ObamaCare, an insurance agent's view

Never in the history of people talking about Things They Know Nothing About have we had so many people saying so much about something they know so little.

Of course we are talking ObamaCare. 

The most astonishing thing to me and others in the health insurance business is that the people behind this plan clearly know little about insurance, and even less about selling it. If they did, the first thing they would do is stop saying ObamaCare is about insurance because it isn’t.

Health insurance means insurance companies work the actuarial odds of a person getting sick and the probable cost of treatment. That’s what insurance companies do. Health, auto, life, homeowners, or business insurance is basically all the same. Insurers project risk and costs based upon the law of large numbers and actuarial historic data and create a policy product the public will want.

The Affordable Care Act (ObamaCare) is different because it subsidizes one group of consumers by artificially raising costs on a different group of consumers. That’s not insurance. That is a government mandated social program. Or social engineering, or redistribution. Not insurance. 

Let’s look at one example which leads us to an easy fix:

Mr. X is in perfect health. Height, weight, blood pressure, and cholesterol are perfect. Mr. X is 55 years old and makes a good living. He is single. 

His current plan had a $4,500 deductible, then 100% coverage for the balance of the year. It costs him $228 per month in 2013.  His plan was cancelled because it did not conform to one of four approved plan designs.

His new ObamaCare-compliant plan is a “Bronze” level plan with a $5,000 deductible, then 60 percent coverage until the out of pocket max hits at $6,250 for the year. The 2014 premium will be $459 per month. 

Worse coverage at a higher price.

In 2014 millions of self-employed people will realize what hundreds of thousands are now figuring out: For those who don’t qualify for subsidy, the “Affordable Care Act” is a  complete misnomer.

They thought they they were going to get lots of free stuff more affordably, but are now realizing they are getting less coverage and paying more. And risking IRS fines if they refuse.

The majority of the country will soon go through this when the mandate for group plans commences.

Even as the fights over ObamaCare continue, there is one major flaw which can be fixed. And it could even be a bipartisan fix!    

ObamaCare dictates that there are four tiers of coverage levels, Bronze, Silver, Gold, and Platinum. And coverage details are dictated within those levels and the law. This means that there are actually only four insurance plans from which to choose for everybody in the country. 

And that’s what must be changed right away. 

The previous --and heavily regulated -- health insurance “free market” allowed insurance companies to design their own plans,  set their own pricing, and sell them after they received regulatory approval.

There were hundreds of plans. Now there are four.

The federal government is very involved in approving the safety of car designs, but doesn’t design the cars. The result is we have hundreds of cars from which to choose that meet federal safety guidelines but are as different as a minivan, a Nissan Leaf, a Bentley, or a Ferrari.  This is a better regulatory model!

The federal government can -- and has -- dictated mandatory coverage for lots of different things,  but they went too far with the strict four “metallic tier” design. 

The quickest fix -- and it probably won’t be all that quick -- is to get the federal government to back out of plan design. Set minimum coverage mandates, establish the redistribution rules, and let the insurance market create the products. 

Let a thousand flowers bloom.

Stocks is a certified health insurance agent in California and the former mayor of Encinitas, Calif.