Posted on 08/15/2009 9:04:37 AM PDT by OldDeckHand
Early in my career as a lawyer, I did a lot of work for insurance companies. I once had a case that provoked considerable laughter: a man was building an addition to his motel. He talked with his insurance agent about builders risk insurance, which would cover the structure while it was under construction, but decided not to buy it. One night, the structure caught fire and burned to the ground. The next morning at eight o'clock, the man was at his insurance agent's office, saying that he wanted to buy that builders risk coverage after all.
Once the facts became clear, of course, we won the case. You can't buy insurance against something that has already happened. You can try to make someone else pay your bills, maybe, but you can't buy insurance. The fact that that plaintiff's building had burned down was a preexisting condition.
It's no wonder that health insurance policies have historically excluded coverage for preexisting conditions. You can insure against the risk that you might get cancer, but if you already have cancer, it's not a risk, it's a certainty. Yet there are several reasons why the analogy to my plaintiff who changed his mind about insuring his building isn't fairly applicable to the current health care debate.
For one thing, the fact that health insurance is conventionally linked to employment--the curse of our present system--creates huge distortions. If an employee changes jobs, the consequence may be a change in insurance companies. A condition that was covered under the old plan is preexisting from the standpoint of his new carrier. Unlike my plaintiff who regretted his decision not to buy insurance on his building, the employee who changes jobs is entirely blameless and didn't set out to assume a risk.
(Excerpt) Read more at powerlineblog.com ...
So let's say we get rid of this artifact of WWII. Buy health insurance like we buy auto or homeowner's insurance. Is there a problem with that?
The “preexisting conditions” hype is a hoax. Under Federal Law, all insurance companies are REQUIRED by law to cover pre-existing conditions as long as insurance does not lapse for more than 6 months.
Further, it may be an issue of Federal Law, but after 2 years of coverage they are required to pick up pre-existing conditions anyway.
I know, I HAVE a pre-existing condition, I am self-employed and have paid for my own health insurance for years.
Not in my estimation. Individuals would be responsible to buy major medical insurance - what medical insurance was originally designed to cover, major catastrophic accidents and diseases.
Employers could then contribute to employee's health spending accounts. The employees could draw upon these accounts to pay for the more routine, predictable and reoccurring medical expenses like check-ups, doctors and dentists visits, prescription and the like. This would drive down costs as you'd begin to shop for better prices as you would actually be responsible for paying the bills.
The problem being that while these articles are rational and usually accurate they are beside the point. These “programs” are based upon political considerations such as if I give program X to “The People”(usually from foreign parts) then I obtain and maintain control. POWER!
Requiring coverage of pre-existing condition coverage is another distortion.
With no transfer of accumulated premiums, the receiving insurance company is covering a burned down motel.
I understand that there should not be any discrimination based on "pre-existing conditions", but I have a friend who's personal experience indicates that the discrimination does exist.
Her husband is "between" jobs and they have maintained their previous insurance under COBRA (so, no gaps in their coverage), but are unable to purchase a new insurance policy because of supposed pre-existing conditions for each of them - it's not just that the insurance would be prohibitively expensive, the problem is that that the companies they have contacted will not offer coverage.
Federal law or not, all I know is that real people have real problems getting coverage when the insurance companies see something in your medical history they don't like.
I have a pre-existing condition (MS) and I’m covered by a group policy. If my husband loses his job, then we could go to COBRA for a certain length of time, and you’re right, we wouldn’t be excluded due to the pre-existing condition once he got a new job. BUT if COBRA ran out, there is no way I could get a private health policy that would cover my MS...no private company would write it, I’ve checked.
It's clear that some people suffer from hardships buying health care insurance because of pre-existing conditions. But, as Hinderaker points out in his essay, you don't buy insurance for something that's already happened, right? What your friends are really trying to do is finance - over a very long time and with favorable terms - payment for their already existing disease treatment.
