Medical insurance companies aren’t built to be sensitive caregivers

Editor’s note: Worth Richardson, a civics and economics teacher for Culpeper County Public Schools, is the new columnist for Wednesdays. He replaces the late Eddie Dail. Worth is a former economic analyst/reporter covering the U.S. Treasury Department, Senate, House of Representatives and National Association of Realtors.

Jason Campbell is not the only person in Washington whose ability is being questioned; medical insurance companies are being criticized more heavily than ever. Why?

They are companies offering customers the opportunity to have health insurance, not entities mandated to offer us “unalienable rights” like “life.” Health insurance is a product offered by a business, not a right guaranteed by our Founding Fathers.

The White House’s proposed health care plan says it will end “discrimination against people with pre-existing conditions.” Health insurance companies are not discriminating against these people — just not insuring them because it would be unprofitable.

Would you ask a fire insurance company to insure a building on fire? Health insurance companies are a business, not a nonprofit — they must operate to earn profits. If they stopped differentiating between potential customers with and without pre-existing conditions, then their business model would fail and the health insurance industry would collapse.

The White House needs to stop using the word discriminating when referring to insurance companies’ determination of premiums. Insurance companies are basing their premiums on merits — the statistical chances of the applicant requiring more coverage than what he is paying into the company. If health insurance companies are not allowed to charge different premiums to different customers, then my car insurance shouldn’t drop when I turn 25, nor should it go up if I buy a red car.

(Please note said plan also looks to end “discrimination” against age and gender premium differences).

Insurance companies use advanced mathematical equations to figure out how much to charge. In these equations are immense amounts of statistical data that determine how much risk is involved with a particular applicant. This method is used across the spectrum in insurance when modeling risk and determining premiums.

Insurance companies are not discriminating when they determine premiums, just quantifying how much risk is associated with the applicants.

The proposed health care changes from the White House look to eliminate extra charges for preventative care such as mammograms and flu shots. The idea being, catching cancers early or inoculating against viruses will save money in the long run. If this were true, insurance companies would have already instituted the policy long ago.

The National Cancer Institute estimates 12.8 percent of women will have breast cancer. If an insurance company charges extra for mammograms, it is because it has quantified the costs of later stage treatment as opposed to the cost of covering mammograms for every woman under coverage. It also means the cost of later stage treatment on the 12.8 percent is lower than screening every woman under coverage.

Is this insensitive? Yes, but insurance companies are not revoking the right to preventative medicine — the extra may still be paid by the 12.8 percent.

Insurance companies are businesses rooted in mathematics, not sensitive caregivers. No matter the case, they do come off as insensitive to the basic human needs of life and the pursuit of happiness. But at the end of the day, they are businesses offering a product.

There are many issues in our health care industry that can be fixed, but requiring a business to do things which make it operate at a loss is not the road to change.