Terry Du Bose recently posted the following letter from a third person, who used to SELL health insurance, on the USA.CAN listserv (USACAN@groups.barackobama.com). It describes a practice called "adverse selection" which provides a rather good explanation of my last 13 years of experience with health insurance (even in an small-employer-sponsored group), and which also demonstrates rather nicely why government intervention in this far-from-free market is required just to restrain the evil side of greed:
If we are going to help President Obama get the support he needs for health care we must make our intentions known and voices heard. I do know a little about health care from the insurance side. I owned an insurance agency in Austin , Texas for many years and finally walked away from a very good six figure income because I could not stomach it any more. After I got into the business and saw how corrupt it was, I thought I could make a difference. No way were, they to entrenched in the hip pockets of our congressmen.
There are a number of items I could address about the health insurance industry, but in an effort to keep this interesting let me hit on just a few high points. Most people believe that if they purchase a health insurance policy they are covered for life. That is partially true. There is a term in the health insurance industry call "Adverse Selection". In a nut shell here is what it means. You purchase a health insurance policy. Internally the insurance company assigns you to a group. An example of the group could be all policies sold in that year, or all policies in Texas , or all policies in you zip code prefix. As people in the group get older and have more health problems the expense goes up and possibly profits go down. The insurance company offers a new policy with different coverage and lower premiums to the group. The only way you can qualify for the new coverage with lower premiums is with underwriting approval. The company moves the healthy clients over to the new group and leaves the sick with cancer, stroke, diabetes, heart problems, etc. in the old group. The insurance company will now increase the premiums on the sick group as much and as often as the law and insurance contract will allow. The goal is to make it so expensive that the insured's can not afford the coverage and will have to terminate their coverage usually through non payment of premium. Now we have a group of financially devastated sick people who will probably loose their homes and become a burden on the tax payers. Yes, it is legal and for profits.
Did you know the Health Insurance industry spent one hundred million dollars on Lobbyist when Bill Clinton was elected to office to fight his health care policies? The health care industry had three lobbyists for every congressman in D.C. The health care industry gave George W. Bush about nine hundred thousand dollars to make sure universal health care would not have a chance.
Did you know that Ford, Chrysler, and GM have over one million retirees that they are paying for their health insurance? The Japanese owned plants in the USA only has around 300 retirees that they cover their health insurance. There is no wonder why the American auto industry can not compete with the foreign auto makers.
The insurance industry determines the quality of health care that we receive, not the doctor. This needs to change. I am now a Real Estate Agent and a while back I was holding an open house. I caught what appeared to be a real estate prospect in the bathroom stealing medication from the medicine cabinet. No they were not looking for amphetamines or barbiturates; they were looking for antibiotics for a sick child. They could not afford see a doctor.
We need health care reform now. We can not depend on our congressmen for they sold their souls long ago. It is up to us and our new President of the United States of America , OBAMA.
Mr. DuBose's informant only fails to mention two things: 1) Congress hasn't changed that much; a majority of both houses are still the same people the insurance industry owned only two years ago. 2) President Obama himself was a Senator a year ago. Therefore, he chances of real CHANGE seem minimal, but I support the proposed changes.