Healthcare Dilemma: An innovative approach to tackle the substantial uninsured population nationwide while preserving the private nature of the healthcare industry.
One of the nation’s major challenges is the absence of health insurance coverage for nearly 41 million individuals.
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Despite the majority of elderly Americans being covered by Medicare and about two-thirds of non-elderly Americans having coverage through employer-sponsored plans, a considerable number of workers and their families remain uninsured due to their companies not providing coverage or being unable to afford it. Medicaid and the State Children’s Health Insurance Program (SCHIP), also known as HAWK-I in Iowa, play a crucial role in assisting low-income children and some of their parents in bridging these gaps. However, a pressing national issue persists, with nearly 41 million people lacking health insurance coverage. This situation contributes to a significant health-care crisis in the country.
Medicaid and the State Children’s Health Insurance Program (SCHIP), also known as HAWK-I in Iowa, play a crucial role in assisting low-income children and some of their parents to bridge gaps in health coverage.
Numerous proposals have been presented by politicians from both sides of the aisle, ranging from advocating for a health-care system akin to Canada’s to endorsing health savings accounts and addressing frivolous lawsuits against the medical community.
While these proposals have their merits, they also come with significant drawbacks. For example, a socialized national health-care program might eliminate the need for health insurance, with costs covered by taxes, theoretically not a bad idea. However, an expected reduction in compensation could lead to a shortage of new doctors entering the field.
Moreover, the increased demand resulting from a lack of personal responsibility, where individuals wouldn’t have to worry about deductibles or copays, might contribute to health-care crises. This is because people could seek medical treatment for minor ailments that they might otherwise ignore due to the financial considerations associated with deductibles and copays.
Consequently, there is a growing issue of extended waiting times for patients dealing with severe health issues, as everyone is scheduling appointments. Simultaneously, we are witnessing a decline in the number of healthcare professionals due to a lack of incentives.
The Bush administration is currently advocating for HSAs (Health Savings Accounts) as a potential solution. This approach involves combining a low-cost, high-deductible health-care insurance plan with a tax-deferred savings account. This savings account accrues a minimal interest on the side, which you contribute to alongside your monthly premiums.
Withdrawals from the savings account for qualified medical expenses are considered “tax-free.” Unlike a flex spending account, this provides a distinctive advantage.
In familiar employer-based plans, any funds withdrawn from the savings account for qualified medical expenses are “tax-free.”
Unused contributions to the account do not go to waste. Essentially, if you never utilize any funds in the savings account, you can withdraw or roll over the amount into another vehicle for retirement use after reaching the age of 62 1/2.
While this may be a viable option for some, for others, the premiums associated with these plans are still prohibitively high. The issue persists that if major treatment is needed in the initial years of the policy, the savings account may not have enough funds to cover the gaps, leaving a significant portion of the costs to be paid out of pocket.
Now, let’s address what I consider one of the most critical issues from the perspective of a health insurance agent: the challenge faced by individuals with pre-existing health conditions in obtaining coverage.
Approximately half of the clients reaching out to my office seeking health insurance have a health condition that could lead to a denial of their application by an insurance carrier or result in an amendment rider that essentially excludes coverage for any claims related to that condition.
Hypertension, or high blood pressure, is a common issue I encounter. While it may lead to an outright rejection of an application if other factors are present, it is more likely to result in an amendment exclusion rider.
One might think this isn’t a major concern, assuming only the cost of blood pressure medication needs to be covered out of pocket. However, many consumers are unaware that this rider excludes ANYTHING deemed part of this condition, including heart attacks, strokes, and aneurysms, all of which would result in significant out-of-pocket expenses.
Consider the scenario where my father recently underwent double bypass surgery, incurring a bill of approximately $150,000. Without the hypertension rider on his health insurance policy, he would have had to pay the entire amount out of pocket, not to mention the additional cost of two months off work. For someone with an annual income of $40,000, this could have led to financial ruin.
