Thought I’d take time out and share these timely thoughts wrt the current healthcare ‘reform’ debate.  Let’s get some comments going on this… Whadya think?

Commentary by Bill McIlroy – former Insurance company employee and current Health Insurance Broker.


I worked as an Underwriter and Underwriting Manager at four different health insurance companies in the late 90s and through 2005; it amazes me that there is so much media surrounding how the Government plan will apply pressure to insurance companies to “lower their costs”. It’s simply wrong and completely misguided. The Underwriting departments at insurance companies set the prices (along with actuaries). I PERSONALLY set prices for Individual, Group & Medicare products in my career. We ALWAYS set pricing based upon that 85% of ALL premiums would go to pay claims. DID YOU GET THAT? 85 cents on every dollar pays medical & prescription claims. The other 15% pays for expenses (salaries, benefits, utilities, rent, etc…). There’s typically 2% – 3% targeted for profit within the 15%. The media shouts that insurance companies are pocketing all this extra cash and that that the Government plan will force insurance companies to lower their prices. IT’S NOT TRUE!!! In addition – Does anyone think that the Government is going to run their plan with a smaller amount of administrative costs?


The problem IS NOT the insurance companies. In a free market society, demand almost always drives supply. If Americans weren’t so irresponsible with their own health and we didn’t shout about how we didn’t like being told what doctor to see and when, perhaps things would be different. HMOs were created in the 70s to keep healthcare costs down. Of course we didn’t like being told how to manage our health. We want to eat what we want, fail to exercise and take a pill to fix everything.


HealthCare is no different in theory than building a car. A door has a cost, steering wheel, tires, hood, etc.. Add all these costs together, slap on costs for the employees salaries, benefits, advertising, etc… At the end, there’s the price. PAY ATTENTION HERE – could the Government create a similar car for less by using the same parts? That’s what they want us to believe is going to happen with HealthCare. They want us to believe that they can lower costs, but not change any of the cost structure. You’re a smart person – think it through; 2 + 2 = 4; The Government is trying to have you look at a trick mirror and get you to believe they can make 2 + 2 = 3.


BOTTOM LINE: The ONLY REAL way to get the price of a car lower is by a cheaper car and the ONLY REAL way to lower healthcare prices is to make our healthcare worse (we pay more of our own maintenance issues, we insure less people, we have fewer doctors/hospitals, doctors make less money, etc…).

Bill McIlroy
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