Posted on 05/11/2017 6:54:47 AM PDT by SeekAndFind
As Senate Republicans prepare for their turn in the health-care meat grinder, it increasingly appears that the question of preexisting conditions will be toughest to address. This is an issue so fraught with emotion as to cry out for some straight talk.
First, lets be clear about whom were talking about when the conversation turns to preexisting conditions: people who are already sick or at high risk of becoming sick. Insurance is or should be about managing risk. We buy coverage to protect us against events that are unlikely to happen but would carry a catastrophic cost if they did. Our premiums reflect both the likelihood of those events and the potential price of the medical care theyd require.
Consider that, in 1752, Benjamin Franklin started the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, the first wide-scale commercial-insurance company in the United States. In providing Philadelphians with insurance against the then-frequent calamity of house fire, Franklin made the common-sense decision to charge those who lived in wood houses, which were more likely to burn, higher premiums than those who lived in brick houses.
The Affordable Care Act essentially eliminated this type of risk-management, mandating identical premiums for both brick and wood houses, or in this case, someone in perfect health and someone in very ill health. It is this Gordian knot that congressional Republicans are attempting, in their usual inept way, to cut.
A lot of numbers have been thrown around about how many Americans have preexisting conditions. Barack Obama, for example, has suggested that the number is as high as 133 million. But these figures grossly exaggerate the number of Americans who would be affected by changes to the ACAs preexisting-conditions provisions. They include, for example, Americans on Medicare or employer-provided health insurance, neither of which are subject to medical underwriting. If you get your health insurance at work, the companys overall costs may increase to reflect its claims experience in the event that Congresss reform bill gives insurers the right to charge more for those with preexisting conditions, but your individual contribution will not increase because you have such a condition.
Democrats have also been circulating a long list of medical problems that meet the technical definition of preexisting condition. Many of those conditions have little more than a marginal impact on premiums, and others are explicitly addressed by state laws that ban insurance companies from charging more for those who have them. For example, some commentators have claimed that insurers might call rape or domestic violence preexisting conditions. But even if an insurer was willing to bear the public outrage from doing so, 44 states currently prohibit the practice. Those that dont ban it explicitly, including states such as Vermont, would enact a ban at the first hint that an insurer might change its policies to punish a victim of rape or domestic abuse.
This politically motivated hysteria does not make the question of how the system should treat those with preexisting conditions any less pertinent, of course. If you have a preexisting condition, you are not being insured in any real sense, because there is no risk to manage or spread over a larger pool. But your health-care costs still need to be paid, and there are essentially just four ways to allocate those costs.
This is an issue so fraught with emotion as to cry out for some straight talk.
We could require that people with preexisting conditions bear all the costs themselves, either by paying an actuarially fair premium or by forgoing insurance and paying their costs out-of-pocket. For some the increases will be modest, more an inconvenience than a crisis. Charity care might fill in some of the gaps, and federal law would continue to require that hospitals provide emergency care. Nevertheless, it is likely that many people would not receive the care they need. As a result, virtually no one favors this option.
Second, other people in the insurance market could pay the costs. Thats how the ACA works. The ACA mandates that healthy people, who are unlikely to use insurance, buy it anyway, and charges them much higher premiums than would normally be justified by their actuarial risk. The young and healthy essentially subsidize care for the older and sicker. This has the perverse effect of forcing some people who are struggling financially, such as those just out of college, to subsidize people who might be much better off financially. It also doesnt work, as the ACAs implementation showed, because not enough healthy people sign up to pay for the influx of sick people. Insurance companies then either drop out of the market, cut back on high-quality providers, or raise premiums. All of this in turn forces healthy people out of the insurance pool, threatening to create an adverse-selection death spiral.
Third, you can try spread the cost of insurance subsidies over the entire tax-paying population. Thats the theory behind high-risk pools. Individuals with preexisting conditions would be removed from the general insurance pool, allowing premiums for the rest of us to drop to levels reflecting our reduced risk. Most peoples premiums will go down, while those in the high-risk pools face much higher premiums. To be feasible, this option thus requires government to subsidize premiums for those in the high-risk pools. Before the ACA, some 226,000 Americans were enrolled in high-risk pools in the 35 states that offered them. Some state pools were well-designed and worked fairly well, while others had problems. It remains to be seen whether a new generation of high-risk pools would be better. The major problem with this option is that it attempts to preserve the illusion that people with preexisting conditions are being insured, when in actuality the uninsurable are uninsurable and there is little point in continuing to include insurance-company middlemen between them and their health-care providers.
Finally, we can take those with preexisting conditions completely out of the insurance market and have taxpayers pay directly for their care, including them, for example, under Medicaid. That is the approach advocated by Senator Rand Paul, among others. Its biggest downside is an increased risk of adding substantially to federal and state spending at a time when the growth in Medicaid costs is already squeezing out other priorities such as education and infrastructure. Another risk is that directly paying providers might recreate the many problems plaguing existing programs such as Medicare, Medicaid, and the VA, with the specter of price controls, rationing, oppressive taxation, and debt looming as costs rise.
None of these options includes a magic money tree that provides free care. We are arguing about who should pay, which is a natural and healthy debate to have in a democracy. But too much of the discourse surrounding this issue pretends that treating people with preexisting conditions is cost-free. Moreover, all of this debate takes place against the backdrop of the ACAs ongoing implosion. The laws protections for those with preexisting conditions may not count for much if, in the near future, there are no plans being sold on exchanges in their markets, or if none of the available plans cover the doctors or hospitals they need. And even where insurers have not yet pulled out of Obamacare, people with preexisting conditions are currently being hurt by high premiums and deductibles wrought by the laws flaws.
