Making Health Insurance Premiums Refundable

In the United States, healthcare premiums have become a central point of concern for individuals and families alike. As the cost of healthcare continues to escalate, many Americans grapple with the burdensome weight of soaring premiums.

As many Americans fight with insurance companies about declined coverage, many feel powerless when it comes to advocating to receive the care they pay for. We believe making healthcare premiums refundable will offer not only relief to millions of Americans, but restore a sense of control. 

Most insurance companies in the United States operate as for-profit, publicly traded entities. Typically, health care premiums are determined on the basis that everyone contributes to the system, with the amount contingent on individual health and expected needs. However, many individuals do not receive the care they should, as healthcare companies prioritize returning profits to shareholders first, paying subscribers second. 

Our proposed policy would make any organization seeking participation in health care insurance to view subscribers as fair members, fostering a more balanced and responsive approach to healthcare coverage.

The Case for Premiums

The argument supporting insurance premiums revolves around the fundamental need for insurance companies to secure upfront funds to cover essential healthcare services. This financial contribution from individuals is intended to cover the overall funding and sustainability of the healthcare system. However, this perspective doesn’t account for the complexities introduced by deductibles, out-of-pocket maximums, and co-insurance elements woven into insurance policies. Insurers argue these fees are needed to guarantee that the costs associated with services are covered, creating a system where individuals accrue in essence “credits” for potential future needs for that specific calendar year. For many who do not meet their deductible, their premium is very much a membership fee with little benefits.

In embracing the concept of a refundable premium, healthcare companies will confront a vital decision. They can either opt to rethink their cost structure, or offer better services and benefits.

In rethinking the service structure, companies will be forced to align the costs of premiums with deductibles introducing a market correction on the cost of healthcare service. Such an act would be a win for ordinary Americans as it would introduce pricing competition naturally through a mixed market model.

Alternatively, companies may choose a proactive approach by offering incentives or introducing service improvements. These incentives could take various forms, such as discounts on services, additional coverage benefits, or enhanced customer service experiences. The aim is to create a more attractive environment for individuals, enticing them to remain to fully utilize their service. This system would create a mutually beneficial environment for all parties involved. 

How the refund would work

The means for the premium refund would involve subscribers receiving a reimbursement equal to the amount of their premium, minus the deductible they have paid. This approach guarantees that the system remains funded to cover associated costs. Meanwhile, individuals who do not fully maximize their insurance plan cost would have the opportunity to receive a refund for the unused amount.
To address concerns about potential financial losses for companies, insurance providers can offer Health Savings Account (HSA) options for unused premiums, along with access to HSA banking services.

Subscribers have the choice to either receive a refund or keep the funds with the company as an HSA account, presenting economic opportunities for both parties. As both parties would benefit from such financial vehicles. 

This system will encourage providers to offer competitive benefits, fostering a beneficial relationship with subscribers. Overall, such a setup motivates companies to provide appealing benefits to keep subscriber funds.

A more equitable system

This system necessitates healthcare providers to actively address and fulfill the coverage needs of their members. To remain financially viable, companies must streamline operations and cut operating costs. 

Encouragingly, the funds returned to individuals from unused premiums can serve as an incentive for wealth and equity building. This redistribution of economic opportunities not only transforms the healthcare landscape but also enables Americans to accumulate additional wealth. Moreover, healthcare providers can seamlessly introduce new HSA banking solutions, treating HSA assets and funds as interest-based loans to contribute to the system’s funding.