Why is this a problem in the first place? Because years ago, insurance was tied to employment. Big mistake. Term life insurance policies don't change or get canceled if someone becomes terminally ill. They don't increase in cost as the person ages. And, they aren't dependent on employment (unless of course you have one of those "Cadillac" health insurance plans).
This is why it's paramount to divorce employment from health insurance. That way, there's no insurance portability problems to begin with.
I agree that getting our insurance ‘free’ from our employers is part of the problem...but it is difficult to change something that ingrained all at once...so the incremental approach starting with the actions described in this article is more likely to succeed.
The prohibition on pre-existing conditions protects the other people in the group insurance pool from the increased risk of people with medical conditions incurring medical expenses. Typically, in an employer group, the expenses incurred by the group drive the cost of the premium. By covering pre-existing conditions, it is likely that everyone’s premium will go up at renewal. Limiting coverage for pre-existing conditions protects the group.
The link of insurance to an employer is that the employer does some of the administrative work in maintaining eligibility lists and sometimes, in submitting the claim forms. The employer can make sure that the risk is spread by automatically covering all or most of the employees. He can make sure that they are required to pay for a portion of the premium - which tends to serve as a cost containment measure by investing people in their health care.
Currently, benefits are part of the payment to employees. Health and other insurance is an investment in keeping the employee healthy and focussed on work. Decoupling of the insurance benefit in the form of some health account, would require a great deal more in administration costs as election and tracking of enrollment would require more work from the employer.
Currently, group health insurance through an employer is a competitive benefit. Changing that to an entitlement would eliminate the motive/incentive for an employer to participate. Without a public option, that would mean that everyone would have an individual policy where the cost would reflect more of their individual risk. Converage of pre-existing conditions would likely be extremely high because there is a pretty certain chance that costs will be incurred. Personal policies are a great deal more expensive than group policies as there is less predictability and more risk exposure. The bigger the group, the better the premium.
That seems to summarize the problem nicely.
My son was diagnosed with Type 1 diabetes at nine years old. There’s nothing that he (or I) did to get it. There’s nothing he can do to get rid of it. It falls into the “crap happens” category.
I’m raising my son to be aware that he body will probably betray him much sooner than average. He can really only count on a good 20 years of productivity. Everything after that is a blessing, but not a guarantee. He has to be smart early. Get it right while he’s young. He can’t afford to make mistakes in his 20’s.
Yeah, I’m scaring the crap out of him, but he has to get it.
But he’s going to need coverage. Hopefully, he’ll be able to get it through he employer... hopefully.
If he were to try to buy coverage as an individual right now, he’d be screwed. I’ve received quotes of $1500-$3500 a MONTH for an individual health plan for a 25 year old Type 1 diabetic in good control.
Republicans are not saying that we should “do nothing”. Everyone agrees that people like my son need some help.
No, a public option is horrible and we’ll be out there fighting it with everyone else in another two weeks.
But we can’t ignore a sub-set of our population that *can* work - that *want* to work - but who fall through the cracks. Right now our system is set up to help the worse cases and that’s about it.
Before this whole thing blew up, the health insurance banded together and sent a letter to the White House agreeing to drop the “preexisting condition” issue - to cover people like my son at affordable rates. That would’ve taken care of a huge problem right there.
President Jerk-off said “NO”. He wanted a State-run option and wouldn’t settle for less.
Your situation illustrates precisely why we somehow have to move away from an employer-based health insurance coverage to either an individual or cooperatively based coverage.
If health insurance more closely resembled term life insurance, many of our existing problems would simply go away. I'm assuming that your son has some kind of coverage through you, his parents. In an ideal world, your son - upon reaching the age of majority - would then assume "ownership" of his existing policy, without the threat of cancellation or prohibitive fee increases. But, because presumably he's covered under plan that's provided at least in part your employers, that option isn't possible for him.
Really, we are reaping problems in our health insurance industry that were sewn in the 1930 and 1940s - it's the fact the responsibility of managing our health care costs were shifted from the individual to the employer, that's caused much of the skyrocketing cost increases as well as peripheral portability and coverage problems that we face today.
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