Proponents of private health care make it sound really simple to the average person. I always hear the statement “A free market system will ensure the best price and service”. While that may be true with most other industries, that argument over simplifies what healthcare is and misses the point. I’ll show you what I mean…
For our phone service we used to have qwest, but then we found that Vonage would be much cheaper. So far Vonage is okay, it has its ups and downs but it’s worth it to be saving the money. If we don’t like their service, we can switch back to qwest or go to another phone company. That’s how the free market works, and it’s beautiful. It ensures that Vonage must compete to provide me with competitive service at a competitive price.
Simple huh? So why can’t we just allow that same phenomenon to work it’s wonders on the healthcare industry? That’s basically how Ari Armstrong of the Independence Institute puts it. He tells us about how he and his wife “recently obtained high-deductible individual health insurance in conjunction with a Health Savings Account.” Which is great, because HSAs are the best thing available right now.
But as a health insurance broker who has an inside view of the Colorado health insurance industry, Ari doesn’t completely understand the current health insurance market. The title of Ari’s article is “Leave Decisions on Health Coverage to Individuals”. I’m not sure how old Ari is, but he and his wife might be a lot like me and my wife. Right now, we’re young and healthy and we’ve got total control over our health care decisions. We also have a high-deductible individual health insurance plan along with a Health Savings Account.
But let me take a common example I’ve seen through my experience in the industry. Ari lives in Golden and let’s say he and his wife make a trip into Denver to go to a Rockies game. As Ari gets closer to downtown, traffic suddenly stops ahead of him on the road. Ari stops, but the guy behind him doesn’t. He’s rear-ended and suffers serious back, neck, and head injury. Luckily, the guy behind him was insured and the guy’s auto insurance paid for all of Ari’s hospital and physical therapy bills.
A year later, Ari gets a letter from his health insurance company saying they regret to inform him that they have decided to stop doing business in the state of Colorado. Ari calls up his independent broker to shop around for the best policy for him to replace his coverage. “Has anything with your health changed since the last time we talked?” his broker asked.
Ari says “Well, I’ve got several plates in my spine from a car accident and I’m on a few medications after the back and brain surgeries. But it wasn’t my fault and the other drivers insurance is paying for it.”
“Unfortunately, there aren’t any health insurance companies in Colorado that will cover you now Ari.” his broker says.
Lucky for Ari though, he lives in a state that has a taxpayer subsidized high risk pool that can offer him basic coverage, CoverColorado. (many states, mostly in the south, don’t provide this option to their residents) CoverColorado even has an HSA option, however the premium is about 3 times as much as he is paying for his current plan. That’ll be his only option for him until he turns 65 and qualifies for medicare – if it’s still around.
This is just one example of many. If Ari had coverage through his employer and the same accident happened to him. Maybe his employer goes out of business, leaving him with the option to either get another job that provides health insurance or CoverColorado.
The examples are endless. But the point is, the “individual” doesn’t have control. The insurance companies do. And if it weren’t for the government enforcing mandates on how insurance companies conduct business, it would be even worse.
