Understanding “health insurance” and pre-existing conditions
The present health care bill is caught up in Congress in an argument over insuring pre-existing conditions. That’s a requirement Americans seem to desire, but that few understand, as Josh Blackman wrote in 2009:
. A September 2009 Kaiser survey found that 80% of respondents supported this ban [on failing to cover pre-existing conditions] ”“ that included 88% of Democrats and 67% of Republicans. Among those supporters, however, only 56% still favored the provision if it resulted in higher premiums; 36% would oppose it. Supporters almost certainly did not realize that requiring insurers to cover sick people would necessarily shift the cost onto everyone else.
Recent surveys are similar in that they uncover, not just the opinions of respondents on the question of coverage of pre-existing conditions, but ignorance about how the entire health insurance system works. Way too many people seem to think that insurance companies set prices and rules arbitrarily and that their reluctance to cover pre-existing conditions has no economic cause (except greed) and no economic results (except joy).
Now, granted, part of the reason for this ignorance is that “health insurance” isn’t really insurance in the usual sense of the word. But because it can be, and sometimes is, a matter of life and death to have it or not to have it, and because in most of the Western world it has become thought of as a right to be guaranteed by the government, a great many people not only no longer understand the way the insurance model would work for health care coverage, but they no longer accept that model even if they do understand.
Health care has become remarkably expensive, and specialized care is now priced out of the reach of most people. That’s not a coincidence; it’s partly a result of insurance reimbursement rather than out-of-pocket payments, and partly a result of laws requiring hospitals to treat even the indigent. But it’s also a reflection of the fact that health care equipment and treatment has become far more elaborate. Think just about a disease such as leukemia, which when I was a child was an invariable death sentence with no treatment at all, and then reflect on what can be done for it now.
The current debate on pre-existing conditions lumps together a host of different but related things. For example, we have the fiction that before Obamacare, health insurance companies regularly used to “drop” people who had been properly insured and then got sick. This was propaganda in the sense that it didn’t happen in the way that people were led to believe it did. There were laws to forbid it, and when you heard anecdotal instances of its happening anyway it was virtually always because the insurance company alleged that the patient had committed insurance fraud by not disclosing the pre-existing condition at the outset. In other word, the patient lied.
Now, sometimes the insurance company would use this as a ploy when it wasn’t true. In those cases people could sue, because the law was supposed to protect them from this. I am pretty sure that, as with most things, sometimes there was a miscarriage of justice. But there were laws that prevented this supposedly-widespread dropping of sick people just because they got sick.
Then there were the high-risk pools that used to cover people with pre-existing conditions prior to Obamacare. I’ve written about the subject several times before, for example here:
If you look at the chart in the middle of this page you’ll see that 35 states ran high-risk pools prior to Obamacare, and most had been in operation for many many years (Kansas had started its high-risk pool in 1993). The 15 states that didn’t have them didn’t necessarily leave their high-risk individual health insurance customers in the lurch, either. Some were guaranteed issue states, which meant pre-existing conditions could not be excluded at all: New Jersey, New York, Maine, Massachusetts, and Vermont had straight guaranteed issue, with Ohio, Oregon, Rhode Island, and Idaho having guaranteed issue with some restrictions involving previous continuous coverage…
How do I know this sort of thing? I was in a high-risk pool for quite a few years. It was far from perfect””I paid about the same as I would have if I hadn’t had a pre-existing condition, and my deductibles were significantly higher””but I could certainly get insurance.
It was a problematic situation, to be sure. But the idea that there was no recourse for people with pre-existing conditions who were not insured through their jobs is simply wrong.
There’s a lot more that is poorly understood about the way pre-existing condition coverage used to work, but I’ll stop there. I’ll just add that the confusion about what went on then—and the purposeful propaganda to make it sound even worse than it was (see this, for example)—continues in today’s confusion about what’s happening now:
[An amendment to the bill offered by Rep. Fred Upton, Republican holdout from Michigan] would provide $8 billion over five years to reduce premiums and other costs for those with pre-existing conditions who have a gap in coverage and reside in states that received waivers from some of Obamacare’s requirements under another provision in the bill…
Upton on Tuesday cited the bill’s provision on pre-existing conditions as a reason for his defection. Under the bill — prior to the amendment he is now working on — states could allow insurers to charge higher premiums for people with pre-existing conditions who have had a gap in coverage of at least 63 days in the prior year. States could also let insurers charge older customers more than the original bill allowed — at least five times more than younger ones, beginning in 2018.
