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If those employer group rate things didn't exist, the whole system would be different. The insurance companies would still want peoples money, they'd just come

• marcinzm 7y ago
  Why would they, if they know someone will cost them a lot of money then what incentive do they have to ever insure them for non-exorbitant amounts if they can avoid it? Every other form of insurance would either not insure them or charge them massive fees (home owners, renters, life, car, etc.). Group rates are a hack if anything and insurance companies have no incentive to make less money by having their own version of it. edit: To explain further. Let's say insurance company A has a group plan and B insures people individually. A is then forced to charge half their clients more than B as the average rate is identical. Thus it's in those people's interests to move to company B and pay less. Now those left on A's plan have even more average risk (as all the low risk people have gone to B) and the rate needs to go up. Rinse and repeat until A has no clients or is bankrupt.
  • dd36 7y ago
    Arbitrary grouping should be outlawed. It should be based on their entire pool of business. Law of large numbers means some will always be sick. They should make money by preventing sickness not by directly or indirectly increasing the cost of care.
  • randyrand 7y ago
    What you're calling insurance (insuring people who have pre-existing conditions, or are known to be very expensive) is not insurance. That's just plain old welfare/socialism. I'm fine with welfare, but keep it out of insurnace. Let insurace be for insurance (i.e. known but unpredictable risks), and welfare be for welfare.
  • AnthonyMouse 7y ago
    > To explain further. Let's say insurance company A has a group plan and B insures people individually. A is then forced to charge half their clients more than B as the average rate is identical. Thus it's in those people's interests to move to company B and pay less. Now those left on A's plan have even more average risk (as all the low risk people have gone to B) and the rate needs to go up. Rinse and repeat until A has no clients or is bankrupt. The problem is the same thing happens with employers. Employer A provides high quality health insurance, so everyone with a preexisting condition takes a job at employer A while employer B out-competes them by providing less/no insurance and picking up all the healthy employees who choose them because they can pay better wages. Then it's employer A rather than insurance company A that goes out of business and the remaining employers are the ones that don't provide health insurance. You can try to get out of that by requiring all employers to provide health insurance, but it really has nothing to do with the employers. It would be superior to require all individuals to buy health insurance instead, but people seem to hate that. The other option is to require insurance not to deny coverage or set rates based on the existence of a condition if the individual had insurance coverage at the time when the condition became known. Then as long as you were carrying insurance you're covered, which most people will then want to do for exactly that reason, which would thereby prevent the death spiral. But if you don't want to buy insurance, well, then you don't have insurance. See what happens if you wait to buy fire insurance until after your house is already on fire.
• newnewpdro 7y ago
  Or it'd just be socialized like public education and the postal service...