Healthcare Reform or Entitlement Program?

The PPACA is depending on a $500,000,000 cut to Medicare reimbursement that it now pays out to providers on an annual basis. From a political standpoint, this is impossible to keep relying on.  These cuts mean fewer providers will participate in Medicare. Right now in America, the major voting block is from senior citizens who would be enraged if they discovered that this would create a huge cutback from providers offering Medicare.

Presently in Pennsylvania, as is the case in most of the other states, anyone who is young and healthy has the right to purchase an individual policy from one of the major health insurance carriers valued at $5,000,000 for around $100 a month. 

The reason for this is because the policy includes a clause relating to pre-existing conditions.  The pre-existing condition clause protects these young and healthy individuals that in turn enable them to have this type of policy at such a low monthly premium.   The issue is that if at this time we already have a problem getting enough young people to actually purchase such a low premium policy in 2010, how on earth will we ever be able to entice them to purchase a similar policy with a no pre-existing condition clause and unlimited benefits when the cost in 2014 will escalate much higher? 

In 2014, individuals with a serious health condition will be the first to stand in line to purchase health insurance from the newly created State Exchanges.  The young and healthy on the other hand, will take the stance that since they are in good physical health, why would they purchase insurance at all, especially if they will be able to obtain insurance at a later date, when and if they fall ill.  It is simply human nature not to buy something until you need it, especially insurance.  That is, unless it happens to be a pair of shoes, tickets to the ballgame, or an all inclusive vacation.

Adding insult to injury, President Obama has been referred to as saying that anyone who fails to purchase basic health insurance will be fined and possibly even prosecuted if they decline to opt in to the program.  If that were to actually happen, it would take years and years just to accomplish the procedures necessary to monitor, manage and then enforce these policies.

Companies that participate in the 2014 exchanges will not be required to underwrite their policies.  Thinking  back to the credit issues that AIG experienced a couple of years back, it was discovered that because AIG had no underwriting of their credit default, was  exactly what caused all the financial misery they endured as a company, not to mention most of the other  major banking institutions in America during the same time.  If the risk is not underwritten, the program may as well be considered a “give away”.

So what this all boils down to is that President Obama wants the insurance companies and large employers to finance a national health insurance plan by levying taxes and inflicting harsh penalties to those that do not comply.  If the President wants national health insurance then he must have the votes to pass a tax such as the Medicare Tax to fund this new entitlement program otherwise this shouldn’t be considered insurance at all.  It would be better and wiser for everyone to call this a new and very large Entitlement Program that only a massive tax increase can support.

About the Author

Albert Kieres:

I have over 22 years of experience in Employee Benefits and Group Health Insurance. My goal is to be an expert on a few specialized products and focus on providing the best value to the consumer.

In 2002 we at American Sentinel designed a program to provide a quality voluntary Limited Medical health insurance program to employees or independent contractors, which currently are not included in a group health insurance plan by their employers. We reviewed the competition and designed a totally different concept which has been approved in 39 states.akieres@aegisfirst.com