How Health Insurance Works and Why It Is Going Away

The topic of insurance boils my blood. I'm disgusted by the people who don't understand it, yet throw in their own two cents and somehow feel entitled to whatever they want. That's a vague statement, but I'll clarify.

To begin with, why does insurance exist? It exists, so that in the event of rare or serious or expensive medical needs, the buyer of the insurance does not have to shoulder the entire cost.

So how does it work? Insurance companies issue the insurance policies, but step back and think about it. As a public company with shareholders and boards of directors, insurance companies must take in more money than they take out. First off, do they have this right? Of course they do. They're providing you a service! They're enabling you a way to receive expensive medical care that you otherwise COULD NOT PAY FOR.

How do they ensure that they take in more money than they pay out? They employ actuaries, who figure out how probable it is that the insurance company would have to pay out money, and what those sums might be. Insurance premiums are based off these calculations. Why should a healthy 30 year old male with no history of heart disease or say, cancer, have to pay the same premiums as someone 30 years his elder with a history of cancer in the family? It makes absolutely no sense for them to pay the same, and insurance companies charge them accordingly. Think of deductibles. Those that are confident about their health will agree to large deductibles for smaller premiums. Those who are wary about their health will not agree to large deductibles and will pay larger premiums for the RIGHT to not have to pay for medical care above this relatively small threshold.

So now we have special interest groups, grassroots groups, and the government trying to force insurance companies to cover those with pre-existing conditions, charge smaller premiums, and not have complete say over who they cover. Of course I have sympathy for those that have pre-existing conditions and other health problems, but at the end of the day, someone has to pay for their care. This isn't an issue of what should be, but rather what the reality is.

Government has moved ahead, and has brought more regulations to the insurance industry. What is the result? In this article, we see that MetLife has ceased providing Long Term Care, because of the costs involved. More and more insurance companies are restricting policy issuance, abandoning certain products, or simply closing their doors. This is all extremely hurtful to the consumer.

Thank you government, politicians, both Democrats and Republicans, and everyone else who lobbied for these changes. Because of your misguided thinking, failure to examine basic economic principles, and utter disregard of the ways public companies operate, citizens everywhere are not able to get the medical insurance they so desperately need. Next time employ a small bit of research, a tad of meaningful thought, or simply keep your mouth shut.