To The Daily Sun,
Where does the responsibility of political inaction lie? Depending on your political leaning, it is either with the Obama administration or at the feet of those who have opposed him. Let's be clear, most of those who opposed President Obama don't write letters to the editor of The Laconia Sun. Although the local writing talent in the conservative pool make a consistent and concerted effort to plant seeds of doubt in our minds, they are not the most venal of the opposition to progressive ideas. The really big boys in the conservative movement lurk behind their lobbyists who are down in D.C. pushing agendas that have nothing to do with the welfare of the average American. As a result, we have some serious unaddressed problems.
Let's start with the health care issue as related to insurance. What you have is a group of companies that are "for profit" and a population with a need for care. Thus, you have a marketplace! Having worked in the life side of insurance, I can tell you there is quite a bit of profit to be had in insurance. Some insurance companies are more upright and honest than others. That's one of the reason for the states and federal government to get involved in the regulation of those who want to operate in our communities for a profit. In the not too distant past, some deregulation of those who offered insurance products was passed in Congress. What the deregulation achieved was not what was intended by the makers of the bill. What happened as a result was that the insurance companies, banking institutions and real estate companies came together "for profit" at the expense of both the taxpayers and the buyers of life and health insurance. Let me address the life insurance idea first.
Deregulation allowed two products to be offered. Banks were allowed to offer term insurance to their customers at attractive rates. That in some sense was a good thing. But the banks used it as nice little profit center that they could show to their re-insurer. The re-insurers would then use their sizable profit from the program to invest in real estate products called limited partnerships. Because of the deregulation of banks, they could offer the partnerships to investors who could afford to pony up $10,000 or $20,000 for a share in the profits over a set number of years. That is just one of the examples of how the insurance companies reached down into our pockets for profit.
Up until the deregulation, most people invested in whole life policies which accumulated cash value somewhat like a savings account. A nice concept for those who have trouble saving money. In case you died, the company paid the face value of the policy. You could actually borrow a portion of the cash value during the life of the policy.
Deregulation allowed the insurance companies to offer what was touted as a variable life product. The policies were usually written for greater amounts of death benefit, but were of little value if you wanted to have a product you could go to in hard times for a loan on its value. Agents went to all their insured people and offered the new product to replace the whole life policies and in the process pay the first year's premium on the new policy. If there was any cash value left over, it was returned to the policy holder. It was an inferior product that was slightly better than the banks new term products but cost more per thousand than the term from the banks.
Now, let's take a look at what deregulation did for the health care insurers.
Prior to the deregulation, states were able to control the product quality and to some extent the rate increases requested by the companies operating in their state. Blue Cross/Blue Shield had to go to each state to be licensed to operate. There were some other insurers in the field offering policies in the various states. The value received was usually good because the state and the companies were watching where the dollars provided out of company funds were going.
Deregulation allowed the HMO concept to arrive on the scene. The so-called Health Maintenance Organization was in theory controlled by the insured population. Well maybe, but as they say, the devil is in the details. Turn a bunch of insurance salesmen loose with a product and captive audience and you a have formula for corruption. It got sold to companies as a cheaper product, to the doctors as guaranteed income and to the general user population as a way to maintain their wellness. What's not to like?
One of the features that seemed to irritate the users was that there seemed to be a lot of procedures that required pre-approval. Another problem for the customer was that the doctors were encourage by the HMO to limit the referrals to experts in the field because it would affect their income stream. As companies started to feel the effects of the employee discontent, some of that abated, but it left a bad taste in the mouth of the user.
Enter President Obama and the concept of universal health care. The perceived need for it was felt most strongly by those who had to contend with the uninsured. Approximately 20 percent of the U.S. population had no health insurance. I will address the pros and cons of the universal health care concept and how it evolved into the Affordable Care Act in my next letter. I will deliver it to you as a Christmas present because I will be too busy watching the election in the next few days.
- Category: Letters
- Hits: 138