This replacement won’t come cheap to taxpayers, either. According to the Cato Institute, the expected cost of this bill amounts to 1-1.5 trillion dollars[2]. This would commit each citizen of the United States including dependants, homeless, and unemployed to pay between $4,000 and $6,000 dollars within the next decade to dismantle an existing private sector that already has similar interests in mind.

The role of the government is to regulate existing private jobs in order to protect both the citizens that rely on their services and the market itself from those who seek to harm domestic markets. This bill seems to lose sight of that, as instead of assisting and regulating private sectors, Kennedy seeks to replace portions of the existing industry.

Insurance companies aren’t opposed to universal health care coverage—quite the contrary. Insurance companies would like everyone to be covered in case anything happens, but this bill would cut out consumers options in what they want covered. Instead of being able to choose more or less coverage as it fits your lifestyle, you would be subject to the same expenses and burdens as everyone around you. An office worker would be paying the same as a worker in the demolitions field for health insurance.

Next is the role of a “Navigator’s Program” mentioned within the bill. Insurance News & Views expresses this program’s role in great clarity:

“[The Navigators grant program] would award grants to public and private entities to conduct public education, distribute information and assist with health insurance enrollment. The legislation specifically states that health insurance issuers, including agents, would be prohibited from participating in the grant program.”[3]

Consumers should be informed. The navigator’s program aims to encourage people to understand the decisions they should make as it pertains to insurance enrollment. However, to encourage those who are completely unaffiliated with insurance to do so is folly. Insurance agents exist specifically for this purpose. It is our jobs to inform the consumer about what exactly policies cover and don’t, and suggest routes that make the most sense tailored specifically to the varying needs of each individual. By removing the agents from this grant, Kennedy is setting up a scenario where the blind lead the blind.

Imagine a scenario where an individual, under the advice of someone from the navigators program, buys a policy. They get sick or injured, and find out that the incomplete advice they received led them to purchase a policy that does not cover a service that was necessary and was available. That individual has no recourse from the program or advisor and no way to get the services they need for the medical care, except out of his/her pocket. In any market in the United States, that would be labeled a scam. Professional advice which competitive market choice of coverage or products needs to remain available in health reform to prevent scenarios such as the above example.

sources:

[1]. http://help.senate.gov/BAI09A84_xml.pdf

[2]. http://www.cato.org/pub_display.php?pub_id=10289

[3]. http://www.iiaba.net/IAMag/NewsViews/061109.html

On March 5, 2009, I received two different e-mail communications.  The first contained 2008 year end results for one of the insurance companies that I represent. An erupt follows:

“Here are the year-end combined ratios for the some lines of business:                  

                        Personal Auto                       117.2

                        Homeowners                         110.7

Clearly, our challenge lies in the personal lines numbers.  We continue to believe that market rates are grossly inadequate.”

The second was a comment from the agents association observations to the insurance company’s reaction regarding Gov. Granholm’s request to freeze auto rates for the next 12 months.

“To date 12 out of 100+ companies have “pledged” to comply with the Governor’s request for a voluntary auto rate “freeze” as listed on OFIR’s web site.

The collective market share of those 12 companies would appear to be minimal.

We also understand that at least five companies have had filings for personal auto rate increases rejected by OFIR. Under Michigan “file-and-use”, at least one of those companies whose rate filing was retroactively “disapproved” has temporarily ceased issuing personal auto policies until its systems can revert back to the previous rates.

The reason for the rejection cited in at least two instances is for the “unfairly discriminatory” use of unreliable data from credit reporting agencies. The argument apparently is that since some credit reports have contained errors, the use of insurance scoring per se is unfairly discriminatory. Perhaps this is OFIR’s stand-in for banning the use of insurance scoring while everyone waits to hear whether the Michigan Supreme Court will hear case on appeal?”

Clearly there is a difference between the Governor’s hope to reduce insurance rates and the industry’s need for adequate rates to stay open to new business and profitable.  Michigan has higher than average auto insurance rates as we have the absolute broadest insurance coverage in the United States.  No other state requires unlimited medical benefits for auto related injuries. This is a unique and important benefit.  There are over 100 companies actively soliciting new auto insurance business in Michigan.  We have a free and competitive market that works.  With the Governor “freezing rates”, imposing a ban on credit scoring, or limiting the insurance companies ability discount rates for the best clients we all lose.  Average rates will increase, competition will decrease and Michigan will be a less desirable place for insurance company’s to do business.  Here is another example of a working free market system that the government wants to “fix”.  Insurance need to be available and affordable and the rates should represent the risks.