“I told the leadership I cannot support the bill with this provision in it,” Upton said Tuesday. “It’s not going to get my ”˜yes’ vote the way it is.”
The previous GOP bill reflected something like the situation that existed prior to Obamacare: states making decisions, and some variability in the price of health coverage depending on whether a person has a pre-existing condition or not. That’s standard insurance practice, and it lowers the costs for others. But Americans have come to be dissatistifed with both that practice and with the high costs of health care and health care insurance, without acknowledging that they are asking for contradictory things.
The Bloomberg article I just linked also gives a statistic commonly offered:
About 27 percent of adults have a pre-existing condition like cancer or heart disease that insurers refused to cover before Obamacare, said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation.
“There are millions with pre-existing conditions,” he said.
That makes it sound like this would affect 27 percent of people. Of course it would not. Many many of these people are on Medicare, which does not exclude them. Many others are covered at work. This problem only affects the rather small individual insurance market. And of course, under the more Draconian Republican bill, they would be covered, just not as easily or as cheaply as those without pre-existing conditions.
Among other things, health insurance is sort of like auto insurance if auto insurance covered oil changes, car washes, and new tires. And gasoline.
The premium for a regular, frequent expense is that expense plus the cost of administering the claim.
Cheaper to take care of it yourself.
Unless it’s group insurance and the cost is passed on to the customer in the form of higher prices. That wouldn’t be so bad except that it sets the expectations for individual coverage which also has to cover…oil changes, new tires, car washes, and gasoline. And the premiums reflect that.
Lastly, health care premiums are deductible to the employer and not reportable to the employee.
So, if the employer has, say, $500 more per employee to spend on compensation, putting it toward health insurance is a good deal. If he paid the guy W2 income, he’d be out his share of Soc Sec., the employee would be out his share of Soc Sec, plus state, local, and federal income taxes. And, if the employer offered benefits such as disability income or pensions, those would have to be tweaked as well.
Glad to see you put “health insurance” in quotes. If you look in the dictionary, health is a personal condition, not a commodity or service you can buy so there is actually no such thing as health insurance or health care. Health is a do it yourself project and if you don’t care for your health the doctor can’t provide health care for you. You can, of course, buy medical insurance and medical care.
Health care is not a right under Natural Law, no matter what all the semi-socialist countries in Europe allege. They are all ethically compromised anyway.
The “right” to health care is just a stalking horse, from which our increasingly totalitarian government will eventually seize the reins and provide “health care” to all, as part of their total control of the population. If you have not read or heard Dr. Ezekiel Emanuel and his Quality-Adjusted Life Year cost-benefit approach, I warn you to learn the QALY concept and details before reading Emanuel. It will chill your marrow. He is a Josef Mengele for the masses, benignly patting you as he directs you to the gas oven of no care. From Harvard, too. And a “medical ethicist”!
The sad truth is that not enough Americans understand for what insurance is. Health insurance shouldn’t pay for anything that isn’t an emergency outlay, and it should have deductibles that are quite high- at least as much as one might spend on a brand new car. With that standard, it is ok if insurers offer things like free checkups and vaccinations, but they will only do so if they are pretty sure such freebies actually reduce the expected emergency cost later on.
However, we will never have that. An honest broker would simply come down on this side- let insurers set absolute caps on what will be paid out that you agree to when you sign the insurance contract, and fund all excess charges via taxation only. Trying to fund what is essentially an unlimited demand via the premium system is guaranteed to bring the system down anyway.
Tough question. Intellectually, I agree that pre-existing conditions negates the very term insurance. On a personal level, I think of my 25 year old granddaughter, 4 years removed from her leukemia diagnosis, and still under the care of Oncologists. So, in a few months, one way or the other, she must leave her mother’s HMO, which has seen her through this very well; but, where does she turn? She could get insurance through her job right now before anything changes; but this is not a forever job. Will there be options for her, as she moves forward?
Human considerations tend to make things a bit messy.
PS The massive expense of my mother’s lengthy struggle with terminal cancer cost my Dad his business, and our home, back before health insurance was ubiquitous. But, folks were a little more resilient in those days. Not sure we can go back, or want to.
Our medical insurance and delivery system was messed up before Obamacare, (By employer medical insurance, by Medicare/Medicaid, by EMTALA) but Obamacare has really poisoned the punch bowl. Too many people don’t understand that Obamacare has made things better for only a small number – maybe nine million (mostly Medicaid and older, poorer people) out of 325 million population. But it has also made things much worse for about nine million people – mostly individual medical insurance purchasers whose premiums and deductibles are ruinously high. And it is costing us much more than it should while it does nothing about skyrocketing medical care costs.
