 |
| ||||||||||||
|
This Week with The Chicowitz: |
| Each week our Boomer-in-Charge, Hershel Chicowitz, has something to say about life, society, or what's going on... from the perspective of a baby boomer. This is what's on his mind the week of November 2: |
|
| rate this | talk about this |
|
Noverber, 2009: Which doesn't belong and why?
Homeowner's Insurance Your kids probably do not have the slightest idea. Perhaps you do. Allow me to explain briefly how insurance works. Following my explanation, the one that sticks out like a sore thumb will be obvious. Of course that will not be the end of the lesson. It's only the beginning. What is Insurance? This is simple. But please pay close attention. Insurance is a scheme to compensate you financially in the event of an unlikely, catastrophic event. The key words there are "unlikely, "catastrophic," and "financially." Homeowner's insurance does not protect your home from being destroyed by a hurricane. Term life insurance does not protect you from dying. But it reimburses you (or your heirs) financially in the event of an unlikely, catastrophic event.
 How Insurance Works There are three fundamental features of the insurance model: 1. Lots of people pay a little, itty, bitty amount of money into an insurance fund -- a big pool of money. 2. Most people... virtually everyone... never receive any money back from the insurance provider. 3. A few people... a very few number of people... receive a relatively large amount of money if they incur an unlikely catastrophic loss. All three parts of the model are very important. Lots of people must pay into the fund. If only a few people pay into the fund, then there is less money to pay to those who suffer the loss. You pay into an insurance fund hoping that you never have to collect from it. You think of it as "money down the drain." Gone; you never see it again. In the unlikely event that you do suffer a catastrophic loss, you receive monetary compensation. Only a few people can collect from the pool of money. If lots of people receive benefits from the system, then there is less money to pay to them. Or, everyone must pay more -- much more -- into the system than they would otherwise have to. It's simple math. That is the only way that insurance can work. There is no escaping that reality. There is one other important feature of the system: it is relatively easy, and thus inexpensive, to administer. The paperwork and administrative costs are small. Your house burns down; an insurance inspector looks over the damage and writes you a check. You die; your heirs send the death certificate to the insurance company; an inspector sniffs around to ensure there was no foul play, and writes a check. It happens rarely; so there is relatively little paperwork involved. If it were more complicated than that, the insurance company would have to charge more money to everyone in order to cover the higher costs of administering the program. Sure; there are lots of complicated side issues... so many, in fact, that most people forget what insurance is. That is why someone should occasionally remind them. I just did.
What Insurance is Not Your homeowner's insurance provides financial compensation in the unlikely event that your house burns down or is destroyed by a hurricane. Do you file an insurance claim when the neighbor's kid throws a baseball through your window? Of course not. Do you file a claim when the hinge falls off the bedroom door and you have to replace the door? Of course not. It is not economically feasible for the insurance company to get involved in such petty incidents. Keep that in mind.
Falling Off the Rails Health insurance used to work the same way. We called it "medical insurance" back then -- you had a "major medical insurance policy." Your medical insurance would cover you if you needed heart surgery or had to have a leg amputated. But you paid for most medical procedures out-of-pocket. You never thought of filing a claim when you needed a new pair of glasses. Band Aids, prescription drugs, regular checkups, x-rays, tooth cleaning, fillings or extraction... you paid for all that yourself. For the same reason mentioned above ("It is not economically feasible..."), your major medical insurance policy did not cover such things. It was far less expensive, easier and more convenient to pay for it yourself.
Enter the Dragon About 35 years ago, Senator Ted Kennedy came up with the bright idea that your health insurance should cover regular medical checkups. It was compassionate; it was warm; it was sweet.... It was also the "camel's nose under the tent." They called it a "Health Maintenance Organization" - HMO; managed care. http://en.wikipedia.org/wiki/Hmo The HMO replaced the standard major medical insurance model. People paid money into the HMO, and received benefits from it. The major difference is that this insurance model veered way off track. Unlike the traditional insurance model, where only a few people collected from the insurance company, EVERYONE collects from their HMO. It naturally follows that, as a result, everyone must pay more money into the find than they otherwise would. As a government-inspired program, the HMO model naturally expanded. You catch a cold - go see the doctor. You bump your arm - go see the doctor. You need a new pair of glasses - go see the doctor. You need a prescription filled - show the pharmacist your insurance card. You make the co-pay; the doctor files the insurance claim to the HMO. After all, you paid for it; go get what's yours! But they call it "managed care" for a reason. Your HMO will pay for only certain procedures, and only under certain circumstances. It will cover only certain prescription drugs, and only if administered a certain way. The HMO people "manage" the system. Your HMO pays only if you see a certain doctor, or a certain hospital. If the HMO rejects your claim, you have to pay the bill. If the doctor charges more than the HMO pays, you have to pay the difference. And the major consequence of this mess is enormously higher administrative costs, both for the doctor and the insurance company. And who do you think pays these administrative costs? And what is the major failure in this model? The sacred doctor-patient relationship; the ability for you and your doctor to determine the best treatment. That has gotten lost in the shuffle of rules, limitations, and paperwork. And who suffers the most as a result? The doctor, the insurance company, the government oversight committee, the politician who demands that the HMOs cover more procedures? Who suffers the most as a result of the abject failure of the HMO insurance model?
The Last Word Homeowner's insurance, term life insurance, automobile insurance, health care insurance. Which doesn't belong and why? Simple, huh? You certainly need major medical insurance, for the obvious reasons mentioned above. But what on earth makes you think that your HMO can provide prescription drugs, x-rays, and Band-Aids more conveniently, more appropriately, more effectively, and less expensively than if you paid for them as your grandparents did? And whose bright idea was it to bundle major medical care with prescription drug coverage and Band-Aid coverage? Well, out of respect for the recently deceased, we won't mention any specific name here. But it was pushed by the same jamokas who are trying to cram "universal medical care" down our throats today. And you're gonna' let them get away with it? Then don't be surprised at the results.
|
|
Printer-friendly version is available here.
|
|
|
|
Hershel will have something else to say on November 9; mark your
calendar 
to
remind you to come back to BBHQ every Monday.
[an error occurred while processing this directive]
|
|
||||||||||||||||||||
We're open to offerings from visitors to BBHQ. If you have something to say of interest to boomers, write it as well as you can in 800 - 1,000 words, and send it to us. We can't guarantee we'll publish it, but we'll surely consider it.
If you like what we're doing here at BBHQ, please help us by buying stuff through our link to Amazon.com:
| The BBHQ Feature Album is "Old Friends Live on Stage (Deluxe Edition) (2 CD/1 DVD)," by Simon & Garfunkel. If you were fortunate enough to see them in concert in 2003, I do not have to sell you. The concert was terrific! This album collection includes 55 songs, plus their new recording, "Citizen of the Planet," and one of the songs sung by the Everly Brothers during the concert. The DVD was recorded during their concert in Madison Square Garden in 2003. For any S&G fan, this is a must have! But then, you knew that already, didn't you? |
 |
|
The BBHQ Feature Book is
"The 5000 Year Leap," by
W. Cleon Skousen. The title does not
adequately identify the content, though the concept of the 5,000 year
leap is astounding. The subtitle, Principles of Freedom 101, is
much more applicable to the subject. This book carefully and clearly
summarizes the thinking of the brilliant founding fathers of our country,
the ideas behind the "miracle that changed the world."
|
 | ||
 
|
|   |
Copyright © 2009, Baby Boomer HeadQuarters - WWW.BBHQ.COM - All rights reserved._
