Government vs. Health Insurance Company

Although the majority of the implementation of the health care proposal will go into effect in 2013, two changes are planned to start immediately. Those are the prevention of insurance company’s denial based on pre-existing conditions and the elimination of lifetime caps on benefits. It is obvious that if insurance companies are forced to comply with these regulations then the cost of insurance will need to go up and perhaps significantly. This will result in a decrease in employers offering insurance, more out of pocket expenses, more people uninsured, and ultimately greater unemployment. Exactly the opposite of what the goals of the government should be.

What needs to be understood is that the insurance company is just a middle man that takes in premiums and then doles out payments and takes a cut as their profit. They create insurance products with pre-existing clauses and lifetime caps to keep the premiums down for the purchaser. Then when an individual’s care is rejected due to the details of the health plan they selected, the insurance company is viewed as evil. The insurance company becomes an easy target for policy makers but in truth is implementing the plan that was paid for.

The insurance company keeps premiums down by rationing care. They attempt to screen out costs that are deemed to be unnecessary and are vigilant against fraud and abuse. This may seem cruel at times, especially when dealing with the sick but it is necessary to maximize the value of the premium dollar. Critics will say the insurance company denies care to improve their profits not to keep premiums low and there is likely some truth to that. But that is where competition and the free market step in. The company must keep their insured satisfied and their premiums competitive. This is why maximizing competition is critical. The more competition that exists, the better the product at the lowest cost. This is why purchasing plans over state lines which would enhance competition is such an important change.

The government has demonstrated its inability to limit costs and instead ends up overpaying for unnecessary and fraudulent claims. They are able to do this because they are not limited by the premiums they collect and by shareholders seeking earnings. They are funded by the taxpayer, the printing press, and by borrowing from China.

As the government puts more restrictions on insurance companies they are essentially limiting the options for us to choose from. This will result in more expensive policies and fewer people insured. More people will then rely on government for health care which is their underlying goal. Vilifying the insurance companies by the government is a populist scheme to garner more federal control and less individual liberty.