Great email to describe health care reform
This was from a forwarded email from my dad. I don’t know who the author is but it’s nice and simple and easy to understand for those idiots out there that don’t get it!
A 12 year-old (you), starts a bicycle insurance business.
You tell all your friends that you’ll offer to insure their bikes against damage, loss, or theft up to $100. The monthly cost will vary, depending on how well they treat their bikes now.
One of your friends, Ron, always takes good care of his bike, locks it in public, and puts it away in the garage.
Another of your friends, Pam, takes horrible care of her bike. She leaves it out in the rain, and has had 2 bikes stolen when she left them unlocked at the mall.
Pam’s parents have spent $417 over 3 years, fixing and replacing her bikes.
Ron’s parents have spent $92 total on the only bike he has owned.
You offer Ron a policy at $1 /month.
You offer Pam a policy at $9 /month, since, based on Pamela’s pre-existing condition of carelessness (not her fault–she’s only 11) she runs a much higher risk of having her bike stolen.
You offer policies to your other friends. You explain that you have $300 of capital, that you’re diligent in charging high-risk kids relatively higher rates, and low-risk kids relatively lower rates. You promise to investigate any claims of mysteriously "losing" a bike, in case the claim’s a lie.
Your friends are free to take out an insurance policy with you, or not. Enough of them buy policies that your business turns a 10% profit the 1st year. You invest the remaining revenues to keep a pool of capital available to pay legit claims, and you hire an employee, Todd, as a claims investigator.
Todd exposes a fraudulent claim made by a kid named Dan. He said his bike was stolen, and filed a $100 claim, but he had really sold it for $50 to another kid named Pat. Todd exposed his fib, and saved your company $100 minus the expense of his salary.
Your company thrives, until one day you receive a visit from a lady named Nancy, who heads an organization called Fair Insurance Bike Reform (FIBR). Nancy says you must change your company’s practice of offering insurance for kid’s bikes priced according to the riskiness of their bike-related behavior, and instead you must offer policies at the same price for everyone.
You laugh, and explain that that would be silly, since offering insurance to kids with a "Ron" profile for the price of a "Pam" profile would likely influence kids to decline your offer, and get their bike insurance elsewhere. Conversely, offering insurance to kids with "Pam" profiles for the price of a "Ron" profile would likely cost your company unnecessary expense, up to and including driving your company out of business.
You offer to show Nancy the math, but she’s not interested. She says that you must either offer a single price for all policies, or face fines of $100 /day until you change your money-grubbing ways. You deliberate, and decide that since you want to stay in business, you’ll raise the rates of your policies to the level of the worst risk, Pam, so that all your customers will pay the higher rates, even the low-risk customers, like Ron.
About 25% of your customers cancel their policies in disgust. All of these customers were low-risk. Now, the majority of your customers are high-risk. You decide that you won’t take on any new customers that show high-risk bike-related behavior, because doing so will reduce your company’s profit so much that you’ll have to fire Todd, and perhaps even close your business.
The next day you are again visited by Nancy, who now explains that you MUST take ANYONE WHO APPLIES, no matter HOW risky their bike-related behavior. Nancy says that if you refuse, you’ll face fines of $100 per day until you change your money-grubbing ways.
You explain to Nancy that such a policy would surely attract those kids who are the riskiest of all, and that your company will probably go out of business from having to pay too many claims to these high-risk kids. You explain your low-risk customers prefer not to have that happen, and that it hardly seems fair that you be forced to contract with kids whose behavior almost guarantees that they’ll be making a claim for damages.
Nancy replies that risk should have nothing to do with it. She explains that everyone has a right to have their bike insured, and that not only will you be required to offer insurance to kids who show high-risk bike behavior, you’ll also be required to insure kids’ bikes that have ALREADY BEEN STOLEN.
Your jaw drops.
You ask Nancy to repeat that last part. She does. You ask Nancy if she has the slightest clue as to what the central concept of insurance is. Nancy replies that yes, she does, that central concept of insurance is "equal treatment".
Nancy escorts into your office two kids named Karen and Jana, each of whom had their bikes stolen last week, and orders you to issue insurance policies for the stolen bikes, and tells you to cut their $100 claim checks.
You hand Nancy the keys to your office, turn off the lights, and tape the "Closed" sign permanently to the door.
Welcome to Health Insurance "REFORM"!
