December 30, 2013
The talk of the town about the Patient Protection and Affordable Care Act is how it will improve your health care. Wait a minute, the PPACA is about insurance and not health care. The PPACA’s impact on your health care is yet to be determined.
Insurance by definition is to cover your risk within the coverage range provided by the policy you have purchased. Insurance companies spread that risk by covering more and more people with a wide range of differing coverage. The more policies of differing coverage the insurer can sell the lower the premiums become for each insured.
In a free market with limited regulations the insurer and the insured can reach a determination of what is in the best interest of the insured with little interference from the government.
Now enters the PPACA which dictates the coverage an insurer must offer. In addition the PPACA limits the number of policies that an insurer can offer. These limitations prevent an insurer from spreading the risk over a number of differing policies covering a number of ranges of coverage. The results are the insurer must charge higher premiums to cover the risk on the limited number of policies. Not only does the insurer have to charge higher premiums, the insurer is required by the PPACA to increase the deductible increasing the total cost of insurance even more.
Another coverage situation the PPACA requires individuals to carry coverage for services they will never need. Males for instance must carry maternity coverage, contraception coverage, abortion coverage, and the morning after contraception coverage. Males will never use these services. Mature females past the age of child bearing are also required to carry coverage for these same services and they too have no use for these services.
There are a number of services within the PPACA requirements that fit into this category. All these services drive the insurance cost up for those who have no need of the required categories of services.
The PPACA thwarts the free market system and in doing so has increased the cost of insurance for everyone. Insurers are no longer able to spread their risk over a wide range of coverage with a wide range of insured. This inability to spread the risk increases the cost for everyone.
We must remember that there is nothing free. Someone is going to pay for everything. If you and your neighbor have the same or similar health conditions then your insurance premiums should be the same.
If there is a difference between your and your neighbor’s premium one of you is subsidizing the one with the lower premium. This is redistribution of wealth. Redistribution of wealth impacts the middle income earners more than anyone else. The middle income earners’ earnings as a group contain the largest amount of money that can be redistributed.