Friday, July 13, 2012

How Insurance Really Works - Not Obamacare

I dislike belaboring the obvious, but often the ICO leaves me no choice. In this instance, it’s the “Shared responsibility” editorial about health insurance, particularly: “The way to pay for it, of course, is for everyone to participate, including those who are currently in good health. That’s how insurance works.”

Except that’s not how insurance works.

Alice and I recently purchased our next 15 years of term life insurance just before our 70th birthdays. Our excellent health qualified us for the lowest rates for our age group, but we are now paying three times what we did 15 years ago. If we smoked it would be four to seven times our current rate. A term life insurance rate depends on your state, age, gender, height, weight, health classification, and if you are a smoker or when you stopped smoking. If your state of health is in the lowest of four classes instead of the highest, your premium increases about 40%. The healthy don’t subsidize the unhealthy.

Auto and home insurance are similarly discriminatory.

The argument that everyone, insured or not, will place demands on the taxpayer funded system is specious. The Los Angeles Times reported (Cash discount for health care, May 28, 2012), that it was much cheaper to pay for health services in cash than through many health insurers. For example, a $6,707 CT scan cost an insured person $2,336, but only $1,054 if paid in cash and not claimed on insurance. A $4,423 CT abdominal scan through insurance cost $2,400, but the cash price was $250.

One of my friends in Fort Bragg has paid cash for health care all his life, saving a fortune while never burdening taxpayers. For more about paying your own way and saving money, see Paying Cash for Healthcare.

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