Posted by politicalpartypooper on July 23, 2009

I’ve been posting about Health Care reform for quite a while, now.  Repeating the same arguments has become tiring, especially when conservatives have chosen to stick their heads in the sand rather than listen to reason.

But I have a new point to make, and it’s one no one is talking about.  Sure, we’ve discussed social medicine, rescission, pre-existing conditions, and the plight of small businesses who can no longer afford their own health insurance, as well as forty million Americans who have no health insurance.  I’ve approached this debate from the Public Option side, and in my haste to convince people of its merits, I’ve overlooked, everyone has overlooked, one obvious problem.

That problem lies alongside the issue of whether health insurance companies ought to be forced to cover pre-existing conditions.  It has been my stance that health insurers generally only want to write insurance coverage for healthy people, and who can blame them?  There is a vast mountain of money to be made from people who pay premiums, but rarely submit claims.  On the other hand, insurers have fought for decades against providing coverage for pre-existing conditions, and more than once, even recently, have told Congress they will never stop the practice of rescission and rejecting coverage based on health.  So how do we force them to cover these pre-existing conditions, and how do we hold their feet to the fire on rescission?

In truth, there may be no answer.  Like any profitable business, health insurers will only offer a product that they believe will be profitable.  Businesses try their best to operate within the black and white spectrums, leaving the grey areas to fools and the government.  If health insurers truly believed that they could offer a product that would account for pre-existing conditions, and maintain profitability, they would have done it by now.  In fact, we wouldn’t be discussing pre-existing conditions, because they would have been covered all along.

Actuaries at health insurers are experts in statistics.  They have data.  They have data about data.  They have stats for everything that has, can, will, or might affect their bottom line; including pre-existing conditions.  They know exactly how much money will be spent on ten people aged forty with Lou Gehrig’s Disease over the course of their lives, and they know when those ten people will die, based on statistics.  They know how often a sprain is actually a break, when that fact will be discovered, and how much it will cost to rectify the mistaken diagnosis, for anyone, at any age.  They spend incredible amounts of money compiling, sorting, and analyzing this data.  They know how much more money a man who is aged fifty with a blood pressure of 145/95 will cost than a man the same age with a BP of 140/93.  They have their actuarial tables ordered that well.

So you have to ask yourself, why would any and every insurer reject the lucrative business that pre-existing conditions could have been up until this point?  After all, managing and spreading risk is what they excel at.  If you have had a brain aneurysm, they could charge “X” amount of additional dollars, and spread the rest of the cost amongst the healthy, and still be profitable.  Why haven’t they?  Why has no one even tried?  In fact, why do most insurers deny coverage altogether for certain people with certain diseases?

The answer lies not in profitability, but rather affordability.  It’s not that health insurers are uncertain about the costs of someone aged forty-five with Type-2 Diabetes that has just been diagnosed.  They know that cost down to the penny in every location in America. Just ask them; they’ll tell you.  Then they’ll tell you that they just can’t be profitable in such a scenario.  But the truth is that they cannot be competitive, especially when their competitors refuse to offer the same provision.  But even beyond that, the costs associated with covering pre-existing conditions might well drive health insurance affordability right out the window for almost every American.

The loudest voice in this pre-existing condition debate is the fact that insurers won’t even approach offering coverage for them.  They’ve had decades to do it.  They could have devised any number of ways to profit from it, if only they had felt they could do so, and remain competitive.  They could have organized as an industry to solve this problem; could have lobbied each state to write a provision into every policy demanding that pre-existing conditions be covered by every insurer.  That would have provided them with a level playing field, and they could have safely charged appropriate premiums for that provision without compromising competitiveness and profitability.  Yet they have not.

Why not?

I am guessing here, but in my experience with the industry (I sell insurance as part of my advisory practice) if they won’t write the policy, it’s because they can’t make money off of it, or cannot be competitive.  It’s about affordability.  Forcing insurers to cover pre-existing conditions could very well create a situation where those insurers have to raise prices so high that their policies become unaffordable for the majority of Americans.  Insurers profit based on the masses, not on individual policies.  They make the numbers work to their advantage.  Is it possible that by including pre-existing conditions in their policies, there is no way for them to work the numbers to their advantage?  Is it possible that such provisions are so fraught with danger for private insurers that they won’t offer them at any price?

Conservatives claim they want health care reform.  They claim they want private insurers to be allowed to fix the system.  But what if those insurers don’t want to?  What if, even offered vastly higher premiums, they decline to offer a product?  They’ve had the ability to offer such a product since their inception, and have refused.

This question must be answered.  How will forcing insurers to cover pre-existing conditions and not reject customers based on health affect the cost of their policies for most Americans?  Why aren’t the insurers already offering such a product?

Is it affordability?  What do they know that they aren’t telling us?  Conservatives, do you really want to force this issue?  You’ve been so loudly going on about deficit spending and raising taxes on working Americans.  Have you at all considered what forcing insurers to cover everyone would cost?  And if insurers themselves will not offer a product on their own, what does that tell you about its feasibility?

In the end, is the public option the only one that can work?  After all, insurers aren’t stupid. They exist to profit, and they profit by selling to the masses, controlling costs, and reducing claims. Conservatives are asking them to change their business model, throw caution to the wind, and cover everything.  Hypocritically, conservatives are putting themselves into the position of forcing private businesses to do business they don’t want to do.

When all the dust settles, what will be the result?



  1. Elizabeth said

    What’s going to happen, I suspect, is that to declare a political “victory” by both Dems and the GOP on the health care reform, the insurance companies will be mandated to take on people with pre-existing conditions, but their premium caps (IF there are any premium caps) will be obscenely high.

    So private insurance will be unaffordable to most people with pre-existing conditions, even though, in theory (and their warped practice), insurance companies will not be permitted to refuse anyone. But the law will be in place and our politicos will have plenty of opportunities for boastful photo-ops as a result.

    The health “care” reality for most Americans, however, will remain unchanged.

    As long as we pretend that profits and health care can peacefully co-exist, we are screwed.

  2. Elizabeth said

    Here is some comic relief related to the title of your post. You know, laughter is the best medicine — and soon it may be the only one affordable to most of us. (What am I saying — it already is [the only affordable one].)

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