The Homa Files

One of the ballyhooed ObamaCare features is the end of lifetime caps on payouts.

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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?

I wouldn’t.

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.

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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.”

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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.

Uh-oh.

Pardon me if I bump into you while I’m looking over my shoulder.

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This entry was posted on November 25, 2013 at 6:59 am and is filed under Insurance, ObamaCare. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.