Wednesday, November 20, 2013

Pre-existing conditions

Mark Palko sent me a link to a Consumer Reports discussion of pre-ACA individual market healthcare.  It was scathing, giving examples like:
The Georgia real estate agent whose group health plan was folding and who couldn’t find replacement insurance unless it excluded coverage of her $1,700-a-month rheumatoid arthritis medication, without which she would quickly become disabled.
I think that the example above gives a good example of what makes the market in health insurance challenging.  When you link your insurance to your job, some people will inevitably lose their jobs.  These people will have paid into insurance when they were healthy but no longer have access to that plan.  Thus they have serious problems ever getting coverage.

Now this would be fine if acute risks were all that we were insuring against (like a house fire).  But we also insure against the development of a chronic condition that is expensive to treat and ongoing.  Now add in recission -- health plans checking to see if you gave perfectly accurate information only after you start claiming benefits (notice that they do not offer to return previously paid premiums as part of this process) and it is clear that the individual health plan market had some serious drawbacks.  In fact, given recission, it is unclear if people who lose inexpensive plans were actually insured in the case of a disaster. 

Now the private market solution to this set of problems is a regulated series of exchanges.  If these exchanges cannot be made to work, and even private companies seem to have trouble with doing so from time to time, the next best solution would be to expand public coverage.  What if anybody could opt-in to Medicaid?  Would that really be a disaster?  It would hurt medical wages and simultaneously expand demand, but we could compensate by expanding medical licensing to groups like Nurse Practitioners provide care to Medicaid patients.  Then private insurance is supplemental (like the UK) and these issues become a lot less concerning (because insurance reputation begins to really matter). 

These issues are worth keeping in mind as we watch this experiment unfold.   

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