This is not to suggest that the GOPs proposal is in any way coherent, of course. In their endless quest to be a little bit pregnant on the topic, Republicans have crafted a bill that manages to borrow the worst aspects of all the above models, and their unwillingness to be frank about the tradeoffs involved deserves all the derision it has received.
But if Democrats have a better answer, we have yet to hear it.
READ MORE:
The Pre-Existing Condition Lie
The Right to Health Care: There Isnt One
Health Care: We Cannot Vote Away Scarcity
Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis. You can follow him on his blog, TannerOnPolicy.com.
What is vexing about it?
People with pre existing conditions are not wanting to buy insurance where they gamble that if something bad might happen to them they’ll “win” their bet and not have to pay as much for their needs or wants.
No, people with pre existing conditions are basically demanding a gift from other folks. They want to pretend that their “contributions” which do not cover the expenses being paid out on their behalf are them actually doing the same as if they had entered into a contract with an insurer BEFORE they got sick.
It’s like demanding a bookie take your bet for the winner of the race after the fact because you have some excuse for why you didn’t place the bet before the race started.
Thank God nobody is talking about just enforcing Existing LAW!!!, to bring down Medical Costs.
The Sherman Act outlaws “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.” Long ago, the Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. For instance, in some sense, an agreement between two individuals to form a partnership restrains trade, but may not do so unreasonably, and thus may be lawful under the antitrust laws. On the other hand, certain acts are considered so harmful to competition that they are almost always illegal. These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are “per se” violations of the Sherman Act; in other words, no defense or justification is allowed.
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws
If you have a pre existing condition, you are seeking a financial subsidy to deal with the coming expenses related to your ailment. That is not the nature of insurance. Asking a corporate entity to “insure” you is akin to requiring a bookie to take bets on yesterday’s games.Nobody in this country including illegal aliens is permitted to suffer without care. In the end it will be the taxpayers, ceding more of their wealth, to the government to ensure that all have “insurance”. The problem is that those needs and the definition of those ailments is forever expanding. The therapies and ailments themselves are often bogus but leave to the government bureaucrats to spend and spend and spend. After all people will complain and the politicians as always will comply.Just another brick in the road to perdition.
So you’re an option one person?
We’re ALL born with pre-existing conditions. What we die of may have nothing to do with our predispositions which may not occur until our 40s, 50s, 60s...
Government regulates healthcare professionals
Government regulates healthcare services
Government regulates hospitals
Government regulates healthcare insurance
Government provides healthcare
Government provides health care insurance
Government uses tax incentives to direct healthcare
Hmmm maybe there is a theme?
This issue is paying for healthcare. Insurance is one way. Direct pay is another. Charities are another. But all healthcare is paid healthcare there is no “free” healthcare. While we debate who should pay we could start by freeing the insurance companies and start deregulating the entire Big Government Medical Complexity.
Amen. But you’re eating your breath. People refuse to acknowledge the illegality of what the healthcare industry does.
“the care they need”
The drug companies would say they NEED the 4000/month drugs, etc.
I think those with preexisting conditions could be given less expensive but good care than those that have paid their premiums all along.
Also, the elephant in the room continues to be the outrageous, skyrocketing cost of medical care.
The latest AARP bulletin has an article explaining why some drugs are so expensive. The answer: manufactures have a patent (no competition, therefore) and can charge whatever they find people and insurance companies are willing to pay.
Of course the more insurance companies pay out, the greater their profits, because they set the premiums at some percentage above what they pay out.
The insurance companies love expensive things.
Pre-existing conditions have been ‘stretched’, for lack of other words, by the insurance industry, to NOT take you as a customer, because their number crunchers have figured out, that YOU will become a financial pay-out, and result in less profit, for THEM.
It is about money.
Is it fair for someone to suddenly demand insurance, after they haven’t had insurance for years or ever, right after they find out that they have a serious disease that will cost a lot of money?
It is like driving a car without insurance and when you get in an accident, demanding insurance and then demanding that the insurance company pay.
However, it is reasonable if a person has had insurance coverage the whole time and THEN gets a major disease to be able to keep their insurance.
I read about 10 pages of our anti trust law before posting that link, it is a Detailed Description of our Current Medical System!! They are ALL GUILTY!
The answer that nobody wants to face is that we are headed for single payer.
It appears the medicare coverage of those suffering from mental illness has been cut.
I hear you. People won’t acknowledge it. The President could end this on his own, but he won’t.
How about those who had insurance through their employer but got laid off? The college student with a congenital condition who is no longer covered by her parents’ or school insurance? Etc. There are lots of people who have pre-existing conditions who are without insurance due to no fault of their own, not just people like those you describe.
Government healthcare = everyone gets hosed except those who don’t pay taxes.
With all the ink spilt and electrons moved on preexisting conditions coverage, I have seen zero estimates of how much including it adds to the insurance premiums of others. Zero.
With a gubermint honey pot begging to be dipped into, why would anyone buy their own health insurance? Just wait ‘til something happens and either save or spend the savings. Let somebody else pay for it (rich taxpayers)- it’s the American Way!
Same result...workers pay!!
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