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Life & Health INsurance Companies are just soooo DIRTY!

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Message Ed Tubbs
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Froma Harrop (click here in yesterday’s Press-Enterprise, opined how Bush was sheltering insurance company greed with his justifications for limiting governmental expansion of the children’s health care program (S-CHIP).


While there’s almost nothing I could conjure that would expunge a drop of the animus I feel for not only George Bush but virtually the entire GOP contingent in government as well as all who voted GOP in 2004 and 2006, and while there’s little positive I would attempt to posit concerning the insurance industry, I would like to offer food for thought on the mess.


In the way of a disclaimer, for 15 years I have been a licensed life and health insurance agent, hawking a variety of insurance company products. While admittedly some commissions on first-year premiums can be quite high and thereby appear to the lay consumer as motivating to the rep, only the new agents are much swayed by them. The name of the game resides in the residuals; what an agent earns from the years of persistent downstream business on policies the consumer keeps in force. It really doesn’t do a bit of good selling a policy that’s not in the insured’s best interest. If a complaint of unsuitability is filed with the state insurance commissioner, the mere fact of the ensuing investigation is a stain. The time consumed by the agent responding to department of insurance inquiries further reduces the hourly rate the agent may have felt he or she earned from the “quick buck.” And finally, it’s likely the insured will cancel or let the policy lapse. Cancellations result in the agent returning any unearned commission back to the company, and the consequences of policy lapses are no residuals and likely unwanted ill will from the insured’s circle of associates; the primary and easiest to mine source of new business.   


Phew! Glad that’s out of the way. Now I can concentrate on the gist of what I want to posit.


The insurance industry is the only one I know where a company earns exponentially more the less and less it provides in exchange for the price charged.


The philosophy insurance is based on has the consumer-subscriber transferring the dollar costs from any of a variety of risks he or she faces to the insurance company. Those risks are pooled among all the company’s subscribers.


The company, to hedge its bet against inordinate loss, cherry picks individual applicants based on the information contained in the application and from its external investigations of the applicant. Adverse selection is the company buying a claim; analogous to selling a fire insurance policy to someone whose house is ablaze.  An entire army of underwriters is solely responsible to see the company does not adverse select. Another army is employed simply to deny coverage to a subscriber, whenever and wherever possible. A tactic many companies have resorted to is denying a claim based on a preexisting condition, even if neither the insured nor his or her physician of record had prior knowledge the condition existed!


On group policies, the company cannot cherry pick. What it does to counter the claims, via statistical/probability analyses that demonstrate conclusively it’s going to suffer, is to charge premiums to the employer commensurate with the ages of the employees. By dint of the physical condition wrought through aging, the older the employee, the higher will be the premium charged. It isn’t tough to see how this could coerce employers to discriminate between job applicants based on age. (And please, please, please do not think for a moment that such discrimination does not take place. It’s rampant.)


In the case of a job termination, whether voluntary or not, the individual may have the legal right — COBRA — to keep his or her coverage, but now at a premium that for all intents and purposes, makes it inaccessible. And if the now-out-of-work applicant has a preexisting condition, high blood pressure or a history of diabetes, for example, no insurer is going to go near him. PERIOD! No exceptions! After all, business is business, and the insurance industry is likely the most successful business of all.  


There is another type of health insurance: the HMO; health maintenance organization. The overriding risk to those who join one is the sponsoring company, finding its losses unacceptable, moves out of state or leaves that line of business. For the individual, now with no protections whatsoever, now older and perhaps with a condition deemed preexisting, where to go, other than the bankruptcy courts when a health crisis arises?


Everyone has heard the coarse mantra — “SOCIALIZED MEDICINE” — screamed as opposition to any government participation in the health care dilemma. Pointed out are allegations that the citizens of countries where universal coverage is the mode must wait inordinately for certain kinds of care, or that some government bureaucracy determines whether the care sought is warranted, depending on the symptoms.


Look folks, we have a much worse scenario here, under the private insurance paradigm. Armies of clerks fight with America’s medical professionals every day, telling the frustrated physician the recommended treatment will not be covered; “clerks,” as in C-L-E-R-K-S! All this administration comes at an exorbitant cost; approximately 30¢ of every premium dollar! And the best the country gets in exchange for substantially higher healthcare costs than anywhere else on earth is a dismal comparison with every other industrial nation on earth; lower birth weights, higher rates for infant and maternal mortality, higher morbidity (disease) rates, shorter life spans. Furthermore, every US company that offers healthcare coverage is at a very serious disadvantage in the global market. No one wins.


So long as we pretend to the present system of private insurance coverage, remember: 30¢ of every premium dollar, the country will get poorer and poorer and less and less healthy as only a select few insurance company execs remain in President Bush’s and the GOP’s “haves and have mores” club. Those few are the only winners in this charade. And this is coming to you via someone who has done okay marketing health insurance policies.


A single-payor system, similar but not necessarily the same as Medicare, seems to me to be the most efficacious model. It would not be without extraordinary serious problems; funding, implementing, managing, etc. But look what we’ve got now, and scan the horizon for the straits we’ll be in (YOU’LL be in!) if we don’t engage those challenges immediately.  


K-Street is gonna fight like hell, and they’ve got the Milky Way galaxy big-bucks to kick up a ton of obscuring dust. The questions I propose all of us consider are which candidates and which political party seem most on record for their readiness to engage the enemy?


— Ed Tubbs

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An "Old Army Vet" and liberal, qua liberal, with a passion for open inquiry in a neverending quest for truth unpoisoned by religious superstitions. Per Voltaire: "He who can lead you to believe an absurdity can lead you to commit an atrocity."
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