Whether you choose to like, dislike, agree or disagree, with the current President, he reminds us of the key element of insurance that individuals tend to forget:

Insurance companies do NOT pay claims. Insurance companies collect premiums and redistribute those funds to pay claims.

In fact, according to ACA law, 80% of all premiums received on individual and small group must go directly towards paying claims. No other business industry is mandated by law to pay all operating costs on a mere 20% of revenues received. Group plans with more than 50 have a Minimum Loss Ratio of 85-15.  When combining this element with the fact that there are not enough healthy people paying into the insurance system, the result is increased premiums for all.

If you can get past the reference of paying “$12 / year for insurance” then this article is a good read for a reminder of what insurance is all about…

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