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Obamacare vs. Car Insurance
I wrote this article because I got tired of people comparing affordable care act to car insurance. Being an independent agent and selling health insurance, I've am both the policyholder and knowledgeable about the products available. I can tell you, Obamacare has very little in common with car insurance.
1. Direct Competition
Car insurance companies compete with each other on a head-to-head basis, usually without government playing favorites.
When government competes with private enterprise, there immediately rises multiple conflicts. Government does not operate on the same razor thin margins the private enterprise does. Government does not bring the same efficiencies for-profit brings. But the government also has tax resources to rely on, giving it an unfair advantage.
Obamacare contains a hidden public option (Section 1334a) that directs the Office of Personnel Management (OPM) to contract with selected health insurers to offer “multi-State qualified health plans through each Exchange in each State.
Most states have I know low-cost or high-risk funds (or both) available for people they can get car insurance otherwise. But these are state run, and don't typically compete with for private insurance carriers. 1.
2. Individual Mandate
The Affordable Care Act requires the first tax on Americans who exist without health insurance. There are few exemptions to Obamacare. If you are an illegal alien, prisoner, Amish, or participate in a health cost-sharing ministry, you may not have to pay the annual penalty. 2.
3. Huge Annual Fees
The Affordable Care Act charges health insurers with $60 billion in new taxes. The problem is to pay that new tax, the industry will have to raise rates several times that. And they raise premiums on you and I.
4. Guaranteed Issue
Companies usually do one thing when they're forced to cover uninsured. Raise prices dramatically. The cartridge to get to minimize your exposure by constructing a risk profile of you. insurers calculate how much money you probably will cost them, they can adjust your premiums to compensate for a higher or lower risk. Carriers can also exclude certain drivers they deem high risk in the household from coverage.
After January 1, 2014, Obamacare will be fully implemented and there will be 4 rating factors permitted under law; age, family status, are and smoking. You won't be rewarded for making healthy choices like exercising or watching what you eat. Look for rates to jump dramatically, as insurers try to compensate for potentially huge unlimited risk.
5. Employer Mandates
Most car insurance is bought privately by the individual. go with Obamacare, if you buy health insurance through an exchange, your employer could be penalized. Even though your health insurance coverage is usually unrelated to your employment.
6. Deductibles
Very few car insurance policies offer nondeductible coverage. Insurance is used to protect against catastrophic loss, not cover every possible incident.
Obamacare route requires very comprehensive payouts by the insurance company including preventive maintenance. Large up front costs are nowhere to be found in the car insurance market.
7. Policy Choices
There are many choices with car insurance, even if you had a DUI, tickets, or accidents.
Obamacare requires you to buy insurance that covers pediatric, maternity and newborn care, even though you do not need it. Obamacare limits high deductible plans, FSAs, and HSAs leaving consumers with fewer choices. Costs will rise significantly.7
8. Fewer Carriers
Although not easy, it's still possible for a company to start in the auto insurance business. Their profits are not capped, just like their losses.
With the new health care reform law, Health Insurance Companies must be invited to join the exchange. They have maximum levels of profits but not losses. While their exposure is unlimited, Insurers profit is limited to 15 or 20%. This has already resulted in Health Insurance Companies leaving several states, and/or going into more profitable businesses like information technology.
9. Self Insurance
It's a misnomer that you must have for insurance to drive. Your are mandated to be financially responsible. You have the option to make a cash deposit with the DMV, or Department of Insurance, which is self insuring. Or you can buy a surety bond usually in an amount around $35,000-$50,000. Fleet car owners can even start their own small insurance companies in order to self-insure their vehicles.
The Affordable Care Act does not give you any of the above options, and penalizes you if you choose to self-insure by making good health care choices, without buying the government mandated insurance.
10. Healthcare Choices
When I use the medical portion of my car insurance, I can go to the doctors and providers of my choosing, as long as I use licensed professionals, the car insurance company should pay my claim.
With state-mandated Obamacare, I must use doctors and facilities in network, and if I don't, much of the healthcare is uncovered at full cost to me. you wrote several articles on healthcare without insurance, prescriptions without drug coverage, and extreme DIY healthcare.
11. Protecting Property
State required financial responsibility laws address your ability to pay for damage you incur to others property. There's no state requirement that your own property be covered by auto insurance. When you a new car, the finance company and probably will require you to get full coverage. Homeowners insurance is required, if you have not paid off the mortgage on your house.
