INSURANCE BUSINESS CAN BE MESSY

#insurance #healthinsurance #riskmanagement
The insurance business can be messy and complicated.

Some insurance is mandated. For example, a minimum amount of auto insurance, usually liability insurance, in case someone else gets hurt, is required in most states.

Health insurance, under the Affordable Care Act, is now mandated. We can certainly debate the necessity of that – perhaps later.

Life insurance may be the only one that is completely optional, meaning it’s not mandated and many people can live without it.

But even if insurance isn’t mandated, it may be – or should be – something we can’t really live without. When a person doesn’t buy flood insurance because it’s too expensive, but lives in a flood-prone area and gets flooded, many thoughts crowd her mind, and the minds of others watching. Those others watching may want to help, but may cringe at a Go Fund Me request to help HER. They might prefer to help the responsible folks take care of necessities that their flood insurance may not cover.

As for health insurance, the business model may seem complicated.

All insurance business models are about “risk management,” which may seem like a vague term to most, but we’ll use health insurance as an example as we break it down.

The health insurer collects premiums from folks who are healthy, and not making any, or are making very few, claims. When a person gets to a point in his life that he needs to make perhaps significant claims, those premiums he paid all those years may not matter.

The insurer will use all kinds of gimmicks, technicalities and even trickery to find ways to either not pay a claim, or pay as little as possible. They may often put consumers, already dealing with what ails them, through an incredible process to get their money. The more daunting the process, the more likely people will give up.

Remember this: just as consumers don’t like to be put through a wringer to get what they are owed, the insurers don’t like to be pestered day in and day out, either. The rule of thumb: if your policy says you are covered, fight for what you are owed. If the company doesn’t pay, sue.

Then, we have the standoffs between providers, usually big providers who may be the only game in town, and insurers over fees, reimbursements etc. You see insurers use their leverage to give the least to the provider, and you see the provider using its leverage by not taking the insurer’s policyholders as patients.

Remember, an insurer’s promise of coverage with your provider is made to be broken. In standoffs like these, the patients (policyholders) suffer and no one cares.

New York Times columnist Paul Krugman wrote that despite the exit of some big insurers from the Affordable Care Act marketplace, the law is working well, reducing the number of uninsured Americans considerably. His column was published Aug. 22, 2016, in The Atlanta Journal-Constitution. Though some insurers’ exit from the marketplace is a concern, Krugman says the problem can be fixed if people can learn to work together to do so.

The U.S. is the only major nation in the world in which health insurance is left up to the free market. Some advocate that we move to the single-payer system, in which we’d all have health insurance through the government. There are pitfalls here, too.

The insurance industry provides many, good-paying jobs. Many of those would be gone in a single-payer system. Drug and device companies rely on their U.S. profits for much of the money that goes to researching new and better treatments.

What to do? Determine what insurance you need and buy it. You may have to give up some pleasure and deal with some messy situations along the way, but going without can create far worse consequences. Remember the Fram Oil Man ads: pay me now, or pay me later.

If you are having trouble paying your premiums, look for other ways to make money. There are many part-time options out there that could even give you enough to surpass your main income. To check out one of the best, message me.
Insurance is messy. You may have to shop around frequently for the best deal, but paying penalties, or just taking the risk that you won’t need it, is a recipe for disaster.

Peter

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