A shift in the risk assessment model:
Shift focus from past experience to anticipating future costs: http://www.csmonitor.com/2006/1013/p01s01-usec.html is a 2006 article that explained how insurance companies were going green, offering incentives for those who drove hybrid cars and used ideas of going green for buildings. Describing the changing models used for risk assessment--from past experience to anticipating future costs, author Scherer explained that the insurance industry was in a position to influence policy and educate consumers because of its enormity as a sector of the economy and because of the money flowing into the industry.
Insurance is supposed to cover contingencies: In an effort to reduce the likelihood of those contingencies prevention is a way of reducing risk, it should not replace covering the risk that insurance as a product is supposed to cover:
What does going green insure? By incentivizing green building, what risk is being insured, what contingency is considered by going green? Regarding hybrid cars, insurers claim they can make money because hybrid car drivers are often "stable" middle aged drivers--in other words, safer drivers are more likely to drive hybrids therefore by insuring hybrids, insurers can give good drivers a discount in insuring them against accidents. The going green incentive is really just another way of rewarding someone for being less likely to have an insurance claim, the going green is collateral benefit. Incentivizing housing that goes green is less clear. Are houses built with green materials less likely to incur property damage? The insurance industry claims that such building would be less likely to incur physical damage. Again, if something is less likely to produce a claim, it is cheaper to insure--sound familiar?
Health insurance is also going green-- by living a lifestyle with less risk from illness, insurers can incentivize consumers with a discount--the wellness rebates for quitting smoking, working out, and definitely being young. However, consumers lose when the goal of insurance becomes prevention as a replacement for covering the costs of needed medical treatment and care: The risk assessment model is less about pricing in covering eventualities than it is about preventing those eventualities--therefore, the break in insurance rates targets prevention rather than cure. This is not bad in itself. In the property insurance scenario the benefit to the planet is incidental to reducing the likelihood an insurer will have to pay a claim. In the health insurance field, healthy living is the by product of reducing the likelihood an insurer will have to pay. But when prevention becomes the goal of insurance, insurers are no longer insurers they are only educators and policy makers and our premiums are payments for education rather than cure. The truth is that we have a health crisis because of greed and because we have allowed the educator/policy reforming insurers to lull us into accepting that paying a premium that covers prevention rather than cure is reasonable. Prevention must be covered only as a means of reducing risk, but insurance coverage is for when the risk of illness becomes the actuality of illness--when prevention didn't work. With the expansion of preventive programs and the contraction of treatment coverage and options, we have allowed the insurance industry to become a nanny reminding us how to behave instead of a business that is designed to provide us with assistance in paying for medical care and treatment.
Profits from this approach are big--obviously insurers win if they have to cover less. The progression of this model, however, is that insurance moves closer and closer to providing affordable insurance coverage only for those who will not make claims--the crystal ball is not necessary. A single event and your home insurer can drop you. A single accident and your rates will jump no matter how hybrid your car is. And because covering less is profitable, insurers do use their clout to influence policy--a policy promoting hybrid cars becomes tomorrow's mandate that people drive hybrid cars, not for the environment, for the insurers and the environment is an incidental benefit. The model is more onerous for health insurance.
From incentive to penalty. After the policy is influenced to support insurers (requiring healthy living, more expensive coverage for those more likely to be sick which supports the public policy of promoting public health), I believe we'll see the incentive to join the gym evolve. Instead of getting a $150 credit for gym participation, there will be a $150 additional premium charged for those who forego the gym. Eventually, unhealthy living will make insureds ineligible for insurance as "policy" mandates that individuals be gym going nonsmoking nonaging specimens. This is where the model fails. Instead of addressing the cost of treating illness, instead of focusing their clout on reducing the cost of medical care and treatment, insurers are figuring out ways to provide coverage for prevention leaving those who get sick on their own. Prevention is cheaper than cure, no brainer. But not all illness is preventable. And the prize for being a good insurance risk for decades will be the same for us all, eventually we will get sick and need medical care. Ignoring the focus of insurance which is to pay for those eventualities leaves us all out in the cold on the day we need medical care. Even if we're covered we'll be covered less. Even if we recover we'll now be a greater insurance risk and it will cost us more to chase the endless goal that was supposed to be to have assistance in paying for medical care.
Without a focus on reducing the cost of getting medical care, the insurance and medical fields are selling us swampland -- there is no way that we will NEVER need insurance coverage--people get sick, people get old. And if you believe you will never be in need of insurance why are you paying for it? Medical care costs have to be reduced because simply eradicating those likeliest to need medical care from the possibility of affordable medical insurance coverage will not stop greed. As long as a single person is obtaining medical care everyone paying premiums is paying for it and you know what---I don't want to pay for your dietitian if you don't want to pay for my doctor. I don't want to pay for your sonogram, mammogram checkups so that you can congratulate yourself on your preventive prowess. I only want to pay for medical care for people who need it--period.
Task a day insurance: It's time for consumers to bring a little sophistication to the table. Health insurance is not to cover the costs of prevention, it's to cover the cost of the risk of illness. Prevention is a goal, but we don't buy health insurance coverage to prevent illness, we buy it in case we are ill. The insurance industry has shifted its goals but insuring prevention is not insurance, it's parenting. Parenting is okay, but covering the expense of illness is the only reason we should buy insurance.
