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carla123's avatar

What would happen to health insurance companies if government take over the health insurance system?

Asked by carla123 (4points) June 29th, 2012

Correct me if I’m wrong, but I heard that Obama is trying to push a public health system that will allow everybody to have health insurance no matter what pre existing conditions he or she may have. If this is reached, what would happen to insurance carriers like Blue Cross, Blue Shield? Will we need these companies and health insurance agents?

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7 Answers

lillycoyote's avatar

Obama is not “trying to push” health insurance for people with pre-existing conditions. That provision of the health care reform bill has been in place for a couple of years now, I think. The states had a choice to run their own high risk pools or opt into the federal program. What will it do to private insurance companies? Probably nothing a all. The only way you can get the pre-existing condition health insurance is if you have been turned down/denied insurance by companies like Aetna, Cigna, Blue Cross/Blue Shield. Those companies have already denied you so those companies have already made it clear they neither want nor need your “business” if you have pre-existing conditions. And those plans are only for individuals seeking health insurance, not for group plans your employer provides.

Imadethisupwithnoforethought's avatar

They will be far more profitable.

People who are healthy who don’t buy insurance now will be forced to buy it. Making it more likely that to offset the costs.

Qingu's avatar

@carla123, you’re wrong. There is no government takeover of the health insurance industry.

“Obamacare” regulates these companies so that they can no longer refuse to cover sick people and people with pre-existing conditions. It also forces them to offer such people affordable rates. And it makes it easier for people to get insurance from such companies on the individual market (rather than through their employers, which is how most people get it.)

wundayatta's avatar

Where do these ideas come from? Thank you all for debunking them.

Some of us do want to combine all insurance pools into one. If we are all in the same insurance pool, that will be the cheapest way of covering all our health care expenses. All spending is spread out over the biggest number of people. This is the way that most of the western world provides health insurance.

In the US, we think there is a value to competition. In health insurance, the only people who benefit from competition are private health insurers. They get to insure the healthy people, while leaving the government (us) to pay for the sickest people (the poor (Medicaid) and the old (Medicare)).

We guarantee that any insurer can make money, because they don’t have to insure sick people. So the private insurers run around, identifying sick people, and refusing to insure them. The sick people then go into programs for the poor or the elderly, or they pay for themselves, and if they can’t pay, we do, because hospitals charge insured people extra. The private insurers don’t care, they just raise their rates, and increase their profits in the process.

Insurers do two things. They pay bills and they try to figure out who will be sick, so they can deny them coverage.

If we had a system where we get rid of all private health insurers, in fact, we would only get rid of part of what they do. They would no longer need to figure out who to deny coverage to. They could accept everyone. All they would do is pay bills.

Most likely, the government would hire all the health insurers to do the bill paying. Someone has to do it, and the government isn’t equipped to do it. So we’d hire the private insurers to do it. The private insurers would get a little smaller, because they would no longer be doing risk assessment, but they would still exist. Nothing much would change.

That system is called “single-payer” and it is the most efficient way to provide health insurance. By having only one system of insurance, we would save billions of dollars that hospitals and other doctors and providers have to spend to deal with thousands of different insurance companies with different rules. Under single-payer, there is only one insurance card and one system and one set of rules. That would probably save about 30% of current health care expenses. Of course, there would be offsetting costs, but in the end, you’d give everyone the health care they need at about the same cost as we currently spend for a health care that does not give everyone what they need.

Doctors and hospitals will all be happy because they will see an increase of about 20% in their business. Insurers will lay people off, but there will be plenty of jobs in the health sector, so we’ll just be moving people around, and making people healthier in the process. Amazing!

Strauss's avatar

@wundayatta Where do these ideas come from? Many of them are promulgated by the right-wing spin machine.

I agree with you that a single-payer system would be best and most efficient. I think the best way to achieve that would be to lower the eligibility age of Medicare to 0.

GracieT's avatar

My medicine under Medicare is now $650.00 for three months, and that’s because they pay (see the look of irony on my face) amazingly half of it. My medicine for seizures is actually $1,200 every three months. There is a generic for it, but I’ve been told by my neurologists that I can not take generic for seizures, or I risk having a breakthrough seizure. Yay. Generic is $20 for three months. I know several people with seizures that cannot afford it and so have to take generic. People actually have the balls to say that the US insurance system isn’t broken? My seizure medicine isn’t the highest level of cost. I shudder to think of what price that would be. One of the funniest facts about taking generic seizure drugs is that if I do have a breakthrough seizure it could cost MUCH MORE with hospital or ER bills. The insurance people actually have a group of people that calculate how much more money they would have to pay if they do something that could cause problems instead of paying for the most effective treatments. I have reached the limit for medicine costs. I’m not sure if it is for just this year or this decade or my life. It’s just amazing that I can actually afford it. What if I couldn’t? What is even more amazing is that I’m just on Tier Two for medicine costs. Some medicine is unbelievably more expensive. WHY?

I’m sorry for that stream-of-consciousness paragraph. This is a topic that I really care about. I am just too involved.

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