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Pre-existing conditions

by Greg Krehbiel on 8 May 2017

Just a few random thoughts.

This morning I read an article that said it’s inherently silly to require insurance to cover pre-existing conditions, because the definition of insurance is money you pay against a potential future liability. You can’t have a tree land on your house and then go buy home owners insurance for it.

That sounds right, but I think it’s true in an annoying, pedantic way. That’s not the question we’re trying to solve.

The pre-existing condition problem usually arises when people change insurance plans, and since it’s become customary for insurance to be a workplace benefit, people change insurance whenever they change jobs. So I have thought that one way to solve the problem is to prohibit employers from offering insurance as a benefit. Just have people buy insurance on their own, just like they do for their car.

This might lesson the problem, but it wouldn’t eliminate it, because you can’t expect somebody to buy insurance at 18 and keep the same policy until they die. That would reduce competition, for one thing, but also … other things in happen in life. People leave the country, or go to jail, or fall on hard times and can’t afford to pay premiums, etc.

Also, some people are born with “pre-existing conditions.”

The real point of “insurance” — in the popular use of the word — is to spread around the cost of health care.

2017-05-08  »  Greg Krehbiel

Talkback x 10

  1. William
    8 May 2017 @ 11:45 am

    That’s one way to go about it. Yet, it presents other challenges. If employers were prohibited from offering health care benefits, they’d likely offer money in lieu of benefit coverage (to attract the talent needed). The problem is they can offer healthcare coverage more cost effectively than offering individual compensation given they typically get group discounts from insurers.

    From a business perspective, insurers have a point concerning covering pre-existing conditions. After all, most are in business to make a profit and covering those with pre-existing conditions significantly increases the potential they will have to pay out. That said, many with pre-existing conditions got them through no fault of their own and if they cannot get appropriate insurance coverage they are left with the options of going bankrupt or not getting treatment (suffering or dying) in many cases. Despite being better business for the insurance industry, that doesn’t seem to be the right answer from a humanitarian perspective.

    Maybe another area to explore is reducing the cost of health care. Does it “really” need to be as expensive as it is currently or can some reasonable reductions be made without causing the industry to go bankrupt? It’s hard to believe that a single Tylenol pill MUST cost $15 when hospitalized. Can pharmaceuticals be offered “at cost” or at a “significant discount” for those who qualify with certain conditions? Of course, this alone wouldn’t solve the problem but could move things in the right direction.

  2. Greg Krehbiel Greg Krehbiel
    8 May 2017 @ 1:14 pm

    I’m certain health care costs can be lowered, but the best, tried and proven way to do that is to introduce competition. But most of the “reforms” take away competition.

  3. William
    8 May 2017 @ 3:00 pm

    Albeit competition may be a way to lower costs, it doesn’t seem it was as effective as some proclaim…given we had significant challenges in affordability prior to healthcare “reforms”.

  4. Greg Krehbiel Greg Krehbiel
    8 May 2017 @ 3:22 pm

    I think it’s best to admit that the problem is complicated and to avoid simplistic answers. For example, “Europe has single payer and they have lower costs, therefore single payer leads to lower costs.”

    Not necessarily.

    You have to look at why American health care is more expensive first. (Here’s an article on the subject. I have no idea if it’s accurate.) Would single payer solve all those problems? Only some? None?

  5. William
    8 May 2017 @ 3:45 pm

    Good point…it IS complex! Even our current POTUS has discovered this….who knew??? 🙂

    https://www.youtube.com/watch?v=2jwKPgNJGyk

    https://www.youtube.com/watch?v=LjFTP-uUB5w

    That said, there is no silver bullet. Yet, some act as if going back to pre-reforms is THE panacea. Actually for this one, we really need ALL hands on deck…with an attitude for creativity, problem-solving and what’s best for citizens. Yet, the Republicans wouldn’t play nice with Dems…now the Dems won’t play nice with the Republicans. Meanwhile, people are suffering the consequences.

  6. Dave Krehbiel Dave Krehbiel
    8 May 2017 @ 4:59 pm

    For the record, my position is: we people should provide free health care to all citizens up to 40 years old. But that’s it. (With the possible exception of the severely disabled) after 40 years old you’re an adult and you have to take care of yourself. This will save an incredible amount of money, since the majority of all your lifetime health expenses are within the last five years of your life.

    You have 40 years to grow up and get your act together and purchase your own insurance policy.

    Of course, this would never pass. Rather, grandmothers and grandparents are passing on their health insurance costs to their grandchildren.

  7. Dave Krehbiel Dave Krehbiel
    8 May 2017 @ 5:04 pm

    Sorry, I should have said, grandmothers and grandfathers (who vote) are passing on their health insurance costs to their grandchildren (who have no vote).

    Personally, I think it is better and healthier and certainly cheaper to spend your twilight years in an inexpensive place (e.g. the Philippines) than by being a cash cow to expensive hospitals and nursing homes, and a political on every election cycle.

  8. RR
    8 May 2017 @ 11:48 pm

    Employer based health insurance is pretty much the root of all evil in the very flawed health insurance system found in the United States. Employer based insurance creates distortions in the labor market as well as the price of health care. We won’t make any real progress until we get rid of it. Either an individual private market as they have in Switzerland or a single payer system would be vastly superior to the current employer based system.

    As far as the pre-existing conditions issue goes, insurance companies use to use “pre-existing conditions” as an excuse to go on a fishing expedition to find an excuse to deny coverage after customers were diagnosed with expense diseases such as cancer. One of the best things about the ACA was that it banned the use of pre-existing conditions. Insurance companies abused this too much to go down that road again.

  9. Greg Krehbiel Greg Krehbiel
    9 May 2017 @ 7:41 am

    Dave, under your scheme, what happens to someone who is born with or develops a long-term condition before they turn 40? Who is going to insure them?

  10. Dave Krehbiel Dave Krehbiel
    9 May 2017 @ 9:07 am

    Greg, if it were me, I would model my health care laws on homeowner insurance laws. As you have said, the government does pay things well. One example is flood insurance. my understanding is that, if you want flood insurance, you can buy it from your local insurance company, but they must buy it from the federal government. This reduces the risk to the insurance company, reducing costs. In the same sort of way, based on decades of successful practice, a health insurance company could buy “disability insurance” from the federal government.

    In a similar way, the federal government could step in for the next 20 years or so to provide coverage for people who are already elderly, so they won’t be falling through the cracks and dying in the streets.

    I would also get NIST involved. They publish standards for many things, e.g. batteries. You can buy batteries across state lines and know what you are getting because of these sorts of standards. There is no requirement that everyone buy batteries. There is no requirement that battery manufacturers only make scattered batteries. There is no requirement that manufacturers of electronic devices built them to accommodate standard batteries. But the fact that there are many many standards for batteries makes the market more efficient, increases competition, reduces cost, and does not restrict freedom in any way.

    For example, we have all used AA batteries, AAA batteries, C batteries, and D batteries. But I have never personally used a B battery or an A battery. the existence of standards for batteries, developed in cooperation between government and industry, lets the market decide which types of batteries are best for which types of application.