Friday
Mar052010
Insurance Companies "Purge" Older Customers, Says White House Health Official
Talk Radio News Service (Admin)
During a conference call with reporters on Friday, Nancy DeParle, Director of the White House Office of Health Reform, discusses a common practice within the insurance industry called purging that is designed to weed out people who are getting older and may have more health risks. (0:32)
Listen
Listen
Reader Comments (1)
As a worker in the insurance industry, I have never heard the term "purging" used at work. Nancy grossly misunderstands the mathematics of risk management (i.e. insurance) and displays no understanding of scarcity. I invite her (and anyone else) to read the following:
The demographic groups of "ill" or "aged" individuals statistically take more out of their insurance, so they HAVE to put more in. It's not a plot to get them to drop their coverage. It's because the money has to come from somewhere, and right now, that somewhere is the people who voluntarily participate in insurance plans. (Contrast this with the legislation on the table now, where everyone is compelled to participate in insurance plans.)
When ill or aged people are required to pay more for insurance, it's not as though the rug gets pulled out from under them. Their insurance rates persist according to the terms of their contract for the lifetime of the contract. It is not until the time comes to renew their insurance that they have even a chance of being moved to a higher rate class.
Some types of insurance do increase rates as policyholders grow older, but this only takes place as stipulated IN THE INSURANCE CONTRACT. It is not--indeed, cannot be--a ploy implemented later for the purpose of getting rid of clients.