Health insurance is definitely a newsworthy item these days. Thanks to the Affordable Care Act, we hear more and more about health care, the health care industry, and health insurance matters every day in the news. Health insurance is an issue that impacts every American, and because of the unique way that health insurance coverage in distributed in this nation, there is still much to do to get every citizen covered. Presently, much of the health insurance contracts in existence in the USA are provided by our employers. This condition was been brought about by market conditions as they were just after World War II. Sending our GI’s overseas created a labor shortage back here at home. Employers competing for scarce labor offered health insurance and other fringe benefits as an incentive for new hires to work for them. This strategy precipitated a trend that persists to this day. Health insurance is a benefit that most people want to get when they go to work for an employer.
Those of us who work at full-time careers are quite pleased about this arrangement because health insurance coverage not provided by our employers would need to be paid with after-tax dollars. In other words, our work-provided plans can be considered as a popular tax-free bonus, and it is easy to see how this became such a long-standing tradition. The problem of course comes about when people are not working full-time. People who are not yet old enough to work, those who are unable to work, the newly retired, the disabled, and folks who are in between careers are left vulnerable in this system. New federal health care laws passed in 2010 have brought us closer to a solution, but gaps in universal coverage remain. One major problem preventing all of us from being insured is the high cost.
Why Health Insurance Is So Costly
Health insurance coverage differs from all other forms of insurance in that the insurer bears near unlimited risk. When a private citizen owns a house, the bank providing the mortgage will require the purchaser to buy fire insurance to protect the bank against loss of collateral. Because the bank knows upfront what it costs to rebuild a home, its maximum potential loss is knowable and it can set premium levels to reflect the risk/reward aspects of the situation. This is not so with health care coverage because it is next to impossible to know what the “worst case scenario” is with respect to an insured’s lifetime medical expenses. Some people live long healthy lives. Others get sick or hurt and incur hundreds of thousands, and in some cases millions of dollars’ worth of medical costs, with no reliable way to anticipate or underwrite this kind of risk. The open-ended risk associated with health insurance contracts is what makes all forms of medical coverage very expensive for everyone in the system.
One possible solution to this problem is to shift the responsibility of providing health insurance away from employers. At the present time, the nation’s population lacks the political will to transfer responsibility for all of our health care coverage to the government. This may change over time, but until then we need new fixes right now. Relief may come in the form of insurance cooperatives that function like credit unions. Credit unions work because they do not exist to make a profit. Since so much of our health care insurance dollars go to corporations that exist to please Wall Street, getting the profit out of health insurance might just be the answer we are looking for.
Author’s Bio: The articles of Tom Jackson have really met the needs of the users. He suggests them to visit Medicalinsurance.org for more information.
