Unless you have been under a rock, I am sure you are aware that a monumental bill passed a house vote and was signed into law Tuesday that would mandate health insurance for all Americans.

What is the impact of this bill?  I think it is too early to tell but let’s take a quick look at the concept.  No matter what your job is, the company you work for makes money by getting more money in the front door in sales than goes out the back door in debt.  The money they are able to keep is profit and allows the business to keep the doors open.

Insurance companies are no different.  If they take in more money in premium than they pay out in claims they will stay in business.  Until this bill was passed companies were allowed to tell people applying for insurance “No” if they were applying for an individual policy.  The concept is simple.  An underwriter looks at the individual’s health history and if it is deemed they expect to pay more in claims than they will take in through premium payments then his/her application is declined.

That is no longer the case with this law.  Now an insurance company will be forced to offer a policy to each person applying and no exclusions/pre existing conditions will be allowed to attempt to diminish claims.  If we have a group of healthy people and a group of people that aren’t as healthy are combined into this group costs will go up.  When this goes on long enough then premiums will HAVE to go up to make sure the insurance company can stay in business!!

Only the federal government is allowed to operate in a vacuum where profit and balanced books are not required.  Everyone else has to deal with day to day costs and sales.  If a company takes enough claims over time it will eventually lead to increases in premium no matter what politicians say.  Maybe we should have approached an economist to get his opinion!

Stay tuned to see how the law is implemented along with the timeframe.  Here is an article that may be worth reading.