I was reading the latest article on crazy Obamacare:
http://finance.yahoo.com/news/obama...Rwc3RhaWQDBHBzdGNhdANob21lBHB0A3BtaA--;_ylv=3
Basic silver plan:
"$2,000 deductibles, $45 primary care visit co-pays, and $250 emergency room tabs."
"$321 average monthly premium"
"You must have some form of coverage next year, or you will face annual penalties of $95 or 1% of family income"
This got me thinking about all I learned about insurance pricing when I used to work in the insurance world. If a customer knows they can get insurance at any time regardless of medical history, what will be the hazard that the customer will eat the cost of the penalty and get insurance only when they need it (selection bias)?
Paying cash, you can get a regular primary care visit for a 1-2 hundred dollars, which is less than the co-pay+monthly premium of this basic plan.
One year base cost for $50,000 income household:
With this policy: 321*12= $3,852
Without this policy = 50,000*.01 = $500
Once you factor in deductible and co-pays, you need to have a large amount of medical bills in a year before having insurance is cheaper than not having insurance. Since you can simply buy insurance AFTER you find out you have an expensive medical issue like cancer, pregnant, or car accident, why buy insurance? The number of insured will drop.
Since the much higher costs are causing a lot of employers to drop insurance and send employees to the government market, the number of insured wil drop.
The entire basic idea of insurance is risk pooling. If the pool of insured shrinks, there are less people to share the risk and the price goes up. If those remaining in the pool are riskier people, the cost of sharing that risk goes up.
I think the end result will be doctors and patients, who are both fed up with dealing with insurance companies and the government, will start to go towards a cash only system. I personally know people that have found that offering cash up front to a doctor/dentist radically lowers the cost of what they need done.
http://finance.yahoo.com/news/obama...Rwc3RhaWQDBHBzdGNhdANob21lBHB0A3BtaA--;_ylv=3
Basic silver plan:
"$2,000 deductibles, $45 primary care visit co-pays, and $250 emergency room tabs."
"$321 average monthly premium"
"You must have some form of coverage next year, or you will face annual penalties of $95 or 1% of family income"
This got me thinking about all I learned about insurance pricing when I used to work in the insurance world. If a customer knows they can get insurance at any time regardless of medical history, what will be the hazard that the customer will eat the cost of the penalty and get insurance only when they need it (selection bias)?
Paying cash, you can get a regular primary care visit for a 1-2 hundred dollars, which is less than the co-pay+monthly premium of this basic plan.
One year base cost for $50,000 income household:
With this policy: 321*12= $3,852
Without this policy = 50,000*.01 = $500
Once you factor in deductible and co-pays, you need to have a large amount of medical bills in a year before having insurance is cheaper than not having insurance. Since you can simply buy insurance AFTER you find out you have an expensive medical issue like cancer, pregnant, or car accident, why buy insurance? The number of insured will drop.
Since the much higher costs are causing a lot of employers to drop insurance and send employees to the government market, the number of insured wil drop.
The entire basic idea of insurance is risk pooling. If the pool of insured shrinks, there are less people to share the risk and the price goes up. If those remaining in the pool are riskier people, the cost of sharing that risk goes up.
I think the end result will be doctors and patients, who are both fed up with dealing with insurance companies and the government, will start to go towards a cash only system. I personally know people that have found that offering cash up front to a doctor/dentist radically lowers the cost of what they need done.