Here is something you might not have considered when looking at Barack Obama's health care program.
Insurance companies make money by collecting premiums up front and investing the money. That is exactly why you pay less money for car insurance when you pay everything at policy inception. Some states actually allow insurers to charge more in premiums for customers who cannot afford to pay the entire policy premium at once. In other states, insurers charge billing fees to accomplish the same thing. The point is, the more money you have, the less you will spend in insurance premiums and fees.
Here's a hypothetical example:
Person A
Down Payment: $1,000
Policy Premium: $1,000
Number of Bills: 0
Billing Fees: $0
Person B
Down Payment: $500
Policy Premium: $1,000
Number of Bills: 5
Billing Fees: $50 ($10 each)
Person B
Down Payment: $200
Policy Premium: $1,000
Number of Bills: 8
Billing Fees: $80 ($10 each)
And please remember that some states allow insurers to charge more in premiums, as well as charge billing fees to those who cannot pay everything at once. So this example is a very conservative estimate. The real difference is certainly more. The deck is stacked against those with less money.
In addition, insurers use a customer's credit score as a factor in setting insurance premiums. A customer with a good credit rating will pay less than one with a bad credit rating. The insurance companies do this because people with good credit are more likely to pay their bills on time or early, giving the company additional time to invest the premiums and make profits.
So now let's look at Obama's health care proposal.
Under Obama's plan, adults are not required to get health insurance. And if they get sick or injured, they will be covered, but will be forced to pay a penalty for not having health insurance.
So how big is the penalty?
Suppose that a man goes without health insurance for 10 years, and one day gets into a car accident, sustaining severe injuries. Just as an example, let's suppose that the medical bills amount to $15,000. And let's suppose that hypothetically, insurance premiums would have been an affordable $1,000 per year, amounting to a total of $10,000 over the 10 years that the person was not insured.
Should the penalty be $10,000? Or should the penalties be substantially more? After all, the insurer did not get the opportunity to invest the premiums.
The bottom line is that the Obama plan is a non-starter with the insurance companies. They will never agree to insure these people who decide not to get health insurance unless the penalties match the premiums not paid and the unrealized investment profits. After all, the insurance companies are in it for the money.