Health Insurance: Better, Cheaper, Safer
Full transcript below:
CBN.com – Paul Zane Pilzer is a world-renowned economist, multimillionaire software entrepreneur, adjunct professor, and author of three best-selling books: Other People’s Money (Simon and Schuster, 1989), Unlimited Wealth (Crown Publishers, 1990), God Wants You to Be Rich (Simon and Schuster, 1995/1997) and most recently, The Wellness Revolution (Wiley, 2002). Pilzer completed college in three years and received his MBA from Wharton in 15 months at age 22. Pilzer started several entrepreneurial businesses, earning his first $1 million before age 26 and his first $10 million before age 30.
PAT ROBERTSON: Paul Zane Pilzer’s an economist, former White House advisor and bestselling author. His new book is called The New Health Insurance Solution. He says employer health insurance is out and private health insurance is in. Paul, it’s a pleasure to welcome you back to The 700 Club. Thanks for being here.
PAUL ZANE PILZER: Thank you. It’s great to be here.
ROBERTSON: What is the deal? I was under the impression that if you get group insurance with your employer, he could get a better deal than you could. Not true?
PILZER: That was true 20 years ago. Traditionally, group employer insurance was half the price of an individual plan you buy from a carrier.
PILZER: No longer. In 46 states today, individual health insurance is actually half the price of group or employer health insurance.
PILZER: What happened is, groups or employers, they passed so many laws of all these things they have to cover. They have to cover maternity for people who aren’t married, or who are male in case they married somebody who’s pregnant.
PILZER: And more important, they have to take anyone. Meanwhile, in 46 states, the states liberalized their laws, allowing insurance carriers to underwrite each applicant. Today, 90 percent of Americans who are basically healthy can get an individual Blue Cross/Blue Shield plan from a carrier in their state for half the price of their employer plan.
ROBERTSON: As in $10,000 and $5,000, or 14 and six? What are the differences?
PILZER: In 2006, the typical group employer plan for a family of four is $14,000.
PILZER: This same coverage bought from this carrier, often, in many states, is $7,000 or less.
ROBERTSON: Who knows that? This is one of the best-kept secrets.
PILZER: It really is a best-keep secret and why I had to write the book. And when I wrote the book, people said, ‘Oh yes, individual insurance is twice the price.’ I say, ‘No, it’s now half the price.’ No one knows about it for a bunch of reasons. First, individual health insurance used to be twice as expensive. As you say, it’s now half the price for the 90 percent of healthy Americans. Second, health insurance you purchase as an individual recently became tax deductible. Before this year, even if individual health insurance was half the price, you had to pay for it with after-tax dollars. Starting this year, if you’re self-employed, you get a hundred percent tax deduction for individual health insurance; and more important, your employer can give you a tax-free allowance, saying, ‘Here’s $14,000 or here’s $10,000. Go buy your own health insurance totally tax free.’
ROBERTSON: Does the employer get to deduct that, by the way, if he makes such a payment or not?
PILZER: Absolutely. They get a deduction, and you’re not taxed on the benefit. It’s as simple as doing a travel reimbursement.
ROBERTSON: And this starts in 2006, or this is already in effect?
PILZER: Actually, 2005 . . .
PILZER: . . . was the first year employers were allowed to give allowances to people to buy their own health insurance. And of course, what really kicked in this year was state-guaranteed coverage. A law passed in the 90s gave the states until 2005 to guarantee coverage to you if you’re medically ill. We’ve always had government coverage for people who are old called Medicare or government coverage for poor people called Medicaid.
PILZER: Starting in 2005, all states now have guaranteed government coverage for people with medical conditions. So this way, everyone can be covered.
ROBERTSON: That again is an incredibly well-kept secret. They don’t want that word to get out, do they?
PILZER: No. In fact, when I call up the various states, and I had to put a team of lawyers together to call each state to gather this information, they said, ‘You’re not going to tell people about this. There’s a lot of sick people in our state who, if they knew they could get health insurance guaranteed by the state, they would assault us.’ I call that chapter ‘Become a Friend of the Governor,’ because the 250,000 American families now on state-guaranteed coverage because they have medical problems, almost all I found were connected in some way to state government to find out about this, which is why I wrote the book.
ROBERTSON: Well now, somebody in this audience right now, he’s uninsurable. I mean, he’s got cancer or he’s got . . . .
PILZER: Right. There’s a medical term: medically uninsurable.
ROBERTSON: Medically uninsurable. All right. But he can go, what, to his state or to the insurance company and say, ‘I want a state-guaranteed policy?’ How does that work?
PILZER: Each state is different. But in 40 states, they designate the largest carrier, the Blue Cross/Blue Shield in their state, to take the medically uninsurables. They typically are charged twice the premium as if they were healthy, which is still much less than an employer plan. And when they’re charged that, the insurance carrier loves it. They must take people. And the moment that person makes a claim above their premium, the state pays all losses. So for them, it’s a terrific deal.
