Who should pay for pre-existing conditions?

A friend of mine, whose name I will keep anonymous wrote the following satire about what to do about how to pay for people’s pre-existing conditions.  But when it comes right down to it, he basically described high risk pool insurance in a nutshell.  Pre-Obamacare, we had Cover Colorado, the high risk pool in Colorado.  It was funded by a small fee that every insured person in the State paid on their insurance bill.  If you think about it, any group can be “taxed” to fund high risk.  In Colorado, it was a hidden fee that every insured person had to pay.  It can be done, and it can work, with agreement from the people of the community.  I believe that all states should have high risk pools, but to keep things fair, there should still be waiting period penalties for those who choose to have a coverage gap longer than a specified amount of time.  As an alternative to high risk pools, we could implement health status insurance, for those worried about developing a health condition while employed who lose insurance due to job loss; health status insurance is simple way to solve the problem of portability:

Satire-Who Should Pay for Pre-Existing Conditions
“I have an idea for how to handle people with pre-existing conditions. First, we need to understand what insurance is, and what a pre-existing condition is. Insurance, by definition, is a system whereby people insure against the risk of something happening. Some people will have unforeseen expensive conditions develop, so a large group of people pays premiums proportional to their risk, and then the insurance company pays for the expensive conditions out of those premiums. Pre-existing conditions are conditions that exist before somebody buys insurance.

So what does it mean to make an insurance company pay for somebody’s pre-existing condition? It means that some company is doing business selling insurance policies to people who want to mitigate their future risk. Then along comes somebody who is not a customer of the insurance company, and has, for example, a severely damaged knee, wanting a knee replacement. The insurance company is then forced to pay the cost of this person who is not their customer, which might amount to $60,000. Perhaps the person with the bad knee has to pay a “premium” of a few hundred dollars, maybe even a thousand dollars, one time, in exchange for the $60,000 payment of the insurance company. After getting the knee replacement, the person can then cancel the “policy” and walk away from the insurance company, and never pay them anything again. That is, unless something else expensive comes along, in which case he can just make the insurance company pay his cost again and cancel again.

So what we are talking about is making some company pay the high costs of people who are not their customers. Clearly, these people need something to be done for them. They can’t afford to pay these high costs. In order to be compassionate, we need to force some other group of people to pay for them. It really doesn’t matter who (as long as it is not doctors). Who wants their own group to have to pay for them? I propose that we make hockey team owners pay for other people’s pre-existing conditions. Why not? If we are going to make some group of people pay for the medical fees of people who are not their customers, then why should it be insurance companies? Why not hockey team owners? In Idaho Falls, the hotel owners have to pay a special tax to pay for a hockey rink, which is called an events center. I believe that sort of thing has happened in plenty of other cities. I figure what goes around, comes around. Hockey team owners make hoteliers pay for their stadia, so we can make them pay for other people’s pre-existing medical conditions.

If you are opposed to this, then you must be uncompassionate. Either that, or you have a different idea about who you want to force to pay for people who are not their customers. What group of people do you think it should be? I think most people would pick a group to which they do not belong. Remember – not doctors. Let’s start a national movement to make the hockey team owners pay for pre-existing conditions. After all, we can’t just let these people suffer and die. Have some compassion, for crying out loud!”

House GOP ObamaCare Repeal and Replace Summary Table

Click here for a detailed House GOP Repeal and Replace Summary Table.  This document sums up the House repeal and replace proposal as of 3/6/2017. The draft legislation is scheduled to go to mark up tomorrow in the House Way & Means and Energy & Commerce Committees on Wednesday, March 8, and is expected to be scored by the Congressional Budget Office soon. Considerable changes will likely occur during the mark up phase. I will do my best to keep my readers updated as changes occur.

 

Health Insurance and Pre-Existing Conditions

Guest Post by Dr. James Brook, D.O.

Many people seem to not understand what it means to require “insurance” companies to pay for people with pre-existing conditions. To do so would require companies to lose money. When companies lose money doing something, they have to stop doing that thing. Requiring “insurance” companies to pay for large immediate costs for a customer, in return for a much smaller premium, obviously requires them to lose money. I put the word insurance in quotes, because this scenario is not true insurance at all. The purpose of true insurance is to spread risk, so that an individual does not bear the full risk of devastating conditions. A small number of people develop very expensive conditions, and it is unknown beforehand who those people will be. Large numbers of people pool their risk by purchasing insurance. Then those who do incur large costs have those costs absorbed by the larger group of people, through their premiums. Premiums are based on the risk that a person has when entering the insurance pool, to the best of the ability of the insurers to determine the customer’s level of risk. Suppose somebody who had not previously been paying insurance premiums suddenly comes to find out he needs a knee replacement. Under the scenario of requiring “insurance” companies to pay for pre-existing conditions, the company would have to pay for this new customer’s knee replacement, while only being paid a premium that is a very small fraction of the cost of the surgery. The person who got his knee replaced could then stop paying premiums as soon as the surgery bill is paid. A premium has to exceed the predicted cost to the company. To avoid losing money, the company would have to charge an immediate premium that exceeds the cost of the surgery, since the probability of the cost is 100%.

What incentives then apply to patients? They are incented to not buy insurance at all, until costly conditions develop, and then apply for “insurance,” which the company is forced by government to provide. What incentive applies to the company? They are incented to stop doing business, because they are forced to lose money. Both of these things happened under Obamacare. People gamed the system, “insurance” companies lost enormous amounts of money, and they pulled out of the markets. All of this was entirely predictable, and indeed was predicted by many people. It is simple reality, based on incentives. It may feel good to require coverage of pre-existing conditions, but it is magical thinking to think that it can be done, while companies continue to stay in business. It may be heartless for companies to refuse to lose money on their customers, but would you go to work if you were forced to pay your employer to do it? If you are not willing to lose money by working, then you are being heartless to require it of others.

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Dr. James Brook is a Direct Primary Care physician in the state of Idaho, offering affordable primary care to patients willing to pay affordable, direct fees at the point of service.  Visit Dr. Brook’s website for information about his innovative health care model, and to learn more about his health care reform philosophy, clearly illustrated in his book, The High Price of Socialized Medicine.