One of the ballyhooed ObamaCare features is the end of lifetime caps on payouts.
While the provision has obvious benefits for folks who encounter humongous medical bills, it strikes me as having a scary semblance to the “insurance” that AIG and others were selling against mortgage-backed securities and their derivatives.
Let me explain …
First, let’s look at the basic economics as a wager.
Lets say that the annual premium on an average individual policy is $5,000 … and an individual is covered for 50 years … total premiums collected are $250,000.
That’s the insurance company’s max win … if the policy holder files no claims over the 50 years.
What’s the insurance company’s max loss?
Well, it’s uncapped … conceivably, it could run into the millions for somebody with a very serious medical condition.
Would you take a bet with a very limited upside and a limitless downside?
And, it’s not obvious to me why any rational insurance company would take the bet … especially since they’re compelled to take people with known pre-exiting conditions … who wipe out the chance for a win and increase the odds of the bank breaking.
I was joking with some friends that I liked ObamaCare outlawing lifetime caps.
I figure there’s no longer a financial reason for my family to pull the plug on me prematurely.
Let me linger since its a free option …. let me live on and on and on.
Apparently, other folks are thinking along the same lines.
Pew has just released a study concluding that “A Growing Minority of Americans Say Doctors Should Do Everything Possible to Keep Patients Alive.”
Think about that for a moment.
Already, the bulk of medical expenses come in a person’s last year, the social trend is moving towards “hanging on”, and ObamaCare has an “all you can eat, forever’ provision.
Those expenses are going to skyrocket !
That is, unless Palin was right and there will be death panels.
Pardon me if I bump into you while I’m looking over my shoulder.