No plan will remedy these issues perfectly. But the Congress must start. by dismantling Obamacare (piece by piece if necessary) and working toward a more market driven, more cost transparent, more efficient medical care model where doctors and patients are more in control. Maybe it can’t be done, but I hope we give it a try before going down the universal (government controlled) medical care path.
“What is a pre-existing condition? A hang-nail, recovery from stage 3 cancer, or something in-between?…
I think it is reasonable to believe that a binary pre-existing/not pre-existing segregation is nonsense. So either you have perfect health, or you are a train-wreck waiting to happen?” – TommyJay
http://neoneocon.com/2017/05/02/revisiting-those-high-risk-pools-briefly/#comment-2202911
This hits at one crux of the “pre-existing” issue.
One example I know about is one family friend had/has a cyst that her doctor said was/still is nothing to worry about. But, prior to obamacare, the insurance company deemed her with a “pre-existing condition”. Yet, she was in great health, per her doctor.
She suspects it really was about her age, having just turned 50 at the time. Age naturally increases everyone’s risk. The cyst was probably just the thing the insurance company needed to kick up the premium (by a multiple).
It is a much thornier issue than, well, she can go to the state subsidized high risk pool and still be covered.
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“The previous GOP bill reflected something like the situation that existed prior to Obamacare…
they would be covered, just not as easily or as cheaply as those without pre-existing conditions” – Neo
Fundamentally the medical insurance industry is highly regulated and, thus, is effectively an oligopoly.
Without great competition, there was (and still is) an incentive for them to seemingly “cherry pick” the healthier, and younger population.
So, the system prior to obamacare wasn’t all so great either.
Ultimately, whatever solution (I’d prefer a much freer market – that NOBODY is selling to the public right now) has to be sold to trump’s swing dem voters, and they are likely to be folks who are more likely to be hit by this issue.
Doubtful that going back to the pre-obamacare situation is sellable.
But, who knows. If trump endorses it, that might be all they need, nowadays (until reality hits).
“Kimmel implies that opposition to Obamacare-style insurance mandates is both un-American and indecent. Had he been less hysterical, he would have acknowledged that different health care systems have pros and cons — and decent Americans can have legitimate differences of opinion on such matters. …
Compassion without clear thinking is just a waste of Kleenex.” – Michelle Malkin
http://www.realclearpolitics.com/articles/2017/05/03/a_thinking_moms_message_for_jimmy_kimmel_133772.html
In the first place, health insurance is health insurance. There’s no point in talking about the “insurance model” when it comes to actual insurance.
Of course through continued misuse of language, enabled by ignorance and helped along deliberately, it seems that the general public no longer thinks in terms of insurance, when it comes to health insurance.
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But to the issue of “rising costs of health care,” and speaking of increased medical tech and so on, here’s one for the books.
I will skip the whole back-story, but in January I saw a G.P. new to me, since I now must rely on such largesse as Ms. Pelosi and her gangmates (on both sides of the aisle, but even worse on the D side) are pleased to give me under color of the Wondrous Medicare, Part D, and the Medicare Supplemental Insurance (that used to be called “major medical,” or simply “health insurance”).
This gentleman wanted me to see a gastroenterologist. The appointment was made. (In the event, I actually saw a “nurse practitioner.”) The lady looked over the results of my latest blood exam. She told me I should have a colonoscopy and an endoscopy. I said, “Not gonna happen.” (I’m 74 in 26 days, and the pulmonologist only gives me maybe three more years — with luck — anyway.) Finally she said, Well, then at least have a DNA Stool Test. I said, “Whazzat.” She never did tell me, but finally I asked her what percentage of those who took the test turned out to have colo-rectal cancer or precancerous polyps. She finally said she didn’t know, so I narrowed the question to ask what percentage of those who tested positive from the Stool Test turned out to have the colonoscopy-endoscopy results confirm the existence of cancer or polyps.
I hope you are all sitting down, and have put down your hot or sugary drinks. The percentage?
4 %.
Yes, boys and girls, this whiz-bang wondrous test that you simply must have or you will die later on today in a bed of pain that you made for your very own self, your very own self, gives
96 % false positives!
Stuff like this is part of why medical costs are so high.
And by the way, stuff like this results from a lot more factors than just “greed.” But it’s past my bedtime, so End of Story.