Comparing Two Insurance Policies
Posted: Wednesday, October 01, 2008
by Rose-Marie Chaperon
Chaperon Consulting, LLC
Universal Health Insurance:
Universal Health Insurance or National Health Insurance is one form of universal health insurance in which the private market for insurance is eliminated and the government directly insures everyone. This will put a damper in the pocket of the major health insurance companies in the United States. I as a healthcare worker along with many people I am concerned about the number of people who lack health insurance in the U.S. There have been proposals for "Universal Health Insurance" to ensure that everyone has health insurance -- either public or private insurance, through a group or as an individual (Chrispollier, 2009) .
As a person who has health insurance through my employer, if I lost my job next week my insurance would likely go with it. Excluding temporary programs like COBRA, losing my job means losing my health insurance too. Sure I can buy my own, but that can get expensive and there are often holes in the policy than with employer provided health insurance. Under a universal system, I don't have to worry. Imagine I had to pay each month for access to use the police. If you lost my job and I couldn't afford the police bill and called 911, I wouldn't get service.
A few proposals for universal health insurance focus on mandated (employer-based) health insurance -- requiring employers to provide health insurance for their workers. In that case what would have happened to me if I lost my job? What would I have to fall back on? The average COBRA policy cost about $311.00 a month. Would I be able to afford it?
The most fundamental underlying basis of universal health care is the fact that in the system, I don't have to worry about not being covered. The United States spends more on health care as a percentage of GDP than any other developed nation. Countries that have some kind of universal coverage like Canada generally spend less (Zycher, 2007) .
Here is the problem with employer mandate health insurance coverage. If the cost falls on the employer, then the employer might cut out part-time or low-wage jobs. The result is that the people the government tried to help are no longer uninsured and employed, but rather uninsured and unemployed. Part-time employment would become obsolete due to employers' layoffs.
Private Health Insurance:
Private Health Insurance is a policy one can purchase to prevent against loss by illness or bodily injury. Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder. Health insurance can be directly purchased by an individual, or it may be provided through an employer. Medicare and Medicaid are programs which provide health insurance to elderly, disabled, or un-insured individuals. There are a number of companies which provide private health insurance, including Blue Cross, United Healthcare, or Aetna (Investment works, 2007) .
Private medical insurance (PMI), also known as private health insurance, helps individuals bypass waiting lists in order to get prompt medical assistance. It is impossible to quantify how these waiting periods have affected peoples' long term health and well-being. Why Choose Private Medical insurance? Medical treatment - Private medical insurance ensures that a patient gains access to urgent medical treatment and can stay in a quality-approved private hospital should the need arise; Diagnostic tests - This allows doctors to identify life-threatening conditions at a treatable stage; Private hospital care - Private medical insurance entitles patients to a private room with television and radio access (Investment works, 2007) .
Patients with private health insurance can generally choose where they want treatment and which consultant they see. The higher the monthly premiums, the greater the choice; having private health insurance doesn't prevent access to national health insurance treatment. Monthly premiums vary considerably between private medical insurance providers. Utilizing the services of a PMI broker can help people identify the cheapest and most comprehensive private health insurance policy for their needs (Ghaffar, 2009) .
T here are some negative aspects with private health insurance monthly premiums . Insurers have to deal with the rising cost of premiums . Monthly premiums increase in-line with age because the incidence of illness rises comparatively. The most expensive aspect of private healthcare is hospital accommodation. There is also the aspect of pre-existing medical conditions . As is the case with all forms of insurance, private medical insurance does not exclude pre-existing medical conditions, such as a heart conditions. Private health insurance generally excludes: cosmetic surgery, routine check-ups, illnesses developed prior to taking out a policy, chronic medical conditions and pregnancy and childbirth (Ghaffar, 2009) .
Comparing the two:
In comparing the two options, I would argue that a single-payer system similar to Medicare would realize savings in administrative costs sufficient to extend insurance coverage to all of the uninsured. Administrative costs for private health insurance, defined broadly, are in the range of 11-14 percent of total premiums (Investment works, 2007) .
Administrative costs reported directly in the Medicare budget, combined with a proportional allocation of the costs of other federal government administrative functions, yield a finding of 6 percent of Medicare outlays as the total reported administrative costs for Medicare. The lowest plausible assumption about the magnitude of that "excess burden" of the tax system raises the true cost of delivering Medicare benefits to 24-25 percent of Medicare outlays, or about double the net cost of private health insurance (Zycher, 2007) .
Private administrative functions also impose discipline on the consumption of health-care resources, thus reducing upward pressure on insurance premiums. Neither private nor public health insurance in the context of allocating costs is a charitable endeavor.
My personal view, no health-insurance system, whether private or public, can "cover" all individuals or all medical services because resources are limited always and everywhere. This means that both private and public health-insurance systems must impose limits on the consumption of health care: Some classes of services will be denied to patients, and some classes of patients will be denied given services. Single-payer systems inexorably must ration care and impose various types of price controls on providers, as the budget pressures attendant upon "free" (or low-cost) health care grows.
Reference:
Chrispollier, W. J. (2009, 06 08). The Pros and Cons of Universal Health Care in the United States . Retrieved 04 08, 2010, from Weaknomist: http://weakonomics.com/2009/06/08/the-pros-and-cons-of-universal-health-care-in-the-united-states/
Ghaffar, A. (2009, 03 10). Private Medical Insurance - Pros and Cons. Retrieved 04 09, 2010, from Insurance Suite.101: http://health-insurance.suite101.com/article.cfm/private_medical_insurance_pros_and_cons
Investment works. (2007, 05 07). Health Insurance. Retrieved 04 09, 2010, from Investerswords.com: http://www.investorwords.com/2289/health_insurance.html
Zycher, B. (2007, 10 05). Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured? Retrieved 04 08, 2010, from Manhattan Institute.org: http://www.manhattan-institute.org/html/mpr_05.htm
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