posted on:  5/23/2007     revised: 3/9/2010

I am concerned that health insurance said to be developed to help the "working poor" have turned into insurance policies for the "stupid" instead.

Let’s back-step to explain that in recent years many, if not most, health insurance companies have introduced trimmed-down versions of their full insurance plans to make policies that are affordable even to those on a low income. Not that this health insurance is ever “cheap”, just more affordable. This coverage might cost ten percent of net take-home-pay, for example, for a grocery store clerk so at least it is mathematically feasible to include the coverage as part of the worker’s regular budgeted expenses. This insurance might cover, on average, a third of the medical expenses that traditional health insurance policies pay. (Many would argue that traditional medical insurance is financially inefficient but that’s another topic). This coverage is still a huge first step toward solving the nations’ uninsured problem. This is a good idea and a win/win for all.

The problem as I see it that the proliferation of such policies on the Internet has greatly expanded access to supplemental health insurance and mini-med policies. Years ago AFLAC was the only household name in this market and this product was only available through the supervisory umbrella of an employer-provided health plan. Today, consumers are increasingly becoming familiar with the brand names “Basic Health Insurance”, “Core Health Insurance” and “Value Med Insurance” that can be purchased by almost anyone in a mater of minutes. These are all great products in their own right when used as intended, but ignorance is bliss, as the saying goes. There is no requirement that the insurance applicant read or understand the many disclosures that insurance companies are required to provide. It seems that some buyers are deliberately (or at least sub-consciously) ignoring those disclosures and pretending that this minimum coverage is a substitute for regular health insurance.

All things being equal, a buyer will logically choose the lowest price product. My concern is that some people are intentionally choosing to ignore the differences and making purchase decisions solely based on price. Only one state has taken a position that these supplemental policies may not be used as a substitute for regular health insurance1. This decision could come back to have severe financial consequences – both for the individual and our nation as a whole - in the not-too-distant future.

Individual stupidity may very well be the best justification for mandated universal health care. Then again, if that's the case, then we should have trashed this democracy experiment a long time ago.

Footnote
1We do not advocate any laws controlling freedom of choice but a legislative mandate is admittedly effective in resolving the concern raised in this article.
 

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Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved.