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Private Medical Insurance Is A Bad Deal

Private Medical Insurance Is A Bad Deal

Medicare uses 97 cents of each dollar it collects as premiums to offer healthcare. At the same time, if Senate healthcare bill is passed, it will require private insurers to pay 80 cents per dollar of the premiums for the care. The system that will be used to healthcare overhaul is much uneconomical than the public health insurance and then Americans will be forced to purchase healthcare products that is honestly a bad deal. American private medical insurance is a bad deal.

Let us suppose that the Senate bill is approved with a minimum MLR (medical loss ratio) of 80% for individual health industry. But if we want it to work,

  • The secretary of HHS should not to raze the rule by utilizing the loophole in the healthcare bill
  • We need an individual state regulator interested and capable of enforcing the MLR rule
  • We need insurers to find method to tackle the system; otherwise by creating a loophole to re-categorize the administrative job as care.
  • We need to be ensured that the insurers don't raise the pay to within-network medical providers and make the margin bigger.

If all these work properly, then also the Senate bill will insist individuals to purchasing plans which do not spend at least 20 cents per dollar for care. It's a great waste and so private medical insurance is a bad deal.

Insurance should work like gathering premiums from every member of a risk pool and then provide it to the people who were not likely.

As a buyer, we need to go for an insurance which pay more than 100 cents per dollar collected to the plaintiffs. The insurance fund should technically pay more dollars than it gathers in premiums.

But, it is not possible to get such insurance; since there are always some overhead expenses.

Since a perfect insurance is not possible and private medical insurance is a bad deal then public insurance is the only option; not only for Americans but for all across the world. Medicare has a medical loss ratio of around 97%. It's feasible making a tremendously monitored private insurance comparatively economical.

Medical insurance where a maximum amount is spent for care is definitely a good deal. But if it is only 80 cents per dollar that's spent for care, then private medical insurance is a bad deal that the Americans are insisted to purchase. For example,

  • If your yearly premium is 10,000 USD then 2,000 USD is not going to spend for a person in your pool. In case of Medicare only 300 USD to 500 USD of your money is spent for administrative works or for making profit.

With lower medical loss ratio, the private insurers of the country are going to become scam and people are being forced to get insurance from them. Instead, it would be better if people deposit their dollars in savings accounts and spend as and when required; for healthcare purpose. This system is applicable in Netherlands. The Dutch can exclude themselves from getting compulsory medical insurance.

There are several methods working across the world. Such methods utilize an extremely monitored insurance market; liberal funding as well as individual mandate to offer reasonable, high-standard medical insurance to every people. However, for the methods to work properly, the federal government should ensure by law that all people can have reasonable, high-standard and inexpensive medical insurance that the Senate bill is not able to do. It will simply insist Americans to opt for badly managed, costly private medical insurance. Progressives should only accept such mandate when the government ensures citizens' access to reasonable, high-standard and inexpensive medical insurance.

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