[quote name='UncleBob']I think that solution would actually increase the number of "low-risk, healthy people" who would buy insurance.
The fact is, so many people don't buy insurance because coverage is so expensive. One of the main reasons it's so expensive is because of mandates for providers to cover so many things.
For example, I will never, ever, ever need drug rehab. So why should I have to pay for a policy that covers that?
Let's say you're a young girl (early 20's). Let's say you are not sexually active - at all. You're saving yourself for marriage (yes, they do exist). Now, go try to find a policy in virtually any state that doesn't require you to have coverage for pregnancy. I'd bet that adds a pretty penny to the policy.[/QUOTE]
Unclebob you are assuming..
Why don't I flip this and say go try to find an individual policy that includes pregnancy.
Let me give you a few options.
First most all commercial carriers offer the option to remove pregnancy on the group policies, they do not offer (in a lot of states) to remove mental or nervous coverage.
Individual policies normally come without pregnancy, and the ones that offer it as a buy up are basically precharging for the pregnancy.
For example I just quoted someone health insurance and she is 24. She wanted to see what it would cost for her and her husband to have pregnancy..
its about $250 a month more for that coverage. $3000 a year, and it must be in force 3 months prior to becoming pregnant. Another carrier only wanted about $220 a month and they required you were not pregnant for 9 months after getting the rider... so basically its 9 months to get pregnant, and then another 9 months until birth so 18 months at $220 a month premium ~ 4000.. now that was with a $1500 deductible on the birth... so whats that $4000 in prepaid expenses, and then $1500 out of pocket at birth minimum, if you conceive exactly 9 months after getting the rider. Sounds to me like its the close to what you would have paid out of pocket anyway.
Also on Ruin's idea.. medical insurance is very complicated.
Deductibles, both embedded and aggregate for family members, coinsurance at various percentages, ER copays that don't count toward your out of pocket maximums, etc.
Some people say well I have an 80/20 plan... that tells me squat. So basically after your deductible (lets say its $1000), you pay 20% and they (insurance carrier) pays 80%.... but when do you stop paying the 20%?
Each carrier differs, and normally they offer different 80% plans. Some say you split (co-insure) 80/20 to $5000, so the carrier pays $4000 and the insured pays $1000 of the first $5000 in expenses, after the deductible.
Others say its 80/20 of 10,000, or even 12,500, or 20,000 etc... so it sounds the same on the surface but it gets more complicated as you dig deeper.
I have plan offered by Assurant that is a 50% plan. You have a $500 or $1000 deductible then Assurant covers 50% (coinsurance) of the next $2500 in expenses. Then the plan goes to 100%. So if you have the $500 deductible then on the next $2500 you pay $1250, before meeting the out of pocket max (stop loss) then you are only paying $1750 on the first $3000 in expenses. 8 times out of 10 people would rather take a $500 deductible 80/20 of $10,000 then this plan... it makes no sense as you are liable for much more with the 80% plan, but it just sounds better. I hear "80% is more than 50% so I want the 80% plan". I explain it and some people get it, others don't, or just don't care.
My point is, if you lower mandates you are going to complicate things as some people will get limited benefit plans (they exist no actually, Assurant, Aim, etc all have them). They will think they are buying more than they are getting, and it will be too late when the bills come after the fact.
These limited Benefit plans cover some RX, some hospital, and a few office calls a year. They don't cover much more than that. They are guaranteed, and the pricing is fixed.
I am just rambling at this point, but these solutions I hear all have downsides. This is not an easy problem.
As I said before they need to federally mandate all private carriers be level across state lines, no varying state mandates per state. Decide what is to be covered as a bare minimum for Mental/nervous and thats it. Decide what is going to be covered as a min for outpatient rehab, or drug/alcohol, and thats it.
This would allow carriers to streamline and save some money on training, and selling their plans across all state borders.