With ACA, you must insure yourself, courtesy of the government sponsored insurance companies and exchanges.
12. Claim Jumping
With auto insurance, carriers do not buy claims. They do not cover pre-existing damage to your car. If they did, premiums would be sky high for good reason; unlimited exposure.
The jump and dump is a serious problem is in Massachusetts that is costing them millions every year. Nationwide, that figure is estimated to be in the billions. Any elementary school kid can figure it out. If you need a medical procedure, go buy health insurance. Schedule and receive the expensive surgery or treatment, then cancel your health insurance. This will be ruinous to the taxpayers and health insurance companies.
13. Exchanges
With auto insurance, the medium to buy coverage is through the Internet. Each car insurance company sets up their own website and interface with the rates. No taxpayer funds are used.
Obamacare duplicates what private industry is already doing without cost to taxpayers; retailing health insurance. There is no need for the government to spend billions of dollars to set up a duplicative marketplace. Except for one purpose: Control. And when government steps in to artificially manipulate the marketplace, the results are disastrous for consumers.
The health insurance exchanges have already been graded. These virtual marketplaces that allow individuals and small employers to compare available private health insurance options on the basis of price, quality, and other factors, gets an "F" rating from George Mason University, the Mercatus Center.13
Never before has government created an artificial marketplace for insurance, and micromanaged health insurance companies, even demanding your person records! This type of government control was done because insurers were unfairly denying claims.
14. Family Coverage
Car insurance covers with you on a per accident, per person basis. For instance, if I have 100/300 coverage, the car insurance covers a driver for 100,000 in damage per person, or 300,000 per accident total.
Health insurance is much more personal. Each and every member of the family must be named and covered separately in the policy.
15. Policy Limits
Auto insurance has predefined policy limits, which keeps premiums low. There is only so much the car insurance company can lose.
Obamacare repeals all lifetime caps, which would have limited the health insurance company's exposure, and kept rates down.
16. Loss Ratios
Although car insurance carriers usually have to get approval from Department of Insurance to raise rates, the only premium hikes which are rejected are usually what the department considers "excessive."
With the Affordable Care Act, health insurance companies will not be able to profit more than 15-20%. So they may not be as concerned with keeping healthcare cost down.
17. Uninsured MotoristCar insurance offers you a very cheap way to protect yourself against uninsured and underinsured motorist with a rider of the same name. Problem: People without health insurance don't damage you directly. But this is the government we are talking about. 17.
- Medicare tax base for high-income taxpayers: $210.2 billion
- Annual fee on health insurers: $60 billion
- 40% excise tax on health coverage in excess of $10,200/$27,500: $32 billion
- Big Pharma Tax: $27 billion
- Medical Devices Tax: $20 billion
- Require information reporting on payments to corporations: $17.1 billion
- Reduce medical expenses deduction: 15.2 billion
- Limit FSAs: $13 billion
18. Free Coverage
Car insurance always has a cost, no carriers will be giving away their product for free.
Obamacare greatly expands Medicaid, a program originally founded to provide health care to the poor. Except now, Medicaid will be available to people that make up to 133% of federal poverty limit. Millions will be taken off private health insurance which they paid for, and put onto the Medicaid rolls.
Also, those making up to 400% of the poverty level will have part of their health insurance premium subsidized.
19. Repair Facilities
Have you been to one of those commercial centers where every other business is an auto repair or body shop? There is no shortage of places you can have your car fixed.
The Obama administration can push Obamacare on us, but they cannot produce more doctors. There is a finite number of doctors available, and they can only see so many patients. Otherwise, you get healthcare rationing, which is very dangerous.
Recommended Obamacare / PPACA / Affordable Care Act Links:- Obamacare & Claim Jumping
- Reasons I Hate the Unaffordable Care Act
- Free Riding Obamacare
- Obamacare like auto insurance?
- Are You Exempt from Obamacare?
- PPACA Healthcare Rationing
- Health Insurance under Obamacare
- How To Survive Open enrollment during Obamacare
2Are you exempt from Obamacare? Craig Casey, 2011
7. 9/8/2011, Obamacare will limit choice, increase cost. Mary Taylor Ohio Lieutenant Governor
8. Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans
17. Patient Protection and Affordable Care Act (PPACA), Wikipedia
Written by Craig J. Casey
Financial Writer helping people with their insurance problems on the net since 1998.
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