let's go back to our formula:

Insurance Company Profit = earned premium + investment income - incurred loss - underwriting expenses.

Ever since insurance companies became publicly traded companies, the Profit is basically guaranteed. No CEO is going to steer the company in a direction that does not generate shareholder (his) wealth. Not. Going. To. Happen.

So the Insurance company will do their best to control costs of underwriting and administration (aka loss), they will seek to curb the benefits paid out (EOB with bullshit exclusions and other delay tactics designed to just not pay claims) and other limits to what they will and won't pay for. I am not saying fairly and disclosed limits are not kosher. They are. Asking people to pay a portion of the costs is fair-- if it is clearly disclosed.

(self funded plans are another animal, but the idea is the same... yearly surplus is substituted for Insurance company profits and ERISA governs the proper use of this as well.)

Another way to ensure profit is to continually raise premium costs to participants. I have never not had a premium increase on a year over year basis. Once-- at my first job out of college, we got a rebate. A small one. Not nearly equal to what we paid a month in premium.

So we all pay for life style choices we may not agree with. Most major religions come with prohibitions and some overlap and others are in direct opposition. We all pay for our co-workers' lifestyle choices which are in direct conflict with our own.

I say for as long as our employers demand we pay a portion of the premium, any portion, then we all should have a say in the coverage. Or there should just be a standard of coverage which is universal. Sex is no more a risky or costly choice than smoking. They both have known and frankly quantifiable, in terms of costs, possible outcomes which impact the underwriting of insurance. Insurance companies have priced out the cost of every sneeze and hangnail.

So I think we have a few choices-- nix group health insurance and have it be every man, woman and child for themselves. Individual policies all around. Which would be pricey, but technically speaking no one would be paying for other people's choices. (although that likely isn't exactly true. Insurance companies pool their premium dollars, so this would be to their benefit, they charge more for individual policies and still have a pool of dollars to invest and pay out, but technically speaking your premium would be based solely on you and your families health and choices, and age.)

Or we just take some time to understand how group insurance works and accept that discrimination isn't really in any of our best interest, because I am not all that tolerant of smokers and I know I have shouldered the burden of their "choices" to poison themselves and their loved ones for years... way longer than I was ever on birth control... and I am willing to bet next month's premium it costs us all alot more to cover smokers and smoking related illness than comprehensive gynecological care ever will.

So unless we are going to not cover people who are smoking because of the choices they are making-- I think the argument that childbearing and birth control and family planning are "choices" is bogus.

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