Health Reform Limits Health Insurance Options for Children

The September 2010 health care reform mandates limits the health insurance options available for those under 19. Across the United States, many private health care insurance companies appear to have decided not to insure youth who purchase standalone policies after September 22nd. Not all carriers have announced their decision on this issue, but many that have are choosing eliminate these types of policies.
Children 18 and under who apply for a health insurance policy with at one or both parents will not be affected. children 18 and under who are covered by standalone policies that were effective prior to the mandate will be allowed to keep their existing insurance policies.
Who is at fault here? We can put the blame on the insurance carriers. However, mandating that an insurance carrier insures unhealthy people is like mandating that lending institutions to underwrite loans for those with bad credit. Congress could more at fault than the insurance companies.
Health insurance companies do make a lot of money but their margins are tiny. They don’t make tons of money per policy. Adding just a few additional significantly unhealthy people can make them lose money or make their prices unaffordable.
A crude example would involve an insurance carrier that insures a hundred people against heart attacks. Each person pays one thousand and twenty dollars a year. One of the insured people has a cardiac arrest every year. It costs the company $100,000. The carrier pays the medical expenses. It earns $2,000..
After a new law goes into effect, they are forced to cover five new people who have a history of heart disease. Every year one of these five new people has a heart attack that costs an additional $100,000. This means that the insurance company doubled its expenses, but only increased the money coming in by five percent.
If the insurance carrier responded by doubling the cost of the insurance policies, their policyholders would react as well. Some would drop out of the pool. Chances are the healthier people would be much more likely to decide to take the risks that come with being uninsured. It is a sure thing that their prices would have to go up again and again as their ratio of healthy to unhealthy policyholders keeps moving in the wrong direction.
When an insurance carrier is mandated to insure people without regard to their medical history, they run the risk of Prevention Definition Medical going out of business. This could sound crazy to you, but big corporations go out of business from time to time.
Perhaps if the US car manufacturers had been more fiscally responsible, they wouldn’t have needed the taxpayers to bail them out. Perhaps lending institutions should have been more prudent a few years ago and not underwritten so many soon-to-be-bad loans.
A law of congress cannot change the laws of the marketplace. If an insurance carrier takes on unprofitable business it will have to raise its prices. If they are forced to raise their premiums more than their competitors, they will wind up with fewer customers.
Our lawmakers wrote a law that was designed to provide universal health care coverage to children 18 and under. This law has had the opposite effect. Fewer choices for health insurance are now available for children 18 and under.
This has to make us wonder if the rest of the health care reform mandates are as poorly thought out. Our politicians spent a lot of time demonizing the insurance carriers. They are no more or less wicked than companies in any other business sector. They spent a lot of time telling us how much money they make in the aggregate. The real issue is how much they make per insured person.
We’ve gotten great rhetoric and at least one lousy mandate. Let’s Health Insurance That Covers Everything hope that this was the only one mistake. Cross your fingers.

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