Monday, March 29, 2010

Insurance Is To Mitigate Risk

Without risk, why buy insurance? Philip Greenspun's Weblog � Can I buy last-minute health insurance?
Consider a family in Massachusetts that earns $100,000 per year. They decide not to pay $20,000 per year for health insurance in 2013 when the bill takes effect (we already have the highest rates in the U.S. (source)). They get fined 2 percent of their income by the IRS, which costs $2,000 per year, plus pay a bit out of pocket for routine checkups. When a family member is diagnosed with cancer and needs treatment, they sign up for health insurance at $20,000 per year. The insurance company cannot deny them coverage based on the preexisting condition that was diagnosed a week before. After the cancer has been treated, they drop the insurance.
So how long do you think it will be before the insurance companies are out of business?

Or, how long do you think it will be before the law forcing companies to accept these contracts is thrown out? What do you think the Dems are hoping for?

3 comments:

Robb Allen said...

They are planning on killing the insurance industry. Where there are no more insurance companies (or more than likely only a few large companies engaging in Government Sponsored Rent Seeking), then there will be no other option except to go to single payer.

That's the end goal. The only thing stopping them now is the system collapsing faster than they thought and the populace fighting back.

Jake (formerly Riposte3) said...

I know that if I were in the insurance industry, I would be working as hard as possible to get out. This requirement of covering people with preexisting conditions couldn't be better designed to destroy the industry's ability to actually make a profit.

Rich said...

It may be that Obamacare doees not force insurance companies to cover pre-existing conditions. see:
http://justoneminute.typepad.com/main/2010/03/who-has-time-to-read.html
and http://althouse.blogspot.com/2010/03/starting-this-year-insurance-companies.html

The more things change the more they stay the same.