Nothing Could Be Simpler Than Cheap Health Insurance
Insurance is a simple formula for adding efficiencies into the market of life's unexpected misfortunes. By pooling risk and lowering costs today, consumers are protected from having to absorb a high priced event in the future.
Unfortunately, health insurance has been so altered by the "do-good" forces of government policy and regulation that the incentives inherent in efficient insurance principles are on life support. The result: honest hard working Americans are not going to buy health insurance.
The Affordable Care Act and its ancestors: Medicare, Medicaid, WWII wage controls, and a litany of legislative prescriptions have so injured the health insurance industry that the benefits versus the cost of purchasing insurance have little value. Unless you are being subsidized by Uncle Sam's redistributive injustice, rates are now out of line with what Americans are willing to spend.
On average, health insurance is now in the $500 a month range per individual; with no benefits until you reach a $5000 deductible. This means a typical person will have to spend $6000 dollars a year paying for health insurance they, in all likelihood, will not use.
On top of that, you have to pay up front the entire expense for seeing a doctor for a general illness or injury. This can inflict painful choices on a monthly budget so you can forget about wellness care. Under these parameters the current healthcare insurance system is going to make you sick.
When 93% of Americans earn between $30-90,000 a year, these premiums are a burden that is either overwhelming or seen as a misallocation of dollars when weighed against alternatives. Some would rather drive a Mercedes Benz and enjoy a shortened life then pay for health insurance and struggle with how to live.
Under "Obamacare," not having insurance carries a tax penalty of $1000 or so for the average family. Coughing up $100 a month tax is cheaper than paying for insurance and, after all, with a little effort, loop holes can more than offset the cost. With most hard working Americans already receiving the tax equivalent of a government proctology exam, a tad more violation is no big deal.
And forget insuring the family on a group plan via your employer. Rates have reached usury levels that would make a mob boss blush. When a subsidized Blue Cross HMO for a middle class family is over $1200 a month, insurance is out of reach. People are just not going to pay mortgage size health insurance premiums that kick in only after a catastrophic event. At some point, pesky things like food, clothing and shelter take precedent in the budget.
Current prices and disincentives will drive people to just "roll the dice" and go without insurance. After all, if a real medical emergency occurs they will go to the hospital, get the highest quality treatment in the world, and pay the hospital a few dollars a month in perpetuity to keep creditors off their back. It is a simple risk, reward analysis.
This will shift the costs to hospitals and doctors who will be overwhelmed with patients that have no insurance. Of course this is when the politicians will jump in and advance a fully socialized system of government run healthcare. Maybe that was the plan all along?
The benefits of insurance are self-evident; but if it does not provide a positive cost to benefit ratio people will direct their dollars elsewhere. It's a trade-off between going bankrupt now with insurance or going bankrupt later without insurance; for most the answer is a no-brainer.
Is there a solution to this mess? Yes and it's simple. Sell health insurance using the same free market principles that are used to sell auto insurance. Whether it's the health of your car or you, life's unexpected misfortunes will occur and insuring the unexpected need not be complex. It's time to take health insurance off life support and transfuse it with a healthy dose of the invisible healing hand of the free market.
