I liked the general thrust of your idea, and in fact have advocated something like that for years myself.
However, you wrote: “Now if you had a medical condition since childhood, you would obviously have to spend more for insurance....”
Here’s one solution to the pre-existing condition problem that is free-market oriented. Consider first that if anyone in your family has a condition and you get a job with an employer who provides family health insurance, your family member’s pre-existing condition is usually automatically covered anyway. In other words, insurance companies are always routinely taking on such patients as people shift from job to job.
The problem is that if you try to enter the individual market, as you advocate (and I completely agree) then insurance companies WILL deny coverage for pre-existing conditions. Furthermore, in the present individual market, if a number of people get sick in the pool, the pool will start to shrink as premiums escalate to cover them over time. The healthier people just go elsewhere for coverage.
So, what we need to do is first get employers out of the picture, transferring their present health insurance payments to the employees pre-tax, as you advocate (and I agree.)
Next, and THIS IS THE KEY to the whole pre-existing condition mess: By law, whether state-wide, region-wide, or country-wide, dictate that very large pools be formed segregated into 5-year age ranges and sex and not much else, and then again by law dictate that as long as one continues to pay the premium on ANY health insurance policy they will always retain a status of an INSURABLE INDIVIDUAL.
That is, no company will be able to consider their pre-existing conditions when offering them a policy for, say, a 38-year-old male. They will have to price all policies of a certain deductible, copay and coverage at the same rate for all 36-40 year old males who apply provided those applicants hold the status of an “Insurable Individual”.
At the onset of the law, every person would be an “insurable individual” and would have a grace period of, say, 90 days to get insurance with any insurer doing business in the state, region or country (depending on the scope of the law.)
Here’s the next key part: Anyone who failed to pay their insurance company during the grace period, or who later let payments lapse, would LOSE their status as an “insurable individual” and would be subject to being denied coverage for a pre-existing condition or to having to purchase an additional rider paying extra to do so.
Here’s the next key: If ever an insurance company decided that a person’s pre-existing condition no longer warranted denial of coverage for the condition, and the person paid for a policy from them, that person would then again become a fully “insurable individual” once again and no other insurance company could treat them otherwise if they later went insurance shopping.
And finally the last key point: The status of “insurable individual” would become the personal goal of most responsible people. Those who are irresponsible would either suffer the consequences or would have more responsible people looking out for their interests. Those without the means to pay could look to the government to PAY THE PREMIUMS on a bare-bones policy so that they would retain their status as an “insurable individual” until they eventually become able to pay their own way.
Summing up: Giant pools combined with the concept of an “Insurable Individual” would create the backbone of a system on which government could look out for the less fortunate among us by simply covering the premiums on a cheap policy. People would be able to take the risk of going uninsured if they wanted, but most would see the wisdom of at least buying a very bare-bones policy in order to retain their status as an “Insurable Individual”
Grandparents and parents would even start savings account for the kids and grand kids to ensure that they got off to a good start when the entered the insurance market at the age of, say, 21. Kids would enter with the status “Insurable Individual” and would only lose it if they screwed up and didn’t pay premiums. Schools and parents would be drumming into their kids’ heads from age 16 on the importance of retaining that status, and most probably would. Government could then focus on those who just couldn’t. Medicare and Medicaid could be done away with.
Most people would pick HSA plans with high deductibles and copays, the insurance companies would once again be insuring primarily against catastrophic losses, doctors would start quoting single prices for procedures instead of listing every band-aid and cough drop on the charges, and health care costs would plummet due to consumer shopping for services using their own money. Nirvana. America. Wow!
Instead we get Obamacare....sigh
An additional note: The “Insurable Individual” concept would work on just a state-wide basis. That is, any state could try this. Just opt out of Obamacare and go the “Insurable Individual” route, while mandating that employers in the state get out of the health insurance business and transfer all payments to employees.
I’d like to see one Red State try this and then compare that state a couple of years later to Massachusett’s RomneyCare. The difference would be dramatic. The state would also be doing quite well financially, I suspect.