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The Myth of the Health Insurance Silver Bullet

Posted on Date: May 28, 2019

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As a “health insurance broker,” I get this question from employers and franchisees all the time: “If my employees have to pay thousands of dollars before they even get to access benefits, why are my premiums still sky high?”

It’s a good question. All across our country, consumers are facing higher-than-ever deductibles on their health insurance (especially self-employed franchisees). It’s no surprise that health care is already a leading issue of the upcoming election. Many presidential contenders are advocating for universal health care (also called “Health Care for All” or “Medicare for All”). Is universal health care the silver bullet we’ve all been waiting for?

What Is Universal Health Care?

Universal health care means that the government provides access to health care for everyone, regardless of pre-existing conditions, age, gender, or any other factors.

On the surface, this concept seems great. Wouldn’t it be wonderful if no one was denied insurance for pre-existing conditions or families didn’t have to forgo health insurance because they couldn’t afford it?

It’s no wonder that the idea is popular with voters or that many politicians have voiced their support for a range of universal health care plans. However, nothing comes without a cost.

Big Costs, Fewer Services

If the government funded health insurance for every citizen with a “Medicare for All” type of plan, the cost would be staggering. The New York Times recently surveyed a group of economists and think tanks to determine what the price tag might be. Even the most conservative analysis suggested that this plan would cost nearly 14% of total GDP. To put that in perspective, the entire Defense Department costs less than 4% of GDP.

Implementing universal health care would almost certainly result in either significant tax increases or huge deficits (possibly both). To pay for the plan, the government might reduce reimbursements to doctors and hospitals, which could push many doctors into private practice or out of medicine altogether. This could result in longer wait times for medical procedures and fewer overall doctors and medical services, especially in rural areas.

What About People with Employer-Funded Health Insurance?

Nearly 50% of Americans have health insurance coverage through their employer. Some of the more extreme universal health care plans call for moving all Americans onto a government plan, like Medicare. In this scenario, a large amount of Americans could lose the health insurance they like for what will likely be a plan with fewer benefits. Additionally, these plans would decimate, if not destroy, the private health insurance industry. The entire insurance industry (which includes other types of insurance) employs over 2.5 million Americans. Many of them would be out of a job if the private health insurance market collapsed.

Public Plans vs Private Plans

It is possible that health insurance companies could adapt to the rise of a public government-funded health care program. They may offer private insurance that individuals who seek faster treatment and access to more medical options can pay for out-of-pocket. They could also offer supplemental health insurance policies that fill in coverage and coinsurance gaps in much the same way that MediGap policies do for Medicare recipients today.  It could also mean that a “Public Plan” will be offered as another health plan choice to compete with private insurance.

What Does the Future of Health Insurance Look Like?

The bottom line is that we just don’t know what the future of health care in American will look like, because the debate has barely begun. We’ve seen many countries around the world experiment with universal health care policies with somewhat mixed results. Even with those examples, we can’t know how it would play here in America.

What I can tell you is that universal health care is not a silver bullet. The high costs of health care may move away from the individual or the employer, but someone will have to pick up the tab. The government doesn’t have a bottomless treasury, so those costs may come back to taxpayers in a different form!

Stay tuned for future articles on the current health insurance landscape. You may be surprised by what health insurance options are currently available to employers and franchisees.

About the author

Steven Chapkin is a 35-year veteran of the health insurance industry, 26 years of which he spent in senior sales and executive management positions at companies such as Aetna, Cigna, and Lincoln National Life, among others in the managed health care sector.  He has published numerous articles on managed health care in periodicals such as Best Review and Health Insurance Underwriter.  Steven holds a degree in business from the University of Miami and resides in Boca Raton, Florida.

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