Photo Credit: Jacqueline Sinclair Flickr via Compfight cc
The Affordable Care Act (Obamacare) mandate that everyone have healthcare insurance is one item targeted for repeal. The reason for the requirement is that insurance premiums are based on the people who purchase it, the probability that they will use it, and the cost of paying for care. People who purchase health insurance form the risk pool for an insurer. Balancing the financial risk means healthy and sick people need to be in the pool at the same time. ACA architect, Ezekiel Emanuel, recently said at the San Francisco Commonwealth Club, some kind of compulsion is necessary to keep the risk pool stable.
The issue is that the young healthy individuals don’t necessarily want to spend their money on insurance for which there is little return. Let’s look at common insurances and why they are different than healthcare insurance.
Life insurance is inexpensive for the young, but most don’t buy it because the chance of dying is low and the benefit is paid out only upon death. There is no requirement to buy life insurance at any age and you must have insurance at the time of death in order to receive a payout. Most people can’t guess the year that they will die, so they buy insurance for many years with no return because they stay alive.
Car insurance is much more expensive for young people, especially if they are under 25. That’s because drivers aged 16-19 are three times more likely to crash than drivers over 20. One in four crash fatalities involve someone 16-24, almost twice as high as any other age group. They pay more because they are a higher risk of being in an accident than drivers 25 and over. Car insurance provides financial responsibility to protect the driver, vehicles, and other drivers on the road.
Health insurance combines the disadvantages of life and car insurance for young individuals. Similar to life insurance, health insurance only comes into action when something, usually negative, affects a person’s health. Like car insurance, healthcare insurance is not cheap even with federal subsidies. With the ACA, preventive care has been free, but the free care is focused on preventing disease. The young and healthy don’t want to pay for something that they believe has a very small chance of occurrence. It’s the same rationale for not getting flu shots.
Why not offer healthy benefits in individual insurance plans? (It isn’t as necessary for employer plans because many offer wellness benefits. There could be a menu of items to choose from such as personal training sessions, nutrition counseling and a tailored eating plan, yoga, fitness class, and other healthy activities that are free and included with their health insurance. The healthy benefits would attract young individuals to purchase health insurance because they receive something they can use without the requirement of being sick. With luck over time, they become healthier individuals, won’t get sick as often, and have a smaller chance of developing chronic diseases. The risk pool is balanced with more healthy individuals, which keeps the rates down.
Isn’t it time that health insurance companies throw a little innovation into their plans?
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