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DynamicTrends.com
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DynamicTrends.com
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We need to amend COBRA on healthcare, so that coverage is carried from one employer to another with no penalty and so that pre-existing conditions are eliminated for those who were previously covered at the time of any illness. Here's why: Joe works at employer “A“. Joe has healthcare insurance that is paid in part by the employer. Premiums are based on number of employees and Classification of work. Joe may get ill and visit his doctor, which is covered by the healthcare policy. Joe may never get ill and never visit a doctor. The premiums are paid monthly either way. The insurance company then bares the risk of Joe’s illness. Jane works at employer “B“. Jane has healthcare insurance that is paid in part by the employer. Premiums are based on number of employees and Classification of work. Jane may get ill and visit his doctor, which is covered by the healthcare policy. Jane may never get ill and never visit a doctor. The premiums are paid monthly either way. The insurance company bares the risk of Jane’s illness Eventually Joe and Jane both get fired or quit their jobs. Joe ends up working at company “B“ while Jane ends up working at company “A“. Because both are required to wait 90 days before they qualify for healthcare benefits, neither Jane nor Joe are covered should they require medical attention, even though the employer in each case would have continued to pay the premiums had the employees not changed companies. Both Jane and Joe were originally covered, whether they needed the healthcare coverage or not. Although neither Jane nor Joe has been ill in the past, either may become ill at any time. That’s what insurance is all about. It is a risk pool set aside in case it is needed. Only the employer benefits by swapping employees! The employer saves money by not having to pay the premiums, while the insurance company gets less money contributed into the risk pool and the employee is put at risk of financial loss. The 90 day waiting period throws the risk pool out of whack, because there are no premiums being paid during that period. A new employee may not become ill for the first 90 days, and then become ill after 120 days. Or, while working at company “A“, Joe fell victim to cancer. After surgery and treatment over the course of a one year period, Joe recovers. Jane over the same period also fell victim to cancer. Again, both Jane and Joe quit or got fired and ended up working at the opposite companies. Both have to wait 90 days for coverage, however neither will be covered for any cancer related illness due to their “pre-existing condition“, after the 90 day waiting period. Keep in mind that in the future Jane and Joe’s cancer may never return and neither may need medical attention again. The premiums remain the same for both employers and the coverage, except for their exclusion, remain the same. The exclusion for their pre-existing condition is not fair because if the employees had not changed companies, the respective employers would still be paying premiums for their coverage. Since healthcare insurance is part of an employee compensation package, (insurance in lieu of wages), it would stand to reason that the total value of the package should be taken into consideration by both the employer and employee. Healthcare costs an average of $7983 per employee in 2007or $665.25 per month. Most employers today share the cost with employees of about one half or $332.62. Monthly salary varies by type of employer. Let’s use $15.00 per hour or $2600 per month for this scenario. When salary and healthcare are combined, the total package would be $2932.62. It is possible that neither Jane nor Joe may ever get sick again with any other illness, but sometime after the 90 period Joe has a relapse of cancer. Since both are excluded from coverage, the premiums paid towards Joe’s healthcare are worthless. Since Joe is excluded from coverage that would benefit him, he should have the option of foregoing the company health insurance plan and receiving the premium from the employer in the form of tax free wages. Joe could then shop around for a company that would insure him or contribute to a Health Savings Accounts (HSAs), in case future complications occur from his pre-existing condition.As far as insurance companies are concerned, if they only insured healthy people, there would be no need for their service. The risk pool could only function properly if it offers benefits when needed. One other point to be made here, is that employees are put at risk of losing their jobs if they become ill with some affliction that would affect the price of the healthcare offered by employers. By firing an employee, the employer would benefit by keeping costs down, which gives them an incentive to do so. That fired employee would then be excluded from the insurance of the next employer that hires them. The risk pool is thus a FRAUD! COBRA would be changed so that pre-existing conditions would no longer be excluded, as adverse selection for both Jane and Joe were considered when first insured. Allowing insurance companies to exclude someone who is currently ill, but who was insured at the time of contracting the illness, would be antithetical to adverse selection. All insurance companies would be required to contribute a small percentage of their risk pool into a guaranteed-issuance risk pool for those they deem uninsurable and for those who are un-employable. In effect, it would constitute a risk pool within a risk pool. To assure that the system isn’t abused; those deemed unemployable would be required to perform a minimum amount of public service each month according to their ability, in order to qualify for benefits. By Michael Scoglietti Copyright DynamicTrends.com
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