Wednesday, November 13, 2013

If You Have Insurance You Like

I've been thinking about President Obama and the line, if you have a health plan you like, you can keep it.

I don't think he knew he was wrong.  That's because I worked for an insurance company for sixteen years, and I didn't know he was wrong.

There are a couple of pieces to this.  First, back in 2009, I took this as a statement addressed primarily to people who had health insurance through their employers.  The idea was that the old employer-based health insurance system wasn't going away.  The same for people on Medicare.  And this statement is true for these groups.

Second, the individual insurance market was and is notorious.  It didn't occur to me that people covered here would prefer their existing policies to better policies that were cheaper.

Third, the junk policies, which are relatively recent and can be found in both the individual and the employer-provided market.  Among the worst of these policies are those that provide no coverage for hospitalization.

Without putting too fine a point on it, hospital stays are the expensive part of the health system.  (I know, I know.  Drugs are expensive.  Stay with me.)  Traditionally, hospital stays were what insurance was for.

It never occurred to me that anyone would like one of these junk policies.  They're better than nothing, but to my mind they're not real insurance.  They don't keep you from being bankrupted, and they don't keep you from being kicked out to die when you run out of money.

So I made two mistakes.  First, I was distracted by the fact that most people weren't affected by the new law.  Second, I thought the people who were affected understood the coverage they had.

On this second part, I should have known better.  And so should the President.  But I'm not going to lose sleep over this one, and I hope he doesn't either.

P.S.  I wonder if the insurance companies told the administration they were sending out cancellation notices before they did it.

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