If you have been following the Health Care debate recently you will have heard many arguments coming from Democrats that insurance is unaffordable to some, and others cannot obtain it due to pre-existing conditions. They argue that our current system is setup to unfairly benefit the rich at the expense of the poor. The solution to the Health Care problem as always will be new legislation, new Government programs, and certainly new taxes.

Hillary Clinton was speaking today at Lance Armstrong’s LIVESTRONG Presidential Cancer Forum in Cedar Rapids, IA, and specifically addressed what she referred to as Insurance Discrimination.

Ending Insurance Discrimination. Today, insurance companies spend millions of dollars working to discriminate against those with expensive, pre-existing conditions by denying them coverage or treatment. Cancer patients are those most victimized by insurance company practices of trying not to cover care when it’s needed most. In order to end insurance discrimination, Hillary Clinton will:

• Create a guarantee issue system. A “guarantee issue” system, built on the concept of shared responsibility, allows anyone to join a health insurance plan.

This is something you will hear a lot of over the course of the next year as we lead up to the elections. Politicians will tell you that our current insurance system is unfair because it ‘discriminates’ against those who have pre-existing conditions such as cancer. They neglect one very important issue however, and that is the meaning of insurance. Here is how Wikepedia defines it:

“Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium”.

Or as Chris Rock so eloquently put it, insurance could also be called “in case sh$t”, meaning you purchase an insurance policy in case sh$t happens. For example, you wake up one morning and find your car stolen. Provided you have theft coverage, your auto insurance will reimburse you based on the current value of your car. This is the underlying principal of purchasing insurance, making small monthly or yearly payments to transfer the risk of a large loss to a third party.

Now imagine you did not have theft coverage, but you were living in a state with “guarantee issue” laws for theft coverage. You could then call up your insurer and add theft coverage even after your car was stolen therby being entitled to a hefty check from the insurance company while only making one minimal payment to them. Under these circumstances, would you as individual choose to pay money every month for theft coverage on the next car you purchased?

This is the problem with the so-called guarantee issue laws. There is no incentive for healthy people to pay monthly premiums when insurance companies are mandated by law to insure them even after they become sick. Look at what has happened in Maine since 1993 when they passed guarantee issue laws:

In the years since guaranteed issue and community rating were adopted as health insurance standards the uninsured population in Maine has remained relatively stable at around 10 percent, but Medicaid enrollments grew from 9 percent in 1993 to 21.4 percent in 2004. In fiscal year 2003 Maine spent $535 million to fund its Medicaid program.

“If you’re a family of four with parents fifty years old living in Kittery and you want a policy with a $1,000 deductible, it will cost $1,712 a month,” David Spellman, a Westbrook insurance agent explains, “and the proposed 2006 rate increase from Anthem will push that to $2,200 a month.

“If you move your family across the river to Portsmouth, New Hampshire, you can get the same policy from the same carrier for $950 a month. In other words, move to New Hampshire and you can save enough on health insurance to cover your mortgage payment.”

And a twenty-five-year-old man in Maine pays $496 a month for an individual health insurance plan that costs less than $130 a month in Connecticut, Spellman adds.

By passing guarantee issue laws, politicians ignored the purpose of an insurance policy. Costs soared Statewide, and Medicaid enrollment skyrocketing from 9% in 1993 to 21% in 2004. Democrats will tell you it is discrimination to not offer insurance to a person with a pre-existing condition, even though the insurance company will be guaranteed to lose money on that policy.

The solution is not supplying these individuals with Government mandated insurance after they become sick, but by offering them assistance in purchasing insurance prior to becoming ill. Mitt Romney is the only one of the Presidential hopefuls who has come up with what I would consider a reasonable health care plan. Under Romney’s plan all Americans would be mandated to have health insurance, and the government would assist the poor in paying their premiums.

Guarantee issues laws have already proven to be a complete and utter failure. Hillary Clinton’s proposal for new guarantee issue laws will only further exaggerate the nations health care problems by increasing costs and forcing more Americans to cancel their policies. This of course is exactly what Hillary and Co. want to happen however, because we would then be one step closer to socialized medicine.

Don’t be fooled America, guaranteed issue is a guaranteed failure!

Sphere: Related Content

If you enjoyed this post, make sure you subscribe to my RSS feed!

Election 2008, Health Care, Politics