Monday, July 27, 2009

Preexisting Condition Insurance Coverage Makes Zero Sense

One of the big issues regarding the healthcare overhaul is the problem with people not being able to get insurance coverage on Preexisting Conditions. Of course they should have trouble getting that coverage. Indeed they should not be able to. Insurance is all about what might happen, not what already has happened. People pay a certain amount of money to the insurance company so that IF something happens to them the damage will be mitigated. The amount of money they pay is generally less then what the damage would cost them. Insurance companies make their money because the catastrophe does not happen to everyone. If that did happen then the insurance company would fail (think AIG).

Let us look at this 'preexisting condition' notion in a field outside of healthcare. Someone does not get car insurance, then has a major accident. Should they be able to go to a car insurance company after the accident and get insurance to fix that damage? The answer is obviously not. What about a person without home insurance trying to get a policy after their house burned to the ground? Again, of course not. Insurance companies would all go bankrupt if people did not have to pay to be covered and instead could wait until after the damage was done to sign up.

It just does not make any logical sense. Insurance companies do not exist to heal people, nor to help them out of benevolence. Those organizations are called charities, and you may note that none of them are profitable relying on continued donations to keep running. Insurance companies are there to offer risk mediation. You pay them and then they take on the risk of you having an accident or coming down with a serious medical condition. If you did not have to pay the monthly fee to keep your coverage, and could still force the company to pay your medical bills by rejoining (or joining) later with a preexisting condition, everyone would do that. The result would be no more insurance companies as they are forced to pay out huge claims without getting any money from the monthly upkeep fees.

People without coverage and with a condition do present a problem to the system in how to deal with them. Forcing insurance companies to pick up the tab is not the answer. Instead of solving the problem it will create a much larger problems. It will create a huge incentive to become one of the uninsured knowing you do not have to keep paying the maintenance on your insurance to get coverage and bankrupting health insurance companies.

If I were a slightly more cynical man, or one more inclined to conspiracy theories, I might think the resulting problems may actually be the goal. With all the private insurance companies forced out of business and the masses uninsured, a single government system would be the likely result. Unintended potential consequence, or a means to the true end goal? Either way, that would seem to be the most probable logical result from this otherwise illogical policy objective.

1 comment:

  1. I think your right, that is what is going to have end up happening- a single payer system, because the system now is illogical, the contradictions are clear and the only people benefiting form the way things are now is insurance companies that it seems you have taken it upon yourself to defend.

    Medicare runs at a 4 percent overhead, as opposed to private companies which do a 30 percent overhead so they can make profit. Health insurance, or health care should not be for profit,and if we want to be realistic it doesn't have to be. Instead if we had a risk pool of 300 million people, running at the 4 percent overhead- it would be solvent for generations. Our taxes could be lower because were spending less overall on health care- we already spend way more on healthcare then other countries- wed be getting better outcomes, and a huge burden on employers would be lifted. Structurarally it would also make it alot easier for us to recover economically, people would not be sinking costs into health care and could spen on things like consumer items, travel, entrenepurship etc, that actually create jobs.

    unfortunately we have a political system designed to protect the interests of "slave power", which today means private health insurers, a rightist propaganda apparatus dedicated to protecting this modern "slave power" which is desinged to distract and deceive people and halt democracy.


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