The ” Insurance Agent” has received comments suggesting that he is biased. Well, tell me someone who isn’t.
Seriously Health Care is a hot issue and we all have some feelings about it one way or another. It has always been my intention to be as factual as possible and let you come to your own decisions. Hey, the “The Insurance Agent” is not a lawmaker. He does believe that the average Joe or Josephine is capable of knowing what is best for them.
I am about to toss out a belief. If you agree with this statement, keep reading.  If not…. well use your time wisely.
“All companies or industries need to make a profit” We are free to define profits by our own standards but for our purposes here, let’s just say that they have to take in a bit more that they pay out.  Still with me?  Health Insurance companies are no different.  In fact, it is more important for them to make a profit than it is for most other businesses ( yep it is a business, we talked about this earlier) “Why?” Because they have taken your money in advance and had better have some to pay for what they promised.  Ok, a whole’nother issue, for later.
Let’s focus on two issues of importance that are being tossed about.

One is the concept that if every one bought (remember I said bought) Health Insurance,  the cost would go down.

If  you believe this, you are correct.  “No, you really are correct”.  “The Insurance Agent” would never try to patronize you he’s not looking for your vote.

Let me explain,  insurance is based upon the concept of “The Law of Large Numbers”.   Ok since The Insurance Agent is not a math major. He will try to explain with this example.


“The Insurance Agent” is about to hand you a challenge.  This stuff is kind’a dry and not too entertaining, but it is important.  “Why?”  Because a group of Women and Men in Washington D.C. are about to make laws that will seriously affect your Life, Health and your wallet.  I challenge you to be one of the few who will read on.

Let’s say that a few of us  decide to start a company to repay people whose homes have been destroyed by fire. 

Hey, “The Insurance Agent” really does not want to loose any of us who have a problem with the concept of “Profit”.   Let’s say we are starting a membership organization with all of its members sharing in the profit, or, here it comes, the possible losses.  Is that better?

We now have to deal with some numbers.  Why?  Well, let’s break it down.  We know what we want to do, help our  our customers rebuild their homes after a fire.  We need to know, How much money it will cost “If and When” the house is damaged.  If and when are the keys here.  We will need to predict the future by looking at what happened in the past.  Ok, lets ask 5 potential customers about their homes.  “Mr. customer, how many time has your home burned down this year?”  None, you say!  “Hey this is going to be easy, we’ll collect all of that money and not have to pay any of it to rebuild homes.”  It doesn’t mater how much we collect, if there are no fires we won’t have to pay it out anyway.

“Well this aint going to work”.   We better keep going.  Maybe if we asked 1,000 potential customers the same question we may begin to gather some reliable statistics. “Hey, this is starting to work”.  Ten of these folks have had fires in the last year. (we haven’t even dealt with how much damage they sustained in those fires).   Ah! at long last we can start to think about how much money we need to receive from all of our customers to have enough money to rebuild those ten homes.  Since it seems that researching 1,000 events gave us a pretty good picture, it is reasonable to believe that researching the history of 100,000 homes over a longer period of time will be even better.

I know, you are already ahead of me, but we have just defined “The Law of Large Numbers”.

“Hey, I thought you were talking about Health Ins.”   Indulgence please, we are almost there.  The “Law of Large Numbers” is just the beginning.  “Not too simple is it?’ 

Continuing with our thoughts about what is likely to happen to our little company, “Yes, we are talking about probability”.  We don’t need to get in to this too deeply to make our point.  I think we would all agree that we need to take in enough money from all of our customers  (members) in order to help the few who are going to lose their homes.  If a lot of us put money in and a very few of us need to take it out, The less each of us will have to put in!

Just one more step to consider.  Since we are still thinking about probability we need to consider which of our customers (or members if this makes your more comfortable) are less likely, or less often, to need the money in the fund.  Well, if we are talking about Health Costs the answer is clear. Young people get sick less often than older folks. But since young people know this, most of our “Potential” members would rather not put their money in the pot.

Is this a theory?  Absolutely not!   When your employer looks for Health Insurance for its employees, it is going to be asked for the total number of employees ( This key number varies by jurisdiction) the age of each employee and the total number of employees that will participate in the group’s Health Insurance Plan.  Why?  Well the concept is called “Age rating”.   The lower the average age of the Employee Group the less the Insurance costs for each of the employees.  So you see (I told you that you were correct) if every one bought Health Insurance, the total cost would go down for every one.

Not a theory, a FACT!  Some of us may believe this, some of us may not.  We are free to think about Health Insurance in any way we choose.  Here is the rub folks.   Are we going to continue to be free to decide to buy it or not?


“Hey, wait, how about the other issue? Pre-existing conditions.  Were all a little tired. Let’s talk about it later.