When You Eliminate the Evaluation of Risk You Kill the Insurance Companies

One of the unstated goals of Obamacare is the destruction of the private insurers. That's obvious because one of the main elements of the bill as touted by Democrats is that you can't be turned down for coverage based on preexisting conditions.

I was in the insurance field for 9 years, doing mostly property and casualty stuff, but the principles are the same. Insurance companies remain solvent and profitable by analyzing risk and then pricing their coverage commensurate with that risk. Occasionally the risk so overwhelms the pricing structure available that the company must deny coverage. If it doesn't it ends up insuring a guaranteed loser and that will affect the rates of every other customer who will have to pay more to make up for the losses.

Let me give you an example of a situation I ran into and which I posted over on the Insurance for Churches blog:

An unfortunately large number of churches in Imperial County are in sad shape. They have older buildings that have spent years subjected to bitter cold in the winter, blazing heat in the summer, and high winds year around. With small congregations there's little money for regular repairs. They're not all that way, but there seems to be a higher percentage of churches like that in Imperial County than other areas I'm familiar with.

I had a call from a Mexican Baptist church in Imperial County just a stone's throw from the Mexican border. The pastor didn't speak any English, but somehow I was able to communicate with him that I needed to tour the building. From the outside it wasn't a bad looking place. It was probably built in the 30's or 40's and had ornate architecture with a big dome.

We made our way into the sanctuary, and although the building was dated, it didn't look too bad. I noticed a section of the rear of the sanctuary was draped off, so I went over to see what was behind the curtain. I figured it was a classroom or meeting area that they want to keep separate from the auditorium. Not quite.

When I pulled back the curtain I found an area where the entire plaster ceiling had fallen in, probably due to a bad roof and water leaks. Plaster was hanging loose on the ceiling, and pieces were on the pews and seats below. I immediately knew that I had wasted an entire day and about 300 miles of driving to come to this church. There's no way we could touch it.

Since I couldn't speak Spanish I couldn't tell the pastor the tour was over, and I didn't want to hurt his feelings, so we continued. The church had a large basement, and as we were walking down the stairs the hand rail pulled out of the wall and the pastor fell down the stairs. It was everything I could do to keep from laughing. Fortunately, he wasn't hurt and as soon as I could I said my goodbyes and began the long drive home.

Needless to say, I didn't extend them an offer.

If the laws of Obamacare were applied to that situation I would have been required to offer that church a policy and the company would have paid out thousands or hundreds of thousands in claims. Other clients would have seen big hits to their own rates as the company tried to balance out the losses. That's what will happen to the health insurers as they are forced to take clients with preexisting conditions. Rates will go up for the healthy until the companies price themselves out of business. At that point the insurer of last resort will be the government, and that was the plan all along.

It's unfortunate that some people are unable to get insurance when they really need it, and we could have fixed that problem for a fraction of the cost of the stimulus bill. We could have covered all those without insurance and we wouldn't have to have destroyed the private insurance industry in the process.

But insuring the uninsured was never the goal. Government run health care was the goal and for that to happen private insurers must be destroyed.

And that destruction will begin with the signing of the Obamacare bill.