A Basic Insurance Principle

These are some random thoughts that have been bouncing around in my head for a few years but the current situation brings them to the surface again.

I’ll make this brief to the point. Lately, all the talk about Obamacare repeal highlighted all the major problems. Now as the floods hit Texas, the same issues arise with FEMA and flood insurance programs. It is all relative to revenue and liability.

It isn’t necessary to go into all the particulars of insurance problems and expenses. I am concerned with one issue at the center. Its a simple and important principle.

Every conversation or debate always comes back to the people with existing and major health issues. In floods it is people in flood-prone areas. These problems make them “high risk” customers or property owners. In short, they represent a higher risk than average or the median in the pools. Keep that in mind.

Any conversation is always directed back to those “high risk” people, and what to do with them. Now you may say ‘but that is complex, not a simple subject.’ The principle is basic. It’s all about risk. The left likes to surround and cloud that in doom and gloom.

My frustration is these are private and some government programs. And a higher risk of some individuals, through their fault or not, does exist. So naturally the debate always revolves around those particular people. Almost as if the larger numbers of others are hostage to these higher risk. Maybe it’s extortion.

Then they talk about creating high risk pools, who’s in them and who isn’t? That is why proponents for single payer or high flood risk government programs sound the alarm. But if it is just about high risk, then I have a problem with their solutions.

In the insurance industry it is all about risk, an essential purpose of their business. I don’t understand government always taking on extra risk. Why should government assume the highest risk? That is my central problem. These private sector companies are experts with a risk-based business model. We are removing and assuming the highest risk from them under a pretense of reducing costs for other customers. That is their rationale.

If you are in the insurance business, then anything reducing or limiting your risk is a benefit. So if government comes along and assumes the worst, “high risk” people you have a liability windfall. Government taking on that risk reduces insurance companies’ risk.

Since their entire model is based on risk, then that is a huge benefit. You alleviate their liability for the worst risk. Can you say cha-ching? Now that is my problem. I don’t like government assuming the highest risk from the pool. And if we do it in this sector of the market, we can do it in others. Why does government want to willingly take on all that risk, which becomes another term for liability? I want to know why?

It also equates to a bailout, along with the other potential bailouts for insurance companies. So we the government are supposed to assume the highest risk/liability, then subsidize the companies on their other risks. They will also come anticipating a bailout, after we already removed the highest risk. Those are the basics discussed.

My thinking is if you want us to assume the greater liability for the highest risk then we want something significant in return. It is not a giveaway. But the left has their eyes on single-payer, so they don’t care about that. It becomes more rationale for their system. The more problems, the more justification for their system. What about risk?

The progressives see this whole issue completely backwards as a non-problem: “why not? Government should do it.” (and more) But I think we see the big problem with this.

Right Ring | Bullright

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