Insurance Companies and Universal Health Care

Insurance companies serve a very important function in our society. The purpose of insurance is to share risk. Risk is the amount of economic loss that someone is willing to assume in an activity. For instance, a bank would not loan money for the purpose of buying a house, unless the house was protected against losses such as fire, wind and other perils. That protection is provided by a Homeowner’s policy.

A loan to purchase an automobile would not be available unless the car was insured for losses by theft or collision. That protection is provided by an auto policy.

Health insurance is a policy that shares the risk of losses caused by injuries or illness. A share of the risk is assumed by the individual through a deductible or co-pay. In-other-words, if someone visits the doctor, that individual may be required to pay the first $15 or $20 of the visit. The health insurance company assumes the risk of the remainder of the cost.

That shared risk comes about through an exchange of ‘consideration’. Consideration is value. The insured pays a premium in exchange for the promise of the insurance company to pay certain costs associated with the insured’s health care. Which brings us to the controversy surrounding the government’s efforts to institute what some call universal health care.

No matter what side of the argument you are on, in favor or against universal health care, one issue has been settled. President Obama stated publicly that it is impossible to insure the ‘uninsured’ without additional costs. So, the idea that this will be a ‘deficit neutral’ policy has been debunked by the administration itself. Either taxes go up to pay for the program, or health care will have to be rationed to keep costs neutral, or bring them down.

In response to the public out-cry about a government health care program, the administration has called the insurance companies villains. After all, insurance companies exclude preexisting conditions for some period of time when an individual enrolls (however that is not always the case with group policies), and insurance companies are making a ‘profit’.

PreExsiting Conditions

Think about the concept of risk and preexisting conditions. An individual has a home that has been damaged by fire. Would a homeowner’s insurance company now write a policy that would cover the repairs to home caused by the preexisting fire? Of course not! That is not shared risk, that is bad business.

An individual has a preexisting health condition, say diabetes. Purchasing a policy that would exclude the treatment for diabetes for a limited period of time (usually two years), now results in a shared risk. The health insurance company will cover the person for other perils, and if that individual pays the premiums over time, that exclusion regarding the preexisting condition is then dropped.

Is it possible for the government to insure everyone in the United States and force insurance companies to provide policies without regard to preexisting conditions? It is possible, but not without driving the cost of health-care way up. After all, the money to pay the doctors and hospitals have to come from somewhere and President Obama stated that ‘We are out of money’. Since the government doesn’t earn money, its only source of revenue is taxes.

Profit

Insurance companies are being cast as the bad guy since companies make a profit. Which do you prefer, companies that are well run that make a profit, or a company like General Motors that required billions of dollars of taxpayer money to bail the company out? A profit is what allows companies to expand services and provide jobs. Companies that fail to make a profit, go out-of-business.

The government not only fails to make a profit, as a well run business entity should, it runs at a deficit. The latest example is Cash for Clunkers. Not only was taxpayer money used to subsidize auto sales, now car dealers are complaining that the government is not sending the checks for the Clunkers that were promised. It appears that many buyers will have lost their old cars and now face repossession of the new cars purchased since the money for the program did not actually exist.

This does not bode well for a government run health care system.

Tort Reform

Doctors and hospitals must practice defensive medicine. People will sue for anything. Tort lawyers use a ‘shot-gun’ approach when filing a malpractice lawsuit. All doctors, nurses, technicians and hospitals involved in a case are named as a defendant, whether that party had any actual responsibility for the claimed injury and damage.

We need a loser pay system, which provides that anyone who brings a lawsuit and loses, is required to pay the other side’s attorney fees and expenses. That would do away with most frivolous lawsuits and bring the costs of health care down.

Big Government Solution

Government should be required to live within its means. It does not, and the government, not insurance companies, is the villain in this scenario.

The founding fathers did not foresee a large, powerful centralized government. That is what was the war of independence against England was all about. The US Constitution delegated specific powers to the Federal Government, and it does not specify taking over any private sector industry.

Medicare and Medicaid are government health care programs on the verge of collapse. Even President Obama admits Medicare cannot be sustained. No program can be sustained when it runs at a deficit and all government programs run at a deficit.

Universal Health Care will run at a deficit from day one and that is just bad business.

Car Insurance Companies – They Know More Than You Think

When you apply for auto insurance, even when getting an online quote, you’d be surprised by the amount of information the insurance companies go through before telling you how much your premiums will be!

