Health Care & Mortgages…Not So Different

As I was reading the article “Employers Offer Workers Fewer Health Care Plans“ posted in this morning’s NY Times, it occurred to me that the article was very reminiscent of the mortgage industry. If you removed all the health care jargon from the article and replaced with mortgage lingo you would come to the same conclusion.

The cost of mortgages, just like health care, are higher than in years past. As noted in the illustration that was published with the article, the rise in upfront deductibles ranged from +5% up to +25% than in the prior year. Obviously, the rising costs is a big issue for both employers, insurance companies, health care facilities and consumers within the context of an economy in recession.

Here are a few of the similarities that should be reviewed:

• Increase in Upfront Deductibles – Increase in Fannie Mae Delivery Fees
• Increase in credit-risked base premiums – Increase in credit-risked base add-ons to mortgage rates
• Increase in restrictions on insurance eligibility – Increase in restrictions for mortgage eligibility
• Reduction of health related issues covered by policies – Reduction of available mortgage programs for non-owner occupied homes
• Reduction in health coverage – Reduction in loan-to-value
• Reduction in offered plans – Reduction in mortgage products
• Socialize health coverage – Nationalize mortgage industry

It should be noted that none of the above would be an issue in a robust economy; unfortunately, this is not that time. This is simply to point out that there are other parts of the economy that are just as problematic as the housing market & mortgages.