Clark Howard's Tips

January 14, 2008

Small business owners and individuals are becoming more and more frustrated trying to get health insurance.

Clark knows a man who is a health insurance broker with some medical issues. His ailments prevent even him from getting and keeping health insurance -- and this is his line of work!

Insurance originally operated under a risk-pooling model: Everyone was in one huge pot and the healthy paid for the sick; the sick convalesced and paid for the next sick ones; and so on. Today insurers use a completely different method where they evaluate each individual or small biz. Past illnesses will "redline" you and you'll usually get the heave-ho. Insurers have been so rotten about this that that millions have given up trying to get coverage.

The irony is that now insurers are looking for individual and small business customers, according to Business Week. But their premiums are still so outrageous that they're not affordable to many small businesses.

Another interesting fact: Most big companies offer health-reimbursement plans, not real "insurance plans." You may have a branded insurance card and a list of in-network doctors, but the "insurance company" is just serving as a claims processor for your employer.

Big employers gave up on insurers providing affordable coverage and now assume the risk themselves. It now may be possible for small businesses, individuals and families to potentially find more affordable coverage. Take a look around because this is a new scenario in the marketplace. But pre-existing conditions or poor medical history may still redline you.

The health insurance issue has been a hot one on the campaign trail. Democrats have been pummeling insurers over the way they've been treating people. Insurers and their GOP supporters in Congress must offer reasonable plans to individuals and small businesses that don't redline. The alternative is too frightening; every time another free-enterpriser can't get insurance because of past history, that's another person who starts to think that socialized medicine may be the answer.

Consumer advice courtesy of