Friday, May 5, 2017

Preexisting conditions

This is Joseph

It looks like preexisting conditions may be back as a way to increase the costs of health insurance, and this is a bad thing.  Why?

In traditional insurance, if your house burns down then the insurer makes whole the loss.  In medical insurance, a major medical event may have sequels for many years.  If you change insurers (or your insurer goes out of business) then the original insurer is off the hook for continuing costs.  The new insurer looks at the ill participant as a "house already on fire" and would like to not cover these ongoing costs.

There is also an information issue.  If a house burns down twice then that might just be bad luck.  But if a person has two heart attacks, is the second one a random event or a sequel of the first one.  It is pretty clear that we don't want courts adjudicating this question on a case by case basis (or people being denied care because nobody can figure this out).

The most logical solutions are regulatory (like the Affordable Care Act implemented) or structural (like implementing single payer health care).  A portable system of health insurance might also work, although do you want to bet on your insurer being solvent for forty-five years?:

But there is a reason that preexisting condition clauses are unpopular.  Not because people want a free lunch (although some of that may always be present) but because it opens people up to random events (employer bankruptcy, anyone) leaving them unable to afford health care.

And before anyone talks about market solutions, please try and actually use "self-pay" as an option in a modern medical setting.  I actually tried this and it was very difficult to be seen by an MD (and only MDs can do things like prescribe antibiotics -- which can be life saving).

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