ROBERTSON: Is there a special form somebody has to fill out to say, ‘I’m uninsurable?’ How does it work?
PILZER: In half the states, you’ve got to apply for individual insurance and get rejected or up-rated because of a medical condition; that’s charged more. In the other half, you just need a letter from an insurance agent saying, if you applied, “I certify this person would be charged more or rejected.”
ROBERTSON: Well, it looks like to me, if this is good as you say it is, that the employer-sponsored healthcare is going to be like the dodo bird; it’s going to be extinct in about 10 or 20 years.
PILZER: It really is. Only five years ago, 69 percent of jobs had health insurance, say only 60 percents did. Translated, that’s 14 million Americans now working at jobs without health insurance that used to have health insurance. But more important now, the employer has an option. Employers are setting up tax-free allowance programs, saying, “I used to spend $14,000 on a family for healthcare. Here’s $14,000 tax-free. You go buy your own coverage, and whatever you don’t spend, we’ll put into a health savings account that rolls forward every year for when you get older or go on Medicare.
ROBERTSON: And that compounds tax-free, too, the health savings.
ROBERTSON: It’s a tremendous deal.
PILZER: It’s very similar to 401(k) or pensions.
PILZER: You put in and you get back when you put in. Today, if you are healthy, you not only feel the benefits of a healthy lifestyle; you’ll get rewarded in lower health insurance premiums and saving money in your health savings account.
ROBERTSON: Well, if somebody’s fired, or they use the term, the company’s downsized, the prevailing wisdom was—well, you can use the example of Cobra—you’d take advantage of Cobra. Your advice is, not necessarily.
PILZER: Yes. I’ve got whole chapters on Cobra. Cobra should always be a last resort, because it’s temporary, and it keeps you from focusing on the real problem you need, permanent health insurance. But most people don’t even understand Cobra. For example, when you’re fired or quit, you’re entitled under federal law to the equivalent of three-and-a-half months of free Cobra. But your employer doesn’t tell you about this. And I have these Cobra tricks in the book for how to get three-and-a-half months of free coverage when you lose your job until you buy your own coverage or change to another employer.
ROBERTSON: Well now, if I go and get a private, individual family policy, and I’m paying half of what an employer would pay, what about if I get sick or have some really serious illness? Can they cancel the policy on me?
PILZER: No. And that’s the beautiful part of an individual plan. Employer plans go up in price every year based on claims experience. Individual plans, by law, may not be increased due to claims experience. Once they underwrite and take you, and they accept 90 percent of Americans today, they may not raise your premium ever for claims history or anything that changes medically in your family. Your premium only goes up with general inflation and with your age that you knew about when you started.
ROBERTSON: Do the insurance companies like this? It sounds like they’re in a box. They do like it, I guess?
PILZER: They actually like it a lot more than group insurance.
PILZER: The reason is, they get to choose the people they take, with the states picking up coverage for the unhealthiest. Healthcare used to be a random element. Any one of us could get leukemia, say, so let’s cover each other. Today, healthcare, primarily healthcare cost, is dependent overwhelmingly on lifestyle, starting with obesity and smoking. And 46 states have liberalized their laws, allowing carriers to give enormous discounts to people who are healthy.
ROBERTSON: Unbelievable. As I say, most people don’t about it. This is a tremendous secret!
PILZER: I love it. I really enjoyed doing the book, and I’m enjoying the media. And most media outlets start with, ‘This is incredible. I would know about this.’ Then they call back a few days later saying, ‘This is all true. The law has just changed,’ and they’re very excited about it.
ROBERTSON: Well, ladies and gentlemen, the book is called The New Health Insurance Solution, Paul Zane Pilzer. It’s widely quoted these days; Forbes was talking about it just the other day. And I think this is something that you need to get. This book’s available, I guess, in bookstores?
PILZER: It’ll be every bookstore in the U.S., as well as online.
ROBERTSON: All right. Well, you’re talking about major, major money and major problems of finances. And what is it? Forty-five million uninsured, is it that many? Or is it 46? What’s the amount?
PILZER: It’s 45 million uninsured. But when you look closely, as I show in the book, 29 million of them are under 30. People 18 to 30 consume almost no healthcare. And until this year, it was actually foolish economically for them to buy health insurance, because 70 percent of their premium is prepaid medical expenses that they won’t use next year. This year, we have health savings accounts where they can buy high deductible plans for as low as 50, 60 dollars a month to someone under 30 years old. And then whatever they don’t spend in doctor visits, they get to accumulate forward for their retirement.
ROBERTSON: Unbelievable. Thank you so much for being here. This is great.
PILZER: Thank you. It was a pleasure.
ROBERTSON: It’s a real service to the country. And ladies and gentlemen, one more time, The New Health Insurance Solution. You ought to take advantage of it.