Insurance requires risk, or uncertainty. The risk is priced based on estimates of potential losses. All historical information that impacts the future risk estimates can theoretically be used to price that risk. That being said, there are different ways to address historical information, which include:
[ul]
[li]Ignore it[/li][li]Price it[/li][/ul]
If the risk is ignored, then the insurer may face adverse results - they may not be able to sufficiently cover the risk with the associated premium. If this is the option that is chosen, then insurance companies will need to take other steps to try to exclude participants that may cause adverse results. If they are not able to do this sufficiently, they may leave the market entirely by choice or involuntarily.
If the risk is priced into the premium, there will be some individuals with historical factors that result in a premium that is higher than some individuals will be able to bear. Costs go up with age, typically, and this can be managed. Costs go up much higher with cancer treatments, and this may be much more difficult to manage for an individual. If we price this risk and some individuals are unable to manage the associated premium, the choices then become subsidizing individuals in some way, or allowing them to go uncovered.
That’s the challenge with pre-existing conditions - we reasonably know that these things will drive higher costs - it then becomes a question of who should pay.
For auto insurance, if you have a history of auto accidents, DUI, etc. your auto insurance premium is adjusted for that. At some point, all insurers may make the evaluation that the risk is not worth any premium and refuse to cover you. In these cases, the State may run a mandatory pool, or an insurer of last resort. All other insurers in the state may be required to contribute to this mandatory pool so that drivers who cannot get insurance by other means are able to do so, albeit at a high rate. That could work for health insurance, though it could be seen quite negatively as it would funnel high risk folks into lower tiered coverage.
In my opinion that’s a poor analysis of the problem. The specific circumstances when an insurance business has a problem are when both of the following are true: (a) insurance is optional for the customer; (b) the customer knows pertinent information about their individual risk that the insurer either does not know, or is legally barred from using to adjust individual premiums.
In healthcare, if insurance companies are obliged to insure everyone equally at the same price, and the insurance is optional for the customer, the customer base will skew towards people who expect large medical bills, driving premiums up, and creating a vicious circle where more and more healthy people with low expected medical expenses will choose to eschew insurance altogether.
The two viable solutions, then, are not to price it or to simply “ignore” it. They are:
Price it. Allow insurance companies to discriminate based on pre-existing conditions, fucking over anyone who’s unlucky enough to be sick.
Make health insurance mandatory for everyone, so that healthy people must contribute to the insurance pool.
The ACA included a half-hearted attempt to make insurance mandatory, through modest tax penalties for those who choose not to insure. The fact that those measures were far too weak is the main reason the ACA is failing.
A far better way to implement mandatory insurance is to fund a universal public healthcare service out of general taxation.
Making insurance mandatory is more of a secondary step. Doing this assumes that it’s not going to be priced. If it’s not going to be priced, making insurance mandatory isn’t the only path forward. But yes, mandatory purchase is one way to mitigate the unpriced risk, but not the only way.
Let’s assume for the sake of argument that we agree that discriminating based on price is morally wrong, i.e. people with pre-existing conditions should get healthcare, that there should be (in some form public or private) universal healthcare.
If private individual insurance risk is not priced, what alternatives to mandatory insurance do you have in mind to mitigate the unpriced risk?
It seems to me that all of the proposed measures (e.g.in the current bill) to compensate private insurance companies for unpriced risk are just half-hearted, ineffective and underfunded attempts to implement mandatory insurance by indirect means. If general taxation is paying for a public fund to subsidize high-risk insurance pools, that’s just a poorly-implemented way for healthy people to subsidize the care of sick people, i.e. exactly the same principle as mandatory insurance through general taxation paying for universal healthcare.
From a UHC pov, health - good or otherwise - isn’t a moment in time, perhaps set at some point in your teens or 20s.
It’s an 80+ year investment in well-being, inc. the well-being that comes from knowing no one you love or care for, family or not, will ever have to worry.
Besides, all it takes is one car going through a red light and driving off for an otherwise ‘healthy’ person to need a lifetime of care.
So this is my thought; don’t look at healthcare through a private insurance lens. Look at it as a lifetime without healthcare worry, for you and everyone you care for.
I understand that insurance companies are ‘for profit,’ but I think we can question whether they should be.
Not everything has to be run for profit. We thankfully recognize that police and fire services should not be for profit endeavors. I think it is reasonable to have the opinion that health insurance should not be a for-profit entity, even if it current is.
Even before the PPACA there were protections in place that would prevent such a problem. So long as continuous coverage had been in place before an employee changes from one employer to another, or before the employer changes plans, the new insurer could not invoke pre-existing conditions and refuse to pay.
Many of those protections are spelled out in HIPAA which is more often discussed for patient privacy protections and restrictions on releasing patient information. But the act itself is the Health Insurance *Portability *and Accountability Act of 1996, with portability of coverage being a key feature outlined in Title IV.
The problem is that many people in the U.S., who have only ever experienced the “insurance” model, and who were told universal healthcare was what Communists do, would not previously accept what is obvious to the rest of the world.
I was born in the U.K., to me the best and simplest “mandatory insurance” is achieved as part of our social contract from birth, i.e. universal public healthcare funded out of general taxation.
Perhaps more Americans are now starting to realize what their country actually needs. Politically, maybe we just need a way to rebrand the economics of universal healthcare funded out of general taxation as the “Republican Freedom Healthcare Bill For All Americans That Obama Won’t Get Credit For And That’s Certainly Not Socialist”.
General funding is an alternative - we do this for Medicare, among other things.
Mandatory risk pools is an alternative - I mentioned this upthread in regards to auto insurance.
If you read that part of my post that you didn’t quote, it should be obvious that I agree with you.
My point was that US healthcare problems are attributable entirely to a failure of government policy, not to private for-profit businesses acting rationally in the prevailing regulatory environment. It’s a corollary that under sensible US government healthcare policy these business either would not exist at all or would operate under an entirely different regulatory environment.
The thing is that the reason government policy has been a failure is because the private for-profit businesses influence the government policy in such a way that it is designed to benefit them and thus fail for the general public.
Yes, good point. In pushing back against an earlier post that implied that it’s all the fault of evil corporations rather than government policy, I should not have portrayed those corporations as just innocent businesses just trying to make an honest buck.
It’s still part of a model in which everything turns into a contest. If the insurance company denies coverage and the insured person isn’t able to quote back chapter and verse of the policy or, in this case, applicable laws, and in other cases even judicial decisions; in other words, if the person affected can’t think like a lawyer…
they’re screwed.
Health shouldn’t be a duel to the death, wallets at dawn.