History, Health Insurance and the Affordable Care Act

With all the hand wringing going on in the media and coming from the current crop of political candidates about "health care," I get really frustrated and upset.

When I first entered the insurance business, a product called "health insurance" existed. While the product was far from perfect, there were many companies and variations in product design. Yes, people with pre-existing medical problems had a very difficult time finding an insurance company that would cover those medical conditions.

The subtle shift from health insurance to health care happened over the 30-year period between 1990 and today, especially in New York state.

I see the Affordable Care Act as not so much an attempt to give all Americans a comprehensive total package of health care as it was a way to break the back of the largest form of health insurance in the country: the coverage provided by people's employers. Obamacare, with its many mandates and requirements, was a government grab to end the tax deductibility of health insurance premiums enjoyed by businesses, which some people felt was too rich of a tax break that cost the federal government huge amounts of revenue.

This quirk of the tax code arose back in the 1940s, as a response to the wage and price controls that existed at the time. With Obamacare, employers have been incentivized to stop offering health insurance, knowing that all comers can find coverage through the exchanges in every state. And the legislators in Washington hoped that, as the tax deductibility of health insurance dried up, more revenue would flow into the tax system

If you recall, Obamacare penalized people for not having health insurance through a tax hit. Employers that had more than 50 employees also had their share of tax penalties if they did not offer health insurance the way the government said it had to be done. This was a government "heads, I win; tails, you lose situation."

If the government really was concerned about people with pre-existing conditions having access to the benefits of minimum health coverage, a high-risk plan could have been created, paid for by the government with the only qualification being a pre-existing medical condition that would make the enrollees uninsurable. In the meantime, the existing system could have been preserved for healthy people. I contend that the government was interested in revenue, not in helping people with medical problems.

The slogan today is universal health care, not health insurance. The net impact of health care for all is a watered down version of the innovation and high quality that U.S. citizens enjoy now.

Allowing employers to deduct the costs associated with employee benefit plans from their business taxes as an expense was a way around the employers not being able to raise workers' salaries as a result of the wage laws enacted by the government during World War II. Health insurance became an alternative form of profit sharing.

As employer health insurance improved, the various levels of the medical industral complex figured out ways to benefit from the financial incentives offered by health insurance, to do research and development and create many devices, knowing that they would be handsomely compensated for their investment of time, cash, and effort, because, if they developed a worthwhile product, there was a path to payment provided by employer health insurance.

I don't want to go on and on, but the bottom line is: Politicians don't know anything about health insurance.

— Connect with ThinkAdvisor Life/Health on Facebook, LinkedIn and Twitter.

Jerry Cohen is a broker in the life, health and Medicare supplement insurance markets. His office is in Port Jefferson Station, New York.