So, how do we tackle this challenge? Clearly, the proposals have been problematic from the beginning, and even if one of these schemes gained widespread public support, it is unlikely to be enacted into law due to political infighting. One side advocates for maintaining privatized health care, while the other pushes for its socialization, each with its benefits and drawbacks, as we previously discussed.
It seems we are stuck with this problem, devoid of meaningful solutions or a glimpse of hope, right?
Perhaps not. Let me share a story about a client I had a few years ago in my office.
A young woman visited to compare health insurance policies for herself and her family. With several children, she was covered by Title 19 Medicaid and attended a state-funded college. After graduating and securing a position with the local school district, she found herself ineligible for health insurance benefits for some inexplicable reason.
Given that she couldn’t afford a plan costing $500 or $600 per month, she returned to the assistance office to explain her situation.
They eventually collaborated with us to identify a suitable private health insurance plan and reimbursed her for a portion of the cost, something I had no idea was possible!
Imagine how many more individuals could obtain coverage if the government could reimburse a percentage of the premium based on their income. Consider a young married couple in their 20s with one child, having a family income of $25,000 and facing an average premium of $450 for a $500 deductible health insurance plan.
Suppose the government determines that a three-person family with an annual income of $25,000 will be reimbursed 50% of their premium. In that case, the total cost for the family would be reduced to $225 per month.
Now, the family can consider this as a cost-effective premium.
This combination of private insurance and government assistance offers the best of both worlds. The next question, of course, is about cost: how much more would this cost the American taxpayer, and how much higher would taxes be?
I don’t believe it would significantly burden the taxpayers, and here’s why: Firstly, we would reduce the number of uninsured individuals unable to pay for their medical care, lowering the overall cost of healthcare.
Secondly, the significant reduction in the number of people forced into bankruptcy and seeking Medicaid Title 19 assistance due to medical expenses resulting from catastrophic medical conditions without insurance coverage would be realized.
This is crucial to note because, once on Medicaid, a person’s healthcare is essentially 100 percent funded by the government, Health-Care
eliminating any reason to avoid seeking treatment for minor or non-existing ailments.
Conversely, many conditions that would not have been detected before they became severe because
a person who didn’t seek treatment due to lacking insurance coverage would now be identified before turning into a catastrophic claim.
Lastly, if the government allocates a certain amount of money to help cover claims for people with pre-existing conditions,
private insurance companies could eliminate exclusions and declinations based on existing health problems,
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Some states, including Iowa with its HIPIOWA Iowa Comprehensive Plans, have already implemented such programs to ensure residents who cannot find coverage elsewhere.
You might think this is wishful thinking and that these ideas will never be implemented, but they are already in action.
The issue is that only a few states participate in such programs, and most health insurance agents are unaware that some low-income families may be eligible for premium reimbursement.
If all these services were standardized and implemented on a nationwide scale with widespread publicity, I believe the uninsured population in our country would plummet. Health-Care
Now, I’m not claiming to know the reimbursement amounts for different income levels, but I do believe that something is better than nothing, and, in my opinion,
this is the best middle ground we could discover. Health-Care
The socialized aspect of the reimbursement would please Democrats, while Republicans should be pleased that healthcare remains privatized,
giving this idea a stronger chance of bipartisan support.
I’ve sent my concept to multiple senators and congressmen, but I always received the same standard response about their concern for healthcare
and their efforts to find a solution, despite no one reading my letters.
The only way to get these ideas out to the general public is for those of you reading this to spread the word by word of mouth,
email, or by linking to this webpage from your own website.
If enough buzz is generated, these ideas will receive the attention they deserve, and if enough people, like you and me, demand a solution,
politicians will be under enough pressure to act.
The number of uninsured Americans will continue to rise, and the cost of healthcare will continue to rise.
If nothing is done now, the cost of health insurance premiums will only increase!
Until then, all I can do as a health insurance adviser is assess all your options and present you with the lesser of all evils, which, in too many cases, is the option of going without coverage.
