Insurance has long battled a negative public image. Let’s face it. Insurance is an intangible product that provides nothing that even remotely resembles instant gratification (to which our 21st century society seems to be addicted), and which we hope we never need to use but expect ironclad full coverage protection if/when we do need to use it. What could possibly go wrong?
This is a troubling reality because the insurance product does more good for society than almost any other product when disaster does strike. Insurance rebuilds lives and businesses. Insurance soothes when pain runs deep. Insurance quite literally saves lives. Of course, that’s when everything works as planned, which is most of the time. When insurance professionals properly match insurance coverages with client needs and takes the time to sell consultatively. And when consumers take responsibility for understanding their risks and risk tolerances and seek to be informed purchasers rather than assuming that the insurance industry is packed with employees capable of mind-reading. When it all works, it is beautiful. When it doesn’t, the press kicks into high gear to vilify greedy and mean-spirited insurance companies.
I recently came across an article that specifically highlighted the rise (or decline, if you prefer) of the health insurance industry to among the most-hated industries in America. The article cited work done by the American Customer Satisfaction Index, and quoted its director, David VanAmburg – who just happens to be my former college roommate and longtime friend. David does good work, so I place significant credibility on the ACSI’s findings. The natural inclination is to blame the increase in customer unhappiness with the health insurance industry on the Affordable Care Act (a.k.a. ObamaCare), but the ACSI findings didn’t find any direct evidence of this, though Mr. VanAmburg acknowledges that the influx of insureds under the ACA could be straining health insurers’ customer service resources. Most of the complaints seem to arise from bad experiences with health insurer call centers and the (limited) choice of insurance plans – many of which are saddled with higher premiums and higher deductibles.
For all the good that the insurance industry does for people and society, we clearly have our work cut out for us. Rebuilding lives that are torn apart by accidents and disasters, getting business back open again after a fire, providing the resources to care for the sick and injured, are all noble and admirable benefits provided by the insurance industry. How can any industry that provides such benefits be among the “most hated” industries? We’ve got some work to do.
On a sidenote, I recently blogged about federal government budget cuts in the crop insurance program. Being the economic libertarian that I am, I questioned whether or not these budget cuts were really so tragic to the crop insurance industry or the agricultural interests they served. Well, it’s all a moot point now, assuming President Obama signs the recently passed highway bill which restores the $3 billion that was initially cut from the crop insurance subsidy program. Eh, what’s another $3 billion in a half-trillion dollar budget deficit anyways?
The health insurance industry has a new high-profile employee. Marilyn Tavenner was the chief bureaucrat running Medicare, Medicaid, and the Obamacare exchanges. Now she’s the CEO of the health insurance trade group America’s Health Insurance Plans. No doubt, her deep connections to the Washington political class and the federal government’s new and deep role in our country’s health care system makes her an appealing hire. It’s also a stark example of the “iron triangle” that is common in the top echelons of American political power.
Color me skeptical that this is a good thing for America’s individual health insurance providers, let alone consumers.
Last week I wrote about the recent midterm elections and a few potential effects on the insurance industry. In that post, I mentioned the Supreme Court’s acceptance of the King v. Burwell case which could ultimately reverse many of the Affordable Care Act’s (ACA) subsidies, which would ultimately lead to an unraveling of the current law. That eventuality would require the Obama Administration and the Republican-led Congress to reopen the law for significant legislative re-writing. Or under normal circumstances that would be the expectation.
Of course, these are not normal times. President Obama has taken several unilateral steps to modify the ACA without any legislative action. The President’s actions have led to criticisms of lawlessness and anti-Constitutional exertions of power. The Administration argues that they are simply taking common sense steps to smooth the implementation of the complex law. Based on last year’s enrollment troubles, they apparently didn’t take enough such actions. With more unilateral executive orders looming on immigration policy, nothing should be assumed to be beyond the reach of this Administration’s use of executive power, legitimate or otherwise.
I can’t help but wonder when this entire ACA house-of-cards will finally tumble. It has been controversial and lacking any majority public support since its passage. It barely survived its first major Supreme Court challenge but the King v. Burwell case looks rather ominous to the law’s future in my opinion. Then just a few days after the Supreme Court accepted that case, the midterm elections gave new power and emboldened the Republican opposition and their desire to dramatically change, if not repeal, the law. Now this week we’ve seen and heard from economist Jonathan Gruber as he repeatedly spoke of the deceptions built into the ACA law and the selling thereof to the public and to Congress. Dozens of Representatives and Senators who fell for the deceptions and voted for the law have since lost their jobs. Making matters worse for the ACA is that Gruber’s vocalizations were insulting and arrogant, and cannot be dismissed as a one-time slip of the tongue. Here he is calling American voters stupid, and the deception (beginning at the 1:50 point of the video), and more insults. Taxpayers paid this guy to deceive them.
At the Risky Business event hosted on the Ferris State campus last Tuesday, one of our insurance professional panelists was asked about the ACA. The panelist’s response began by saying, “It’s a train wreck.” Indeed. Most shams that are built as a house-of-cards on a foundation of lies, deception, and arrogance do eventually turn into a train wreck. The ACA train has had a bad couple of weeks and the Supreme Court could make it even worse next year. The train is picking up speed on very rickety rails. This is not going to end well. My fear is that we the people are going to be injured far more extensively than the conductors of this runaway train.