Definition of Insurance

Perhaps one of the problems contributing to the rising cost of health insurance stems from the fact that many people have lost sight of the meaning of insurance. When you ask someone what's important to them about their insurance, you'll often hear things like 'good preventative care benefits' or 'low copays for office visits and prescriptions' or 'low deductible.' When we remind people that they'll save a lot of money on premiums by selecting a higher deductible with less coverage for the day-to-day expenses, they often respond by saying something like "what's the point of having insurance at all if you're still going to be paying for all your own doctor visits?" Or they'll say "Well, I never have $2000 worth of medical expenses in a year, so with a deductible that high, it wouldn't even be worth having insurance." The problem with this logic is that people are thinking of insurance premiums as direct payment for an equal-value service. When you buy a car, if you pay $10,000, you can expect to end up with a car valued at $10,000. Insurance is a totally different commodity. You're paying premiums for an intangible benefit, ie. the peace of mind of knowing that if you ever do have a health crisis, it won't leave you bankrupt. Insurance is an aleatory contract, which by definition means 'depending on an uncertain event or contingency as to both profit and loss.' This is why you can pay relatively low premiums compared with the potential benefit - because both you and the insurance company know that the likelihood of you needing the benefit is low.
So in order for insurance to work as it was designed, you have to be willing to buy a policy hoping that you'll never have to use it, and knowing that the premiums you pay will only give you a tangible benefit in the unlikely event that you have a serious illness or injury. The intangible benefit, being able to sleep at night because you know you have an insurance safety net in place, is the one that brings you daily peace of mind.
When people start to expect insurance carriers to cover expenses that they know they'll be incurring (ie, maternity, preventative care, etc.), insurance begins to lose its aleatory nature. It then becomes a tangible product, in that people are paying premiums and fully expecting to realize short-term monetary benefits. Insurance companies are generally for-profit entities. So you know they aren't giving consumers anything for free. If we are buying insurance and fully expecting it to cover planned events, we have to recognize that the cost of those services is included in our premiums.

Making Health Insurance Mandatory

There are currently about 41 million Americans without health insurance. Uninsured people are less likely to seek treatment for medical issues, are more likely to die as a result of treatable health problems, and are more likely to use the ER instead of a physician's office when a problem does arise (often because the patient did not seek treatment when the problem first arose, and it subsequently got worse).
Almost every state in the US requires drivers to carry automobile liability insurance. Yet there are no government mandates requiring citizens to have basic, catastrophic health insurance coverage. In the case of liability auto insurance, it makes sense to require that all drivers be insured. That way, if you run into someone else, and you're at fault, your insurance company will compensate the victim for their loss. However, it is not mandatory to have comprehensive/collision insurance on your own vehicle (unless you have a car loan, then the lender can require it, but it's not a government regulation). This is because you can choose what you want to do with your own vehicle, and if you would rather take the risk of losing it in an accident, you can. Some people might say this is the same as health insurance, ie. it's your health, so if you don't want to insure it, you don't have to. I disagree. The problem with this logic rests in the fact that our society does take care of people in a life or limb health emergency, and payment issues come later (as it should be). If you are in a bad accident and transported to the ER, you will be admitted and treated to stablize your condition before payment issues arise. This is the only humane way to handle health crisis situations, but it leads to a problem if the patient is uninsured. If the patient is unable to pay his or her medical bills, the costs are passed on from the hospital to paying patients and insurance companies. This is part of the reason that health care and insurance costs are so high - someone still has to pay for the services provided to people without insurance or a means to pay their medical bills.
I believe that basic medical insurance should be mandatory, and proof should be required, perhaps in order to obtain or renew a driver's license. This could be a government program, or could continue to be through private insurers. Medicaid is available to the lowest-income sector of the population, and the rest of us could choose high-deductible, no-frills coverage to get us through an emergency. If everyone were paying into the insurance system, perhaps each person's premiums would be lower, since the cost of providing medical services to Americans would be spread more evenly over the whole population, rather than falling only to the insured members.

Slowly Removing Prescription Coverage

I was at a meeting for Anthem Blue Cross Blue Shield today and they were going over their new BeneFits small group plan and the new RightPlan PPO 40. They pointed out that ~50% of the 225,000 small group employers in Colorado are uninsured, so that makes about 110,000 uninsured small businesses. In 2002, there were 1.3 million uninsured people in Colorado (about 33% of the population).
The main thing I noticed about these plans was that the BeneFits plans had no brand name Rx coverage and the RightPlan PPO 40 had it as an option. These type of plans are a great way to possibly lower the price enough to make a big dent in the uninsured population of Colorado. I think Anthem has done a great job of designing plans like this so brokers will have more options to give people who might otherwise not be able to afford anything.
All of the carriers in Colorado are coming out with plans like this. Of the bigger names; United HealthCare has the Saver plans that don't cover Rx at all, most of Celtic's plans only have brand name Rx as an option now, Kaiser Permanente offers 5 plans and only 1 of them (the 100% HSA) covers Rx at all. Humana is the only company with all of their plans covering full prescriptions. But I hear they are working on a plan to compete with Tonik (from Blue Cross), which doesn't cover brand name Rx either.
On the surface, it seems like a great way to offer more options to lower the uninsured numbers. But when these plans become more common and having Rx coverage is seen as an unnecissary luxury, what then?

