About a year ago our homeowner’s association was confronted with increasing cost for our master insurance policy. What made the issue controversial is that we are not a condominium, we are a P.U.D., which means that each of us owns our own structure and the ground it sits on and that only the common areas and buildings are commonly owned. We are managed in a manner like a condominium, however, with association fees providing for exterior maintenance of all properties, including individual units. The master insurance policy provides hazard coverage for the individual units as well as for common property.
This arrangement has worked well for more than thirty years, and the decision to manage this way was originally made for two reasons. First, it assured that a high standard of maintenance would be observed throughout, and that there would not be a need to harass individual owners to maintain their property in a manner that would preserve the overall value of the community. Second, it provided the purchasing power for the community, banding together and buying products and services in larger volume and as a larger entity.
As the cost of the master insurance rose, however, some of the members began to argue that the association should discontinue the part of policy that covered individual units and leave it to the individual homeowners to purchase hazard insurance individually so as to “reduce the association’s costs.” That approach rather baffled me, since the association derives its funding from its membership fees and shedding costs to the members is not really saving anything, but it met with some considerable favor.
Those of us who argued against that idea based our opposition on the idea that 145 individuals would pay considerably higher total premiums for 145 individual policies on 145 separate properties than would be paid by one group for one policy on those same properties being covered as a combined entity, and we eventually prevailed.
President Bush is proposing a healthcare initiative that takes much the same approach, one that suggests that we do away with health insurance provided by employers on a group basis and move to policies purchased individually. Eliminate the purchasing power of association.
How can that fail to make health insurance more expensive? How can that fail to make health insurance unavailable to anyone with existing health conditions? By taking the youthful and optimistic out of the pool, how can that fail to make the cost of premiums higher to those who are older and less sanguine? By requiring health insurance companies to administer a higher number of individual policies, individual payment collections, how can that fail to increase overhead and increase the cost of insurance?
United, the people benefit; divided, the campaign donors benefit. Do I have it wrong?