1. The current debate about reforming health insurance assumes a false premise. The health care industry wants America’s politicians and its people to presume health insurance should be employment based. President Obama, in his speech to the AMA, said he considers it the moral obligation of every employer to provide health insurance to employees. Carefully considered, this premise makes no sense.
2. Why is health insurance employment based? The risk of ill health is not employment based. The risks insured by health coverage is not employment based. Therefore, health insurance should not be tied to employment; it should be sold by private sellers to a consuming public that can demand market-place competition for premiums, like other forms of insurance.
3. Simply, health insurance should be priced and sold where the risks are… in our lives and not at our workplaces.
Match Insurance Sources Would Risk Sources
4. Employers do appropriately provide certain insurance that covers work-related risks. For example, workers compensation coverage protects employers and employees against risks of injury at work or illnesses caused by working conditions. Insurance on the employer’s vehicles provides coverage against risk of a motor vehicle accident involving a company vehicle. General liability coverage protects business visitors, guests, and other vendors, and the like. These are all work related, and appropriately employment based kinds of insurance. Even life insurance for professional drivers or pilots makes sense.
5. The health care debate is not about work-related illness. It is about insurance for general health needs. Influenza, pregnancy, geriatrics, etc.,are seldom work related. They go with living in society, and being living organisms, and being part of a colony of living people. These are life-related. They afflict employed and unemployed persons alike. And, when these are work related, they are covered by workers’ compensation benefits, including payment for health care costs.
6. So, why doesn’t a nation, which provides a government for all facets of life, gear its health insurance business, and payment of its health care costs, to the life-based source of health risks, and not to employment?
7. Health insurance should not be different.
8. A homeowner’s residence must be insured under a policy the homeowner buys through a general agent. The same is true of a private auto, a vacation home, renter’s coverage, insurance on a private airplane, farm insurance, crop insurance, or other forms of coverage. These coverages are not based on an employee’s relationship to an employer because they have nothing to do with such a relationship.
Do Not Create False Ties Between
Insurance Acquisition and Sources of Risks
9. Insurance should not be sourced from a location different from the risks against which coverage applies. Indeed, differences between the source, and risks, skew insurance. Take, for example, group health insurance and small businesses. Insurers are notoriously hard on small employers, charging them massive sums of money to provide coverage. Yet, a thousand small employers, employing ten (10) people each with a work force of 10,000, is unlikely to produce a demographic risk group different than the risk pool presented by a single employer with 10,000 employees.
The Difference is Administrative Costs; They Can Be Eliminated
10. The difference is administrative cost. This difference could easily be eliminated if neither the large nor the small employers provided the coverage, and that the insurance companies were required to insure all 20,000 people on the same basis. None of the 20,000 hypothetical insureds seek health coverage for risk-related injuries and illnesses. Workers compensation takes care of that. So, why can’t each of the 20,000 employees find coverage in conventional, direct sales ways, or through direct contact with insurers, and not through work-related groups?
11. Rating groups permits insurance companies to raid small business coffers. It is as simple as that. The fallacy of group-based health insurance is that it increases administrative costs through the insurance company by driving up business positions unrelated to investment, pricing, funds administration, or claims handling. It creates more sales positions, and provides more grounds for upcharging coverage and improving profits.
12. Elimination of employment-based insurance for general coverage available to all on the same basis, permitting different pricing programs to develop, and allowing more competition, will spawn more insurers, take advantage of the market place, universalize coverage availability, and if the government requires it, permit all to be employed on grounds that match their needs. The government’s reserve program can supply health for those in times of transition.
“Unemployed” Should Not Mean “Uninsured”
13. Employment-based insurance inherently means that those who are without employment are uninsured. COBRA, providing an eighteen (18) month runoff period, serves no protective function. COBRA means the unemployed person must pay large premium costs even though there are no funds with which to pay the premiums.
14. It is hard to find a legitimate reason to base health insurance in employment groups, or offer it through employers. Certainly, this method of offering coverage to the public had proven profitable to insurance companies. It has broken the backs of small businesses, and recently large businesses as well.
The Time Has Come
15. The time for health insurance reform has arrived. Among those major features of reform under consideration – elimination of pre-existing conditions exclusions, portability, and reasonable qualification criteria – is the need to detach health insurance from employment and an employment base.
16. Until the source for health insurance matches the risks, America’s problem of paying for its health care costs will not be solved. Employment bases cannot function effectively to provide an insurance that covers the risks of ailments and injuries in the process of life, not time at work.
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