Saturday, December 22, 2007

A Creative Idea To Get Broader Health Insurance Coverage

The 2008 Presidential campaign is already getting old to me. It seems to me there is continual discussion about the same topics, e.g. Health Insurance, Federal Tax Code, Economy, Social Security, etc., with no new ideas. The Democratic line is to raise taxes and eliminate tax breaks for the wealthy. The Republican line is to reduce taxes and improve the business environment. If there is anything else new, besides the Iraq War, I am not hearing it. I wish one of the candidates would come up with an innovative, creative and new plan to address the issues.

I've been thinking about health care insurance and how to create incentives for people to buy health insurance on their own. I am not a fan of mandating people to buy insurance and having government or businesses required to pay for it. However, I am OK with making health insurance a requirement of another benefit people may want. My solution would be to make proof of health insurance a criteria for highly used non-critical consumer services. Here are some examples what I consider high penetration non-critical services in the U.S.:

Cell phone contracts. It is estimated that over 250 million people subscribe to a cellular phone service. There were an estimated 303,651,573 people living in the U.S. as of December 22, 2007.

Cable and Satellite TV services. Cable has a penetration 58.3% or 65,300,000 households. Satellite penetration was at 29% in 2006 and approximately 88% of household have either cable or satellite services according to Consumer

Credit card usage. Penetration of credit cards is about 70 to 80% in the US.

Notably, critical services such as utilities, mortgages, and rents would not be included. Thus, individuals would not be caused to make a choice between an essential service versus health insurance. For reference, I provided the above services as examples and expect that there are others that could be considered.

Finally, this solution enables the consumer to make a conscious choice versus a default choice about affording health insurance. If the consumer has one of the above services, they will either need to have health insurance or give up the service, which then frees up money for health insurance. Given their popularity, I think most people will not be willing to give up such services, and thus, there will be a significant increase in the number people with at least a minimum health insurance coverage.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or insurance advice. Please consult a professional advisor.

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