Randy Atencio in the Manteca American Automobile Association office is my go to guy for insurance.
He’s been my auto insurance agent more than half of the 45 years I’ve had coverage with AAA. Randy also has had either my renter’s or homeowners’ coverage as well for the 26 years I’ve been in Manteca.
It’s been a good partnership because of two things: I understand the concept of insurance and AAA with Randy’s help makes it pretty clear what I’m paying for in terms of coverage.
First of all, my auto insurance is for accidents and not day-to-day maintenance costs such as oil changes. My deduction for collisions is $500. If I wanted a lower deductible, it would cost me more. If I wanted a higher deductible, it would cost me less. If I increase my exposure it reduces AAA’s exposure. If I decrease my exposure it increases AAA’s exposure. The rates they charge reflect that as well as my driving and accident history.
I have never bought major mechanical failure insurance that some firms offer. The reason is simple. My exposure isn’t that great and I can reduce that by simply doing proper and timely maintenance.
Which brings us to the real cost drivers behind high health insurance premiums.
Costs are rising due to a large degree by our collective steadfast refusal to do preventative maintenance on our bodies whether it is how we care for them and/or partaking in regular checkups. It also has to do with routine stuff we want covered by insurance plans so we have little or no out of pocket expense.
If we insisted on the same for auto insurance it is safe to say my annual premium of $986 would double and then some.
Insurance was meant for catastrophic events. A large chunk of the premiums we pay are invested so insurers can leverage more funds to cover those who have major accidents. If it was simply money in (premiums) and money out (claims paid) auto insurance would be significantly higher.
I have as much at stake proportionately in the system working as AAA does. That said, AAA provides me with lower rates because I’m reducing their risk whether it is driving less than 12,000 miles a year or not collecting speeding tickets is an incentive for me to reduce AAA’s risk. As a result I’m not penalized financially by those AAA insurees that constantly push the envelope speeding or engaging in aggressive driving.
The effort to implement universal healthcare insurance is doomed mainly because it tosses most behavioral factors out the window.
Yes, there are those with pre-existing conditions that are expensive to treat. Setting aside for a moment the moral questions of providing insurance coverage, an insurance company underwriting people with a major medical condition is about as wise financially for the insurer as issuing a policy to someone calling to say they need fire insurance as a firestorm is sweeping down their block.
The real issue is who pays for medical services not whether they can access such services. If healthcare had been looked at that way instead of via an insurance solution we wouldn’t be facing a situation where we will soon be paying $2 out of every $10 in gross national product we generate on healthcare costs.
Underwriting medical education in exchange for working a set number of years at free clinics was never explored. Neither was finding a way to alter bad decision making.
I’m not talking about just people who opt to smoke, consistently overindulge, refrain from even moderate exercise, or whatever the case may be. I’m referring to those who opt not to make wise spending choices.
I’ll use by granddaughter Ashley as an example. She’s in her 20s. While she has a solid job she’s not rolling in the dough but then again few of us were at that age.
She had options. She could address pain in her teeth with $4,000 worth of dental work or she could spend the money on the latest electronic devices. She ended up having the work done. Given she doesn’t like owing money and is looking down the road to position herself better financially by addressing needs now instead of wants, she is working to significantly accelerate her monthly payments.
What Congress did before Jan. 20, 2017 and what it has done after takes away from the basic tenets of solid insurance underwriting that — by the way — the federal government via regulations over insurance companies has virtually etched in stone.
It also doesn’t address personal responsibility although in a way it has sharpened it.
I can name at least a half dozen people in their 20s that have taken the penalty for not having insurance because it was cheaper than the insurance. Doesn’t that, though, make them irresponsible? Some of them pointed out the premiums would take away money they are now using to buy glasses, see the dentist and to visit a doctor when they are sick given the insurance coverage they could afford would not cover any of those items plus had a $1,000 or higher deduction.
You can repeal Obamacare all you want or chant “hey, hey, hey goodbye” on the floor of Congress like a bully taunting on the playground, but neither position addresses the root of the problem.
Fiddling with insurance will not address the high and rising cost of healthcare that drives insurance premiums.
To believe anything else, you’d have to be a member of Congress.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209.249.3519.