Unique Original Articles » Health Reform Slashes Health Care Alternatives for Youth in Connecticut

The September health care reform mandates will reduce the insurance options available for children. In the State of Connecticut and in many other states, many private medical insurance companies appear to have decided not to insure youth who purchase standalone policies after September 22nd. Not all companies have announced their decision on this issue, but many that have are choosing eliminate these types of policies.

Children 18 and under who apply for a policy with at one or both parents will not be affected. children who are covered by standalone policies that were effective prior to the mandate will be allowed to keep their existing insurance policies.

Who's the villain here? We can put the blame on the insurance carriers. However, mandating that an insurance company to insure unhealthy people is like asking banks to underwrite loans for those with bad credit. Our lawmakers may be more deserving of blame than the insurance companies.

Health care insurance companies do make tons of money but their margins are not very fat. They don't make tons of money on per policy. Adding just a few additional significantly costly people can make them lose money or make their premiums unaffordable.

A basic example might involve an insurance company that insures a hundred people against cardiac problems. Each person pays a thousand and twenty dollars a year. One of the insured people has a cardiac arrest each year. It costs the company $100,000. The company pays the hospital and doctors costs and keeps $2,000 as a profit.

Suddenly after a health care reform mandate, they must cover five unhealthy people. Every year one of these five new people has a heart attack that costs an additional $100,000. This means that the insurance company doubled its expenses, but only increased the money coming in by five percent.

If the insurance carrier responded by increasing the cost of the insurance policies, their policyholders would react also. Some might drop out of the pool. Chances are the more profitable people would be much more likely to decide to be their own insurance company. It is a sure thing that their prices would have to go up again and again as their ratio of healthy to unhealthy policyholders would keep moving in the wrong direction.

When an insurance company is forced to approve people without regard to their health history, they run the risk of closing their doors. This could sound crazy to you, but big companies go out of business from time to time.

Perhaps if the US automobile manufacturers had been more fiscally prudent, they wouldn't have needed us to bail them out. Perhaps banks should have been more prudent a few years ago and not underwritten so many soon-to-be bad loans.

Health care reform cannot change the laws of the marketplace. If an insurance company takes on unprofitable business it will have to raise its rates. If they are forced to raise their rates more than their competitors, they will wind up with fewer customers.

Congress wrote a law that was designed to provide universal medical coverage to children. This law has had not had the desired effect. Fewer options for insurance are now available for those under 19.

This has to make those of us who are paying attention wonder if the rest of the health care reform mandates are going to work. Our senators and congressmen spent a lot of time demonizing the insurance companies. They are no more or less wicked than institutions in any type of business. They spent a lot of time telling us how much money they make in the aggregate. The real issue is the amount they make per policy.

We've gotten great rhetoric and at least one bad mandate. Let's hope that this was the only one screw up. Say a prayer.
Alston J Balkcom blogs about universal health care. You can purchase BCBS Anthem insurance on his site.
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