Saturday, February 27, 2010

The Socialized Medicine Scheme: Good and Bad Insurance?

The televised health-care/health insurance debate of Thursday 02/25/2010 came complete with many technical insurance issues such as selling insurance across state lines, health savings account plans, and pre-existing condition private welfare plan underwriting. Than there was Mr. Obama's references to "good insurance" and "bad insurance". (1)

What is "good insurance"? What is "bad insurance"? Is "good" and "bad" insurance really an argument to limit choice?

Bad Insurance

Attempted to track down a definition of "bad insurance". Sorry folks, there is no definition for "bad insurance". No such animal exists.

Its possible the phrase "bad insurance" is related to the phrase "jobs saved" hence the definition is a matter of national security and not available for consumption by the general public.

In my thirty plus years in the insurance industry the phrase "bad insurance" has come up a handful of times as a consumer description. Bad insurance is a subjective description of insurance that did not cover a loss event. That the policy was "bad" as the scope of coverage was not broad enough to encompass a loss.

Apparently catastrophic plans, large deductible plans, and large deductible health savings account type plans are "bad insurance" according to Mr. Obama. (2) This is truly odd as no definition exists for "bad insurance" and its not a scope of coverage issue for Mr. Obama its a size of deductible issue.

Good Insurance

Same problem exists for "good insurance", no definition found. Have heard people from time to time state they want "good insurance". Of course you then need to ask them what do you mean by "good insurance"? At which point an individual explanation is put forth explaining what "good insurance" means in the mind of the particular consumer. The range of responses regarding what is good insurance, to particular consumers, range all over the ballpark.

Mr. Obama thinks "good insurance" is a low deductible, low co-pay plan, with low doctor office co-pays and low prescription card co-pays. (3) That is, Mr. Obama thinks Cadillac plans are "good insurance". Those very expensive, very rich benefit plans known as Cadillac plans are good insurance.

Is good insurance and bad insurance really an argument to limit choice?

The attempt by Mr. Obama to categorize insurance plans as good or bad is really an argument of good vs. bad. You see, the underlying political argument is that Cadillac plans are the only good insurance plans and that catastrophic or high deductible plans are the bad insurance plans.

The argument is framed to limit choice by making higher deductible plans the villain. That is, only Mr. Obama's "good insurance" is what people need. People need Cadillac plans. That high cost, rich benefit plans, are good insurance and this is the plan Mr. Obama has chosen for you.

The higher deductible, lower cost plans are bad insurance according to Mr. Obama. That the choice of lowering cost by retaining and managing more risk is "bad insurance".

Note that the good vs. bad insurance argument put forth by Mr. Obama has the element of cost conspicuously absent. That cost is never mentioned and purposely avoided as the debate point is confined to the good vs. bad with the debater's (Obama) conclusion ,that good is better than bad, purposely shaped for the audience regardless of other important variables, cost being a major variable.

Moreover, the "summit" was held regarding health-care cost. Yet Cadillac plans (good insurance) drive up health-care cost due to over utilization of health-care resources while catastrophic/high deductible plans (bad insurance) drive down cost as they help eliminate over utilization of health-care resources.

As with any debate point using the good vs. bad scenario, the bad needs eliminated. The debater in the argument conveniently defines good and bad for his audience. Hence the elimination of the "bad" leaves you with Mr. Obama's definition of what is "good". Hence only Mr. Obama's choice is the good choice. Of course in the end, Mr. Obama is merely arguing to reduce the consumers freedom to choose.


Bad insurance and good insurance are not technical insurance terms and no definition can be found. In the very few cases where "bad or good" insurance is referenced its a subjective consumer description of how a plan should react to a loss or how a plan should fit their particular needs. The good vs. bad argument is merely a debate point with the attempt to lead the audience into limiting their own freedom to choose.

(1) (2) (3)

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