Why not sell medical insurance like Auto insurance?
27 Apr 2010I know this is long but please bear with me.
Rather than set up a separate government run medical insurance or expansion of medicare to the general public….One criticism of government care is that it will be in direct competition with existing providers. Ultimately siphoning insurance customers away from traditional plans and onto the rolls of govt care causing these providers to go out of business.
Here in my state the auto insurance companies MUST offer the same basic minimum coverage in order to do business in the state. Everyone here must have at least the same basic level of insurance (both auto and medical) . You can go to any provider you choose and this basic minimum insurance level costs the same . If you want more insurance you can pay for additional coverage. But that basic plan is available to all.
So why not have a similar program for medical insurance as part of a nation wide group policy. This group can be subsidized by the government but it would be managed by the existing insurance providers. (In other words if you want to be in the insurance business you must offer and support this minimum plan which would be a foundation for any other plan you offer) The govt pays the insurance company a flat rate to manage each person enrolled in the basic plan.
The more money the company saves (the better they manage the insurance) the more money they keep. However if that company provides poor management it will cost them. Either subscribers will change management companies if they feel they are getting a raw deal or wasteful management would not be payed for by the government.
One advantage I see here is that consumers would have an alternative providers to go to if they feel wronged by a particular management company. Insurance providers also have an incentive to offer additional services to the basic plan members in order to attract more subscribers and earn money.
With a govt program like medicare your stuck with the one provider (the governement).
As they say One Choice is NO Choice….
If someone wants additional insurance they can buy additional coverage from any provider they choose. But No one could be denied coverage for the standardized basic plan. Since everyone is part of this national group policy the basic insurance is portable and independent of supplemental policy one may have. So if you change jobs or move to a different state you may loose the supplemental policy BUT your basic coverage remains intact. You merely transfer the company that provides the management services for the basic medical.
Insurance providers would get paid by the fed to manage the participants in the basic plan for each participant in the basic plan. this would put market forces into play for the insurance providers to make money by attracting additional participants through better service or offerings. COunter to this is if the consumer gets crappy management services they can transfer to any other insurance provider.
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3 Responses to Why not sell medical insurance like Auto insurance?
short and to the point
April 27th, 2010 at 5:02 am
you don’t have malpractice insurance in auto insurance. not the same and it will not work.
roxyfox13
April 27th, 2010 at 6:01 am
It’s not the same as auto insurance. Each state sets a minimum amount of financial responsibilty, meaning state minimum liability coverage. Just because it’s the minimum doesn’t mean it costs the same for everyone. Auto insurance takes a look at your age, your credit, your job, your marital status, your driving record, teh vehicle you are wanting to insure and then some to determine the correct rate for you per each coverage requested. There is no flat basic rate, anywhere. Not even for basic, state required liability coverage.
Also, with property and casualty insurance, (auto, property & ect..) they don’t HAVE TO offer the minimum limit the state requires.
Ex: A large insurance agency I worked for specialized in preferred business and customers. In order to do this, the agency had minimum limits of liabililty set for each line of businesss, personal home & auto, general liability, workers compensation coverage and ect… If you as the customer did not want those high limits then they could care less and would prefer that you call another agent instead. They did not view it as losing business, but more so that you would be a customer with higher risk, and therefore by not writing your minimum insurance policy, the agency could keep their loss ratio low and favorable. As a private company, they can choose who they want to insure and who they want as their customers. Bottomline. So, these reasons alone do not help support your argument for making health care insurance the same as auto insurance.
lucy
April 27th, 2010 at 6:21 am
i agree with the other 2 posters.
auto does not have malpractice, but they have “bad faith” which is just as bad as malpractice if filed against the company and the company loses.
as for some insurers only accepting preferred customers that is true also, but there are many that only take the minimum limits and high risk only since they make more money. i have worked under both.
i agree if all policies could be ’standardized” like auto.
in auto you pick your coverage and limits . when you file a claim for your auto, it pays for the damages.
if you get injured, it pays the medical bills
if negligent, it pays so you don’t get sued
if other party has no insurance or not enough, it pays that also.
the exclusions in most policies are basically the same so no surprises there. in some companies they will slip one in that no one has, but those are few.
after 3 years, most companies will void prior claim history and you start over, whereas have a preexisting condition precludes you from obtaining insurance in most states forever until you reach 65 and can get medicare.
most people will disagree with you, but i have thought for years if health insurance policies would follow the same basic rules as auto, that if you file a claim, they pay subject to your deductible and you can rest assured not going bankrupt.
but health insurance needs to be made mandatory for all.