Correction -- the number of uninsured in Colorado at any given time is around 700,000; or 18.1% of the population. (Source)

Financial Exposure

Your financial exposure is what your wallet (financial) would lose (exposure) if you have a catastrophic medical situation. The reason for health insurance is to minimize your financial exposure, because without health insurance your financial exposure is everything. A lot of people think it's best to have the lowest financial exposure you can get and request the lowest deductible possible.

A deductible is something you'll only need to pay if you have a big claim. However, your premium is something you need to pay no matter what, just to keep the insurance. Just for an easy example, we'll say that a 50 year old male is looking for a policy from Anthem Blue Cross Blue Shield of Colorado (we'll call him Larry). Larry requests a $500 deductible with $25 copays for doctors visits, $15/$40/$60 copays on Rx, and an 80/20 coinsurance with a $5,000 maximum. Right now, this would cost Larry $338.50 per month. This would give Larry a maximum financial exposure of ($500 deductible + $1,000 coinsurance + $4,062/year in premiums) = $5,562 per year plus copays if he had a catastrophic event.
As a good broker, I try to help Larry by pointing out that he can get the same exact plan with a $1,000 deductible for $291.70. This would save him ($46.80/month x 12) $561.60 per year in premiums, and give him a maximum financial exposure of ($1,000 deductible + $1,000 coinsurance + $3500.40/year in premiums) = $5,500.40 per year plus copays if he had a catastrophic event.
So in a worse case scenario, Larry would still save $61.60/year by having the higher deductible if he had a big claim every year. But in a year where he doesn't have something happen, he would save $561.60. Either way, he comes out ahead with the higher deductible. Sometimes I'll talk to people so entrenched with the idea of having a low deductible that they still choose the lower deductible when I give them an example like this. Usually, it's because they're just coming off of a group plan that had a low deductible and have it in their heads that they need to get a comparable individual/family policy.

This example is just the beginning, I'll go over the logic in choosing an HSA later.

MEGA Insurance and NASE

Here is a great way to sell health insurance to overwhelmed newly self-employed people: Start up a cover association with a name like "National Association for the Self Employed" or "Alliance for Affordable Services", so people will think they're getting a great "group" benefit. And recruit naive, new agents by the truckload so they won't know what they're selling.
That's just the beginning. When I first started in the health insurance industry, I worked for MEGA. They recruited about 20 new agents per week; none of us had a clue about health insurance yet. They brainwash the recruits by having mandatory weekly meetings where they bash PPO and HMO plans. After a while, I started to catch on and do my own research into the details of all the plans.
This post was mainly to warn any people that have just become self-employed. With all the things that need to be done when starting your own business, it's too much of a whirlwind and health insurance doesn't get the time it deserves. To keep it short, Colorado, like most states, requires that group health insurance not be underwritten on an individual basis. This may sound great at first, but a healthy person is just going to pay about 3 times as much for a group policy compared to an individual/family policy because they are just subsidizing the unhealthy people in the group. Both MEGA, which uses the NASE to pretend it's a "group" plan, and Midwest, which uses the "Alliance for Affordable Services" to pretend it's a group plan, (all of which are owned by UICI) perform underwriting on an individual basis and will not cover pre-existing conditions. If you have a serious health condition and can't get individually underwritten insurance, the best thing to do is get a self-employed group of one policy. Or better yet, join the state risk pool like Cover Colorado. If you see how much policies like this are, you'll see what I mean. But some people don't have a choice.
Want to do some more research on MEGA/NASE/Midwest/Alliance? I'll get you started...
HERE (a very informative article from "The Health Care Blog" - the comments are very helpful too)
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And more, here and here.

I could've written hundreds of pages on the problems with NASE, but the last thing I'll point out is that MEGA/NASE and Midwest/Alliance were each fined $75,000 a couple years ago by the Colorado division of insurance for misleading consumers about their health coverage, among other sales violations. You can read more about that here.

Finding the Right Health Insurance

Voxen's Blog shows how much of health insurance makes sense to people when they start looking around. The insurance companies start to forget that not everybody is using terms like traditional health insurance, coinsurance, copayment, and deductible on an everyday basis, and tend to not explain the coverage very well. Not only is it hard to decipher all of the terms used and break down all of the plans a company may offer, but there are numerous other companies with just as many plans.
A health insurance broker does nothing else but deal with all of these different options all day. At Insurance Shoppers, for example, we're able to look at all of the options available to somebody and narrow those options down to 3 or 4 that we think will work best. We put them in a side-by-side format, like this, so it's easy to see the difference between each plan. Then, we help you apply and get through underwriting.
After you have the health insurance in place, a broker will always be there to help you with any problems you have with billing or claims. (If you think deciphering the sales material was tough, wait until you get an explanation of benefits saying why they aren't paying a claim). In addition, each year we will compare the best options available to you so you can always be sure you have the best policy you can get.

Why Don't People Use Brokers?
That is what I'm always trying to figure out. When I'm talking to clients about it, quite a few of them tell me they thought there would be an extra charge for having a broker. And I could see why they would think that, because for a lot of services like real estate or stocks, having a broker does cost more. But for any type of insurance you buy, the price for any given policy is always the same whether you buy it directly from the insurance company or from a broker. So, it's like you're paying for a broker whether you have one or not.
I'm guessing that's Voxen's reason for trying decipher all of the Blue Cross stuff himself instead of having a broker figure it out for him. If anybody has any other reasons, I'd like to read your comments.
By the way, a good option for people like Voxen is Tonik, from Blue Cross Blue Shield. We only do health insurance in Colorado and Texas, but Tonik is available in California too.
Good luck!