30 Million Resentful Health Insurance Customers

Health insurance reform legislation has moved to the floor of the U.S. Senate for debate. Passage of the bill could mean that 30 million people without health insurance will be required to purchase health insurance—or risk fines or imprisonment.

As an independent insurance agent who strongly believes in the importance of health care insurance, I suppose I should be thrilled that ten percent of the population will be required by law to buy what I am selling. I am not. Here’s why:

I respect the choices people make. If they choose not to do business with me or not to buy health insurance at all, I assume they have a good reason. They might not disclose what that reason is, but I’m sure it is there. People usually act in their own best interests.

Some people would rather pay for their medical expenses out of pocket, rather than locking into paying a set premium. They are betting that they will be healthy enough and safe enough from injury that their outlays for medical attention will be minimal. I wouldn’t make that bet, but others would. They believe that their lifestyle, family health history, and current health make it reasonable to run that risk. It is their choice. I would at the very least recommend that they use pre-tax dollars to pay their medical expenses by running the money through a tax-sheltered Flexible Spending Account (FSA).

Forcing these and other people onto the health insurance rolls is not going to have the effect that proponents of the health insurance bill say it will. The huge influx of the newly insured will not offset the high cost of covering those with serious pre-existing conditions. The reason is simple: If you force people to buy something, they will use it. Their resentment at the government coercion will manifest itself as a determination to get their money’s worth out of the program. Rather than minimizing their visits to the doctor, as they would if they were paying out of pocket, they will schedule appointments for anything and everything. Paying for these visits, the insurance provider—private companies or the government—will not have enough money left over to pay the high cost of the gravely ill (see my previous post regarding “actuarial insanity”).

The influx of the resentfully insured will place a tremendous strain on the healthcare delivery system. The healthcare industry already faces a shortage of nurses. In four years, when the new health insurance programs will take effect, the shortage will be worst, in part because many nurses are part of the aging Baby Boomer generation has reached retirement age. Healthcare rationing will follow, but nothing will save the private health insurance system. The government will become the sole health insurer. But it won’t be “insurance” at all, because it will not have an actuarial foundation. It will be an entitlement funded by the payroll taxes of a shrinking workforce—the same dynamic that is causing Social Security and Medicare to go broke in the next decades.

My advice: If you don’t have private health insurance, get it now. See your doctor. Make sure you get the tests and screenings you need. If you need further care, get it done. And start a savings account for future medical needs.