In the Affordable Care Act, AKA Obamacare, there is a provision that requires health insurance companies cover pre-existing conditions. While the majority has condemned the insurance mandate of the ACA, most are in favor of pre-existing condition coverage being forced onto health insurers.
However, I feel that this is unwitting hypocrisy. How can someone oppose the government forcing them to pay for something but be OK with the government forcing someone else to? We oppose the mandate because we empathize with those who feel they don’t need to buy health insurance right now. But with pre-existing conditions, we then imagine situations where we lose our job and insurance and then are unable to get coverage because of pre-existing conditions, and lose our wonderful powers of empathy we had a moment ago and decide “f*** the insurance companies.”
This is what happens when people don’t care where money is coming from or who the loss hurts, as long as it benefits them personally.
It seems cruel to people that insurance companies would deny pre-existing conditions, but quite frankly, it’s wrong for us to expect them to cover them. I’d like to think it is because people don’t fully understand the issues with this, so having an insurance background, I’ll try to explain.
Imagine you decide to trade in your car which happens to have a irreparably damaged engine—now only serving the function of an industrial-sized paperweight. The car should be worth $5,000, but it needs $3,000 worth of repairs. The dealer takes the car in on trade for $2,000, and then resells it without fixing the engine. Instead, they sell the new buyer a $1,000 warranty. The new owner takes the car to a repair shop to address the blown engine, submits the claim, and now the $1,000 policy is supposed to pay for a $3,000 engine repair everyone knew it needed before all of this started?
The insurance company would immediately take a $2,000 loss that it would have no way to recover since the policy was paid in full up front for $1,000. While the consumer and dealer might think this is awesome, the insurance company and all its employees who are about to go out of business because they’re repeatedly taking unrecoverable loss, won’t be as pleased.
The ultimate truth is that covering a pre-existing condition is not insurance, it’s a grant.
Insurance is designed so that the insured pays a premium up front, and in return, the insurer takes a financial risk that the insured can’t afford to take themselves. What’s the risk you ask?
Imagine you open a collision policy, and then pay your first premium of $200. On the way home from the agent’s office, you plow into someone and send them to the hospital with a quarter-million dollar medical bill. Guess what? The insurance company just lost $249,800 on you, and there is nothing to stop you from canceling your policy immediately after, leaving them with a massive loss. That’s a legitimate risk they take every single day.
The way they make a profit is by employing actuaries who calculate the insurance company’s anticipated claims using mathematical models, then the insurer charges a percentage above that in hopes the actuaries are have nailed their projected losses. You the consumer benefit because you passed that risk of a $250,000 settlement you might have incurred and can’t afford onto the insurance company, in favor of a monthly payment you can afford.
Here’s the reason I say that covering pre-existing conditions is a grant. What is to stop you from dropping your insurance company after you’ve had a massive claim like that? The answer is nothing. In the accident situation I explained, it is the risk the insurance companies take. While they lost, risk is the business they are in after all.
But in the pre-existing condition situation, there is absolutely no risk. You already have the condition, and they are going to be expected to pay for it. The word risk implies they may or may not incur damages, but with pre-existing conditions, risk is replaced with certainty because now they are liable for something you knew existed—because it was PRE-EXISTING.
Imagine you owned an insurance company and someone drove up with their car on a tow truck smashed to bits, requesting to start a full coverage policy with you. Are you really going to agree to that deal knowing that the claimant is going to give you $200 only to file a $10,000 claim tomorrow? If you’re answer is yes, you may want to avoid starting your own company. So, using the “Golden Rule” as a standard, why are we doing unto them, what we wouldn’t want done unto us?
I am not a heartless person who thinks people should be left to die. But, aside from the obvious personal responsibility issues of people who can buy insurance but opt not to, I believe we should not be treating insurance companies as if they’re Satan in business form, and that taking advantage of them should be considered an acceptable or even honorable practice. They employ a lot of people and help keep our economy strong by assuming those risks most of us can’t afford for a nominal fee we can. If you don’t like it, feel free to take that risk yourself if you can afford to.
Contrary to left-wing beliefs, insurance companies do not have a bottomless wallet. They can, and often do, go out of business if their losses become excessive, just like any other business. Which hurts all the people who work for them.
So while this law doesn’t pass the costs onto the taxpayer per se, insurance companies will pass it to the consumer in the form of raised rates, lest they go out of business. Many of you have no doubt noticed the rate increases already. And while we’re at it, taxpayer and consumer are generally the same people; it’s just the former implies the government pilfered a few bucks first.
There is a better way to improve the health care system through deregulation and tort reform which would lower costs. Taking advantage of legitimate businesses that are then forced to pass those damages onto us is not the answer.
2 thoughts on “Why Pre-Existing Conditions Matter”
While this article does a good job of explaining why preexisting conditions aren’t really insurance, it doesn’t address the fact that the preexisting conditions mandate was legislated in tandem with an individual mandate requiring individuals purchase health insurance. Hence, you don’t have the issue of someone driving up with a wrecked car asking for car insurance, because there’s already a law requiring them to purchase insurance. By the way, you ARE required to have car insurance to drive on the roads for similar reason– they don’t want people crashing who can’t afford to pay for the damages and who don’t have insurance.
It also doesn’t address a libertarian answer to what we do with these people with preexisting conditions. Is the answer to simply lower healthcare costs with market reform so that when they are charged higher than market rates it is affordable?
So what is the Libertarian answer for people? You’re very good at explaining the pain, cost and problems with the insurance companies’ POV. And what of people with pre-existing issues (like myself)? While I agree the regulation on the whole industry is a patchwork quilt of mess, the bottom line is that I am one of those people who’ve suffered two increases in two years of more than 20% each. I’m done! So I use Covered care to get cheap rates, high deductibles and yes, covered pre-existing, because I have no choice. Trying to keep pre-existing off the table until proper tort reform is in place is foolish. Fix what helps people NOW. (And trust me, those old, white, non-educated, Evangelical people who all seem to love Trump would SCREAM bloody hell if they’re Medicare were taken away.)