The Over Educated and Under Experienced and Health Care
The following is an interchange between one of the architects of the Affordable Care Act and Chuck Todd of NBC.
JONATHAN GRUBER, M.I.T.: “Let’s start with understanding that we’re not talking about the vast majority of Americans. This law is really leaving those with employer insurance, those with government insurance alone. We’re talking about a small minority of Americans that buy insurance on their own through the individual market.
CHUCK TODD: Still millions of people.
GRUBER: Exactly. It’s 12 million people, about a third of which will end up paying more under this law. And that as you said in the introductions sort of the idea. We currently have a highly discriminatory system where if you’re sick, if you’ve been sick or [if] you’re going to get sick, you cannot get health insurance.
The only way to end that discriminatory system is to bring everyone into the system and pay one fair price. That means that the genetic winners, the lottery winners who’ve been paying an artificially low price because of this discrimination now will have to pay more in return. And that, by my estimate, is about four million people. In return, we’ll have a fixed system where over 30 million people will now for the first time be able to access fairly price and guaranteed health insurance.”
This opens a window into the mind of at least one of the people who built the ACA. He describes healthy people who either chose not to buy health care insurance or chose very limited policies as “genetic winners”. He also says that they were paying artificially low premiums.
This thought process condemns the insurance companies as poor business people and incompetent. How could the costs of the insurance they had be artificially low? Why were the insurance companies still in business if they undercharged for the policies?
I think they were looking at the situation through their own eyes and not the eyes of the genetic winners. Who is he identifying as the genetic winners? Almost certainly he is describing healthy young educated individuals who are more successful than the average young individual.
They do not have employer provided health insurance so they are probably self employed. They are more independent and smart enough to evaluate the situation and make the best choice of how they will spend their money.
They decided to buy insurance for catastrophic coverage rather than for day to day needs. They took the bet that their annual medical bills would be less than the cost of the premiums for medical insurance so they covered themselves against a sever accident of a major medical illness.
In a free market economy in a land of free men and women that is a freedom that should be available to all. The ACA does not like freedom; it can’t allow free choices because it can’t work if everyone gets what they want.
The ACA condemns an insurance company’s decision not to accept an individual if they have an existing condition. That is a smart business decision by the insurance company.
I don’t think the over educated and under experienced people who created the ACA understand how insurance works. An individual pays the premiums and expects the insurer to cover the expenses covered by the policy. For medical insurance the insured accepts the concept that they may be paying for something they will not need. The cost of the insurance premium is worth the risk; hopefully they will not have to dig too deeply into their pocket to cover any medical expenses. The insured hopes the only medical expenses they have to pay for will be the premium for the insurance policy.
The insurance company wants the same thing. They have to pay for the expenses of all the insured they cover. They use actuaries to determine how much risk they are exposed to and how much the premiums should be. One significant risk they refused to take is to insure people with preexisting conditions. The risk and exposure does not make it profitable. Profit is a good thing not a bad thing. Profits make the free market economy grow and thrive.
The insurance companies want to collect more in premiums than they have to pay out in expenses so they have profits left over. The actuaries provide the details of the risk and exposure to help management make the decisions to operate the business.
Let’s spend a few moments discussing those who have preexisting conditions. A few find themselves trapped, and they have a difficult time because of their conditions but they have other ways to cover their expenses. Most of those who have pre existing conditions get there by choice.
They chose not to pay premiums for health insurance when they were healthy and took the risk that they would not need the insurance. Now they need it and they are stuck with the risk they exposed themselves to.
Another cause is they did not have a job and could not pay for insurance because they didn’t get themselves a job when they should have. Perhaps they never finished school, they don’t have any experience, or they have poor work habits.
These are victims of their own making. Actions have consequences. We all have to prepare ourselves for a job and a career early in life. Parents are part of the process. Parents provide the right guidance and support for their children.
The overeducated and under experienced architects of the ACA think that the young healthy who do not want to pay high premiums for coverage they don’t want are “genetic winners” and they think that insurance companies are evil and unfair for running their business in a responsible way and wanting to make a profit in the process.
They also think that those who failed to get insured and stay insured before they developed preconditions that make them too much risk to allow the company to stay competitive are the victims.
No wonder the ACA doesn’t work and doesn’t look like it can be made to work.