Private health insurance and the National Health Care Bill part 2

The author, Ted Wolk, has over 30 years experience in the life and health insurance industry, looks at the National Health Care Bill and shares his thoughts on the core problems related to this Issue. PART 2

So who is really at fault for higher premiums?

Is it really the health insurance company’s fault that premiums have gone sky high?

Let’s look at the real business world and not the fantasy world. Health Insurance premiums rates are based on claims and morbidity rates, in other words, hard undisputed realistic data. Life insurance companies use mortality tables and health insurance companies use morbidity tables. These are very accurate actuarial tables, actuarial tables that are built on proven and scientific data.

However, when you continue to throw in unknown variables such as increasing malpractice claims, fraud, illegal claims, double billing, etc., it throws everything out of whack, so unless these issues are brought under control, how will you ever be able to lower or get health insurance costs under control? You never will.

What do insurance companies really do?

Insurance companies only pay claims that are submitted to them by the clients, patients and the doctors and hospitals. They have no control of these claims. Let me say that once more. Insurance companies only pay claims.

What do I mean by no control?

As an example, they have no control of all the malpractice claims that they must pay. They have to pay out all the large malpractice claims that are allowed under our current laws. Insurance Companies have no control of these claims or the amounts, or when they will have to be paid.

And because they have to dish out money for malpractice claims, they have to raise the rates for doctor’s malpractice insurance and guess what, the doctors then pass these increases along to you. It adds to their overhead and expenses. This then results in a pass through expense to your health insurance company, thereby raising your premiums. (Remember 100 cents in a dollar)

So in reality, both of these factions, (insurance companies) and (doctors/hospitals) are in a catch 22 situation – no win situation.

So again, I ask, how does it become the insurance companies fault if they have to raise rates to make ends meet at the end of every year, when they have no control of issues like this?

Who gets the Bad press for trying to keep insurance premiums down?

Insurance companies that want to keep the costs down always  end up getting bad press when they will pay only so much for certain procedures. Why? Because those payments are based on actuarial tables or on sound business principles.  No one ever seems to jump on the hospitals and doctors. It is always the insurance companies fault. Why is that? Because most people don’t know what type of coverage they really have till they are in the hospital. (Note: It would b nice if insurance companies could get rid of all that small print, but that won’t happen till all these lawsuits gets under control.

See Part 3 on the National Health Care Bill

See Part 1 on the National Health Care Bill