So now that health reform has passed and has been written about and reported on so extensively, the only topic left to cover is what effect it will have on us health insurance brokers, and our individual health insurance market. I am about to give a scenario which is based on the current law (yes health reform is now a law), and what has happened in states like New York and Massachusetts where this model originates.
In my opinion (which is based on the General Accounting Office numbers which probably also qualifies as an opinion), individual health insurance will eventually end, at least in terms of agents, just like it has in Massachusetts. where everyone buys insurance from the exchange. So again, individual health insurance will still be available, but only in health insurance exchanges where each state is responsible for their own exchange and which companies offer plans through it.
For our current jobs in individual health insurance to stay viable, everyone would need to do as the law intends, which means buying health insurance or getting it through their employer. The rest of course will either qualify for premium assistance to make up the difference or Medicaid which is slated to expand to cover 35 million more Americans. In and of itself, this is a fallacy, as the state budgets are already so bankrupt and deficit ridden that they have been cutting benefits and coverage to people that really need it since the recession began. In fact Arizona just got rid of their CHIP program (health insurance for children) and would have cut even more, had this law not passed which specifically demands that the states not cut any programs nor make it more difficult to qualify for government health insurance programs.
Further, this new health care law is based on the fallacious notion that younger and healthier people will buy health insurance through the health insurance exchange. This will inevitably not happen because premiums for younger Americans are going to surely (yes there should be no doubt) become so expensive because this health care legislation will leave insurance companies with no choice because this law has provisions that keep premiums for the young and old within a certain ratio and because the young and healthy simply will not ever think about health insurance much less buy it no matter what the law. Not to mention that health care costs have risen wildly in the time it took you to read this article. And finally and most importantly, young people and most of the uninsured right now for that matter will not buy health insurance because the law only penalizes them $695 which is not even significant when compared to what premiums are and what they will become under this law.
Most Americans, probably don't realize this, but in New York for example if you shop individual plans right now, the cost for an 18 year old male is the same as a 64 year old with diabetes and any other condition you can think of. And this premium is about $1000 per month for both the 18 and 65 year old to get only average benefits.
Under this new law, the only people buying health insurance will be people that have insurance now (though many of them will elect instead to pay the penalty, I know I probably would) and everyone that has been declined. The rest will head towards Medicaid and to their employer.
Not to mention that the 80% rule, (80% of premium must go to health care costs) this is the final nail in the coffin for us as health insurance brokers. There will be little to no room to pay us as brokers when factoring in administrative costs.
I though, am not opposed to the 80% rule and believe that this is fair and reasonable. But looking at the final bill that passed, I am amazed at the problems that it will cause, and more importantly it is a financial death blow to this economy. What is my solution? As I said all along, replace the 2400 page document with a 10 page document that sets up a single payer system while at the same time, leaving people the option to purchase private health insurance much like Europe. Everybody wins here, and more importantly it makes our health care system become a significantly less important piece of our gdp. In the end though however maybe in 10 years, that is what this new law will cause because health insurance companies will be unable to make enough money to rationally survive. I am quite certain that the people who wrote this bill know that as it seems like this bill will cause enough pain to force us into it.
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