There are very few levels of consumer familiarity with insurance: life, personal property, automobile and… the big ones that are seriously out of control: homeowners and healthcare. And was we watch the MAGA vs Dem conflict from a top-level litany of major disagreements, way down in the weeds are the “us vs them” issues over insurance company profits and practices (the MAGA side) vs consumer coverage and benefits (the Democratic side). MAGA inherited the Republic success on supporting insurance companies and has seized on the irrational “creeping socialism” misnomer as justification for siding with private insurance companies to the severe detriment of even most MAGA adherents.
But as inflation remains a key issue, as housing affordability strangles the hopes and dreams of so many Americans and as uninsured medical costs cripple and kill millions of Americans, insurance is vastly more important issue that it has ever been. Today’s blog focuses on homeowners and healthcare insurance, both of which are beginning to break the backs of average Americans… and are making the corporations that depend on consumers to accept these limitations take a second look; they are increasingly discovering that their own core businesses are severely negatively impacted. Mortgage lenders risk a tsunami of principal loss, and corporations that provide health insurance are finding the cost unbearable.
“Twelve percent of homeowners in the U.S. don’t purchase homeowners’ insurance. About half of them have annual household incomes of less than $40,000, according to a 2023 survey by Insurance Information Institute, an industry trade group, and the reinsurer Munich Re… Others opting to ‘go bare,’ in industry parlance, say they are doing so because their policy hasn’t been renewed by their insurer as a result of increased risk of severe weather damage. Owners might not want to get a state-run policy that typically offers higher premiums and less coverage…
“If a homeowner has a mortgage and doesn’t purchase insurance, the lender will typically buy lender-placed insurance for that property, says David Sampson, president and chief executive officer of the American Property Casualty Insurance Association. Lender-placed insurance is generally more expensive than the coverage homeowners would buy for themselves, financial advisers say… The higher cost of policies is a blow to both existing and hopeful home buyers… Homeowners are increasingly forgoing home insurance, gambling that the likelihood of a disaster isn’t high enough to justify the cost of a policy.” Insurance report referenced in the August 28th Wall Street Journal.
To make matters worse, while 20% increases in homeowners policies is the new normal, but if you live in wildfire or hurricane targeted areas, particularly where the cost of rebuilding is very high, a 70% increase or a complete withdrawal by insurance carriers from those markets is the new normal. While Ron DeSantis rails at inflationary price increases, Florida remains one of the major states where the new rates are unaffordable or unavailable for homeowners in large swaths of the state. But then DeSantis doesn’t think climate change matters are a priority.
On the healthcare front, companies that provide employee healthcare are beginning to realize that current state of affairs is untenable. “Most working-age people get their health coverage through their jobs, and employers either pay an insurer to provide the benefit or bear the cost of medical claims themselves. The cost now tops $22,000 a year for a family on average, according to the health-research nonprofit KFF.
“Hospital care is the single biggest component, amounting to about $449 billion in 2021, the federal government estimates… Gloria Sachdev, who is chief executive officer of the Employers’ Forum of Indiana, launched research that produced a stunning takeaway: They paid the most out of all the states studied… Sachdev was shocked that her members often didn’t know what prices they were paying for surgeries or other medical services, because hospitals and insurers kept them secret.” Wall Street Journal, September 28th. That private cost is two or three times the cost in the Medicare program.
In the last two decades of the 20th century, Detroit migrated a very large segment of manufacturing to nearby Ontario, Canada, where workers were on par with US wages but where government universal healthcare effectively knocked an average of $2000 from the cost manufacturing a single car. That the US is the only developed nation without universal healthcare, a status that MAGA has sworn perpetual opposition to, has created a complex set of choices for both consumers and their employers who provide health insurance.
But these employers are looking for alternatives, even in MAGA land: “Corporate giants from Amazon to CVS are investing billions in primary-care practices. It is part of a sweeping shift in U.S. healthcare to a more value-based model. Here is what that means for doctors, patients and health insurers…
“In places including Texas, Florida and Maine, employer groups are pushing for legislation blunting hospital costs, saying they are fed up with increasing rates and fees, as well as the failure of private efforts to contain them… Employers ‘haven’t had a voice saying, ‘We’re mad as hell, and we’re not going to take it anymore,’ ’ said Chris Skisak, executive director of the Houston Business Coalition on Health..
“In Texas, Skisak’s group helped create an advocacy organization known as Texas Employers for Affordable Healthcare, which is pushing for policies it says will bring down hospital costs. “Employers in Florida are setting up their own group to lobby on issues of healthcare expense and quality. The Healthcare Purchaser Alliance of Maine has begun closely tracking legislation and testifying on bills that could affect cost and pricing transparency.” WSJ. In short, this inflationary bubble is bursting, and government’s failure to contain healthcare costs (which the GOP pledges to resist to the benefit of pharmas, private for-profit hospitals and private insurance carriers) is accelerating inflation and making the United States that much less competitive than every developed country on earth.” WSJ.
The land of Mercedes, Porsche and BMW (Germany) – not exactly socialists – has a first-rate universal healthcare program that costs significantly less per capita than US figures. The old GOP and its MAGA replacement are costing Americans billions extra per year, all of which goes into high corporate profits and the highest CEO pay in history anywhere on earth. We can and must do better. It’s not about cutting government spending if you are shifting those same costs at higher rates to the private sector and all consumers!
I’m Peter Dekom, and if you like inflation and lower taxes for the rich, MAGA’s got the perfect program for you!
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