Subject: RE: Modern Day Lunacy. Reform in a nutshell

Q: What is actuarial science?

A: It is applied math allowing actuaries to calculate claims risk of a population within the framework of a particular insurance product, and defining correct product pricing for unforeseen claims within that product..

Q: What would insurance cost in the absence of actuarial science?

A: About 10-20% more than the total cost of the benefits. Without actuarial science, it becomes a bill paying service. Kind of like what a winning horserace ticket costs if we ALWAYS could buy it after the race.

Q: So why do we want to have insurance?

A: Ah, yes, to take advantage of the actuarial science. All pay a fee, and some benefit, some do not, it is risk management. No one gets financially killed, as all shares in the losses.

Q: So what if actuarial science is gone in this bill?

A: We will tax the rich and subsidize the poor, but now we have all covered, in a bill paying service, not insurance. All are supposed to buy it before they are sick or hurt. Some will, if the penalty is big enough. For those 30 million uninsured, we will spend $330,000 of taxpayer dollars per new coverage to assure their access.

And this all began with Senators named Ted Kennedy and Nancy Kassabaum, via Certs of Credible Coverage imbedded in HIPPA. In that, they denied CoCC to the self employed, and created lots of noise about denials and pre-existing conditions, but for only that 20%. The press had a field day, and still refuse to publish information how employees in group settings do not have pre-ex rules or denials.

In the group market, they taught by example that pre-existing conditions must be covered, 80% of the populace firmly believes this, and who are in the group insurance market.

So today I get calls from pregnant women wanting maternity insurance. (So, honey, where were your premiums before you got pregnant?) One woman admitted to carrying triplets, and also wanted to lower her deductible, because it seemed headed for a troubled pregnancy. I had some trouble being polite enough to explain adverse selection.

I get calls for dental insurance from people wanting dental insurance to get a root canal done. Tomorrow is the appointment! (So, sir, where were your premiums during the past year?)

I get calls for life insurance. (Oh. The proposed insured is at a hospice? Oh, I remember, you are the couple who would not buy even the mortgage life insurance! Did the spouse know about how long foreclosures take? They might want to do some planning for that event).(I am sorry I can’t help you, I really avoid prison, and I would also like to keep my license)

And Obama and his accomplices seem intent on doing this, and sending the higher premiums to the insured and subsidized cost to the taxpayer too.

Wow. If the public ever figures this out, they are going to be angry. This insurance might just cost 20% more than now. They might not see it, as tax subsidies will mask all this shell game. Politics at its best. Liberals doing good, with other people’s money. About a trillion of it.

In any other insurance product, it would be called insurance fraud. So how can congress define what is not insurance fraud for any state? Perhaps the 10th Amendment needs a look.

Meanwhile, why is there not an investigation of a large scale insurance fraud scam propagated by our Congress?

Tom Hanthorn

InsureLinc

Lincoln, NE

402-477-9350

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Tellin’ it like it is!

Modern Day Lunacy

A MINORITY VIEW

BY WALTER WILLIAMS

RELEASE: WEDNESDAY, DECEMBER 30, 2009

Sen. John Rockefeller, D-W.Va., chairman of the Senate Finance Subcommittee on Health Care, and Rep. Joe Courtney D-Conn., a member of the House Education and Labor Committee, have introduced the Pre-existing Condition Patient Protection Act, which would eliminate pre-existing condition exclusions in all insurance markets. That’s an Obama administration priority. I wonder whether President Obama and his congressional supporters would go a step further and protect not just patients but everyone against pre-existing condition exclusions by insurance companies. Let’s look at the benefits of such a law.

A person might save quite a bit of money on fire insurance. He could wait until his home is ablaze and then walk into Nationwide and say, “Sell me a fire insurance policy so I can have my house repaired.” The Nationwide salesman says, “That’s lunacy!” But the person replies, “Congress says you cannot deny me insurance because of a pre-existing condition.” This mandate against insurance company discrimination would not only apply to home insurance but auto insurance and life insurance as well. Instead of a wife wasting money on costly life insurance premiums, she could spend that money on jewelry, cosmetics and massages and then wait until her husband kicked the bucket to buy life insurance on him.

Insurance companies don’t stay in business and prosper by being stupid. If Congress were to enact a law eliminating pre-existing condition exclusions, what might be expected? Say I’m a salesman for Nationwide and you demand that I write you an insurance policy for your house that has already gone up in flames. I send an appraiser out to your house to get an estimate how much money it would take to make you whole. Let’s say it comes to $400,000. Guess how much I’m going to charge you for the policy? If you said somewhere in the neighborhood of $400,000, you’d be pretty close to the right answer. You might say, “Williams, you’re right. Forcing fire and auto insurance companies to sell policies for a pre-existing fire or auto accident is bizarre and stupid, but it’s different with health insurance.” Yes, health insurance is different from fire and auto insurance but the insurance principle remains the same.

If Congress and the president are successful in making the Pre-existing Condition Patient Protection Act the law of the land, their treachery won’t stop there. Insurance companies will attempt to charge people with pre-existing health conditions a higher price to compensate for their higher expected cost. Those people will complain to Congress. Then Congress will enact insurance premium price controls. Insurance companies might try to restrict just what treatments they will cover under such restrictions. That means Congress will play a greater role in managing what insurance companies can and cannot do. (The current Congressional thinking is to restrict premiums for older people to two time or three times that of younger people. This means that in order to compensate of the no pre-ex exclusion the base rates for younger people will have to be substantially higher in order to cover the risks of no pre-ex on the older who likely will have more medical conditions. It’s simple math which the congress-critters can’t seem to fathom.)

The dilemma Congress always faces, when it messes with the economy, was aptly described in a Negro spiritual play by Marcus Cook Connelly titled “Green Pastures.” In it, God laments to the angel Gabriel, “Every time Ah passes a miracle, Ah has to pass fo’ or five mo’ to ketch up wid it,” adding, “Even bein God ain’t no bed of roses.” When Congress creates a miracle for one American, it creates a non-miracle for another. After that, Congress has to create a compensatory miracle. Many years ago, I used to testify before Congress, something I refuse to do now. At several of the hearings, I urged Congress to get out of the miracle business and leave miracle making up to God.

For a president and congressman to shamelessly propose something like the Pre-existing Condition Patient Protection Act demonstrates just how far we’ve gone down the road to perdition. The most tragic thing is that most Americans have no idea that such an act violates every principle of insurance and it’s something that not even yesteryear’s lunatics would have thought up.

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