Thursday, June 16, 2016

Affordable Care that American economy can ill-afford

“The best customer service is one where the customer doesn't need to call you, doesn't need to talk to you. It just works”. - Jeff Bezos, Founder and CEO of Amazon

There is little doubt that President Obama is inspired by the Amazons of the world. That is why; he is trying to create an Amazon of sorts to hawk insurance products to the American citizen. This is what the insurance industry is calling the Healthcare Exchanges that are mandated to be setup under the Affordable Care Act (ACA), nicknamed ‘Obamacare’.

The intent behind setting up these exchanges may be a good one, albeit: to reduce dependence on insurance agents. The exchanges will help buyers compare different insurance covers and choose the one which works best for the individual/small company. Not only is the argument flawed for various reasons, Obamacare has created various other issues, which don’t make sense for the American economy.
  • Reduced subscription to insurance cover: It’s well known that insurance agents act as motivators, pulling buyers out of their inertia and getting them to buy cover. With ACA slashing the commissions doled out to agents, the motivation to push insurance cover reduces, leaving more Americans uninsured.
  • Replace insurance agents with Navigators: ACA aims to create a new breed of advisors called Navigators who just need to take up an online examination and pass the same to qualify.
  • Poor service: These navigators will not receive commissions like agents but will receive ‘grants’ from the ACA program. This will dilute the quality of service provided and open up doors to new problems like wrong products being purchased, inadequate cover etc.
  • Higher costs to small companies: Insurance agents often act as the HR departments by managing all the formalities required while selling cover to their employees. Now, with agents out of the picture, either companies will have to invest more time into the exercise, or let employees manage everything at their own risk.
  • Impact on (un)employment: With more people coming under healthcare insurance, the cost to employers increases making them restrict new hiring even more. This will have an adverse effect on the economy which is already reeling under heavy unemployment.
What Obamacare fails to recognize is that health insurance contracts are complex and it needs an agent’s expertise to advice buyers on the same. It’s one thing to buy pantyhose on an e-shoppe, another to put your health and life at risk on a do-it-yourself portal. Which is why; it’ll do good to the Obama administration to remember another quote by Jeff Bezos:

“I think that, ah, I'm a very goofy sort of person in many ways.”

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