What are They Looking For?

The number one thing that insurers always look for is a clean driving record.  They will investigate your record in the state you’re living in as well as every other state in the country via a central database.  They will verify your birth date and compare it to other personal information to confirm that you are who you say.  They will dig into your driving records everyplace you’ve been issued a driver’s license and also cross-index other insurance records.  All this can take place in just a few minutes-or seconds, depending on the speed of their computers!

But that’s not all that insurance companies are looking for; you’ll also find that they thoroughly check out your credit report.

Why Should They Care About My Credit Score?

Your mother or grandmother may have told you that she can look at your friends and see your future.  Well, insurance companies can look at your credit score and see future!  Like the friends you choose can show your character, your credit score indicates your sense of personal responsibility. 

Let’s say that you’ve made some mistakes in the past and your credit score isn’t so great.  You’ve maxed out your credit cards during a rough patch and are paying them off with minimum payments.  You have no savings, a couple of late payments on record and your credit score is in the low 600’s.  This tells the insurance company that you don’t think about the future much and probably don’t take precautions against unexpected financial downturns.  You’re someone who is living in the present and not looking towards the future.  Is that accurate?

Whether that’s a true picture of someone with that credit score and history, that’s what the insurance companies see and what their statistics tell them is a logical conclusion.  Their data also tells them that a person with such a low score also has a high risk score-they are more likely to make a claim than someone with a higher credit score. 

Don’t Ask for Trouble 

Keep an eye on your credit report and make sure that it is accurate, checking it at least once annually.  Improve it as much as possible, paying more than minimum payments and specifying that the extra go toward the principle.  You’ll be rid of credit card debt in half the time if you pay in that manner and it will look good on your credit report. 

Don’t try to toggle your risk factor by omitting details about your driving record!  If you leave out citations or convictions on your application or deny that they exist, you could be setting yourself up for a fraud charge.  Even if you aren’t charged with trying to defraud the insurance company, it will be on your record for every other insurer to see. 

In short, be frugal and honest!  Good money management and an application that is factual will definitely save you money on your auto insurance. 

How to Compare Term Life Insurance Companies

When you are purchasing term life insurance for yourself or a family member, you are creating a contract between you and the insurance company. When you hire a contractor, wouldn’t you check out the company before you hire them? Getting to know the insurance company that you are going to trust with your family’s future is far more important. There are some basic things that you need to look at before you sign on the bottom line.

Currently in the United States, there are over 1,500 insurance companies operating that sell life insurance policies to clients. Most of these companies are simply subsidiaries of their parent companies. These subsidiary companies are commonly created because each state has different laws, and this allows the companies to be able to tailor their policies to be able to meet that state’s rules and regulations. The parent company and the subsidiaries are separate companies, but they all operate under the same corporate umbrella. Using a single centralized company would not work due to all the disparate laws and jurisdictions. A very important consideration is whether the insurance company has an entity in your local state. Otherwise, in the case of a dispute, you will not be able to bring the case before your state insurance regulatory agency.

Once you find a company that has an operation in your state, there are some important considerations that you should look at, including the following: the policy, the company, financial stability, and claims settlement.

Obviously, you want to verify the policy. Typically, this is the step where most people stop, but this is only one part of what you should check. Make sure that the policy meets your needs. Read the whole policy, including the fine print. Make sure that the policy has all of the features and services that your agent promised. After you sign the policy, it is too late.

When selecting the insurance company, never rely solely on the company name. The name that they select has a lot to do with marketing, and the name that they choose is intended to project financial strength, fairness, dependability, etc. Words that are commonly used in the name include reserve, security, assurance, and equity. Don’t trust these words without examining the company’s history and credentials. It is also a good idea to go with trusted companies that have been in the business for many years. They have been around long enough to have a trusted name in the business.

Because you are buying this policy for many years, you want to make sure that the company will be there when you need them most. It is important to take a look at the financial strength of the company. In order for the company to survive, you need to make sure that they have a strong financial foundation so they can survive down times in the market. You can check their financial ratings from several independent agencies. You want to select a company with the highest rating possible.

Also take a look at the company’s record for paying claims. You can get this information from the national claims database or from your state’s insurance regulatory agency.

These are just some of the things that you should check on before you sign up for any policy. Make sure you are comfortable with it before you purchase the policy. There are many companies that can offer you quotes on term life insurance.