The Insurance Center, Inc.

Many so-called experts, pundits, and politicians are saying that the unsustainable rising cost of health care is due to those greedy, monopolistic insurance companies.  Did you know that insurance rate increases require the approval of the State Insurance Department?  While I believe the insurance industry shares a piece of the blame, the rising cost of health care and therefore the rising cost of health insurance, in fact, can be attributed in large part to three main factors:   

 1)      Government Intervention

2)      Technology

3)      Lack of Personal Responsibility

 Let’s deal with Government Intervention first.  Health insurance is primarily regulated by the states.  Individual states like New Hampshire have varying laws and regulations under which health insurance companies must operate.  The main cost issue is “state mandates”.  Would you like the opportunity to purchase a policy that covers only the expenses you wish to cover?  Perhaps you do not want coverage for office visits or prescription coverage, for example.  State governments require health insurance policies to cover all kinds of things that you may not need or want to insure.  The new health care legislation passed in Washington will be adding even more requirements.  Although the regulations will not be written for months and years, the federal government will be deciding what your policy must look like.  As a health insurance broker, I would love the opportunity to assist my clients in deciding which services to insure.  Health insurance companies would love the opportunity to offer a menu of options to choose from, but in large part they are barred from doing so.

 Government intervention also has a huge influence on costs, due to Medicare and Medicaid.  When you hear that the state or federal government is “cutting” Medicaid or Medicare, they are actually reducing the fee paid to a medical provider for services rendered.  A doctor receives less to treat a Medicare patient, and in turn must recoup costs from another source to continue in business.  The 800-pound gorilla in the room is this “Medicare Cost Shift”.  The cost of doing business does not go down; so when some pay less, others pay more.  This new legislation increases dramatically those that will be covered under Medicaid.  How will that affect health insurance premium rates?

 Now on to Technology!  When we are injured or discover some sort of a disease, are we pleased that we have access to the latest imaging technology or medications?  Are we pleased that what ended in death decades ago now ends in a longer, more productive life?

Of course we are!  My argument is that we fail to realize this when the time comes to write the check for the service or the insurance premium.  Do we really want an insurance policy that will only cover the old fashioned X-Ray?  Or do we want the option of an MRI if our doctor believes it will prove helpful?

 The cost of care continues to rise because the entrepreneurial spirit in America researches and develops medications, medical equipment, procedures, and supplies that improve the quality of life for every citizen.  We must place a value on that.   When the cost of other goods and services rise due to technological advances, what do we do?  Take cell phones for example.  When a new version with more applications arrives, we run out and get it even though our existing one still works.  Why do we not place a larger value on medical advances?

 There is a Lack of Personal Responsibility in our culture today!  I certainly believe in a safety net for those who are unable to care for themselves.  We can disagree about what the qualification levels are.  We can disagree about the level of support provided.  But there will be a safety net.  I also believe that non-profit, community, and church organizations should and will continue to encourage charity for those in need.  That being said, those of us blessed with the ability to pay, those of us powering the economy, and those of us accumulating assets, need to step up to an increased level of personal responsibility.  The time has come to realize that the extra week of vacation, the vacation cabin in the mountains, the new car every 3 years, the snowmobiles and 4-wheelers, as well as other unnecessary extras, must go.  They must go until the time that we have adequately planned for the future and protected all assets from risk we are unwilling to bear.  For example, the purchase of health insurance transfers the risk of large medical expenses to an insurance company.  Why should society cover the medical expenses of someone that bought the cabin in the mountains rather than health insurance?

 Politics and various special interests will always complicate matters, but let’s get back to basics.  My comments certainly over-simplify the most complicated domestic issue we face as a society.  However, problem solving must start with the basics and a clear understanding of the issue.  To control the cost of health care, we must get to the root causes.  I believe that it all starts with the realization and appreciation of the three factors I have outlined above.  

George Curt, CLU, ChFC, CIC

Health Insurance Broker