Pre-existing Conditions
Filed under: 2008 elections, Health Care, John McCain — marc moore on April 22, 2008 @ 5:45 am CEST
At the Wonk Room, Elizabeth Edwards gives a very effective rebuttal to John McCain’s claim that she took a cheap shot at his health care plan. It’s obvious that Mr. McCain is clueless about what allowing insurance companies to cherry-pick customers would to people with pre-existing conditions.
Mrs. Edwards’ expertise with the medical industry comes from personal experience, something that may make the health care issue too personal for her to view objectively. But she’s right about the negative impact of pre-existing condition clauses in health plans.
…the problem with Sen. McCain’s health care plan is not how it affects us –- but how it affects the tens of millions of Americans with preexisting conditions who, unlike Sen. McCain and myself, do not have the resources to pay for quality health care.
That is not a cheap shot, it is a potentially life and death question for tens of million of Americans.
Melodramatic, perhaps, but not incorrect.
In my admittedly casual observations, I’ve witnessed families driven to bankruptcy by complicated pregnancies not covered because they were "pre-existing", a close relative suffering through severe pain for an entire year waiting for insurance to cover her, and have personally been afraid to change jobs because of the very real risk of an insurance technicality jeopardizing my family’s financial situation.
As I’ve said before, it frankly makes sense for sicker people to pay more health care dollars than those who are healthy. But if we assume that a health care insurance system is required - not the case, but assume it anyway because it’s a political, if not an actual, fact - then is makes sense to dilute the risk over the entire population rather than creating two coverage levels for those with pre-existing conditions and those without.
Why? Because driving down prices at the group level for the have-nots - a good place to be, in this case - will result in higher prices in the "have pre-existing conditions" pool.. For Democrats, at least, this is the opposite of what is desired.
Edwards again:
Insurers will disqualify you for just taking certain medicines because of the possibility of future costs, including common drugs as Lipitor, Zocor, Nexium, and Advair. People who have had cancer are denied coverage and those who get cancer run the risk of simply being dropped by their insurer for any excuse that can be found. And insurers make it a practice to deny coverage to individuals in high risk occupations, such as firefighting, lumber work, telecom installation, and pretty much anything more risky than working in an office.
Also true, which is another reason why we should simply deny insurers the right to cherry-pick customers if we’re going to go down the universal health care road as a nation.
But should we do that? What exactly is wrong with people simply paying for their health care as they go, assuming their own risk and reaping the rewards if they remain healthy? It is, after all, not a coincidence that health care costs began to skyrocket after the insurance industry gained a de facto oligopoly in the health care market place. A system that could be gamed was put into place, then it was gamed. No surprise. But the assumption that the health care insurance system is needed at all should be challenged.
John McCain isn’t going to do that, despite his plan’s focus on Americans buying their own health insurance. Not only does it not cover people with pre-existing conditions, McCain’s plan exacerbates the problem by (now) calling for a "special Medicaid trust fund" to do just that. Bad and worse.
What none of the candidates have said is that the fundamental problem with health insurance is the lack of competition in the market. Yes, multiple vendors compete for pools of customers. But as a consumer you and I have little or no choice about which company gets our health premium dollars or whether the coverage levels they offer are acceptable. Employers decide, often based on what’s best for the bottom line as much as what’s best for individuals. Consumers may have the option of the HMO or PPO plan, if they’re lucky, but little else. Where is the competition? Where is the choice?
Furthermore, consumers are almost always locked in to their health care choices for a year at a time. If you’re getting lousy service or the insurer is not meeting their obligations, you’re pretty much out of luck until next year, at which time your choices will likely not be any better, assuming that you’re still working for the same organization.
All of which makes Hillary-Care or the equivalent tempting to people tired of fighting with an incomprehensible system that, at times, seems to have been deliberately designed to prevent quality heath care from being delivered. It’s the easy solution. But it’s also the wrong one, as numerous other countries can attest.
What’s needed is more choice, not less. More options, not fewer. More competition, not another government-run monopoly.
As an employee of XYZ Corporation, why does the company limit my health care options? What does employment have to do with health insurance coverage? Nothing. It’s an artificial relationship that needs to be broken as the first step in fixing a flawed system. While it’s great if an employer wants to subsidize health care, it’s also a disaster when the company’s HR department dictates choices to hundreds or thousands of people. Employees would be better off with a cash subsidy and the ability to choose their own tailor-made insurance packages.
Insurers wouldn’t like this because they would have to compete harder such an open market. But it’s this competition that would provide both choice and cost reduction if it were present in the market.
In a competitive market, those with pre-existing conditions must expect to pay more for their insurance. Naturally, as they tend to use more health care services. But a competitive market does not allow for exorbitant levels of discrimination, only those warranted by the costs and risks involved. On the whole, this seems like a better, more fair system than any of those put forth by the leading candidates in the presidential race.
1 Chris
April 22, 2008 @ 3:15 pm CESTA few comments from someone who works in the "industry"
1. Personal experience is valuable but it can be very dangerous in the conclusions it leads to. Breast cancer, Elizabeth Edwards condition, is a good example of that. Because of the "political importance" of breast cancer we have many state and national mandates regarding coverage. Setting aside how much we value each of those mandates (i.e. breast reconstruction, mammography coverage starting at age 40, MRI coverage), mandates do raise the cost of coverage. It is clear, the higher the cost, the greater difficulty employers have in covering their employees, particularly smaller employers.
2. Please note, in a large portion of the insured (those covered by their employer as part of employment) pre-existing conditions are not an issue. If I presently work for GM and I have diabetes but then get a new job at Ford, I won’t be "excluded" because of my prior condition. Now if I go out on my own and try to buy insurance (an individual policy) that will come into play.
3. There is competition, there are choices. I believe a big part of the "problem" is that the choices cost so much, particularly on an individual level. But that is how insurance works (i.e. spreading risk over a larger group). Health insurance is not a "pre-payment plan". And in any payment scheme (i.e. insurance vs. government run health system) we will be spreading costs over a larger group. The arguments come in when we discuss one’s "fair share". And the related argument is the "fairness" of illness (i.e. congenital disease due to no personal behavior vs chronic illness due to poor lifestyle)
3. "Incomprehensible system". Its not a system.
4. "Why does the company limit my options" The irony there is, I believe, many companies would be very happy to "give you your freedom". However, they’d want you to pay for that freedom. Many small businesses give their employees "complete freedom".
5. Insurers are "fine" with the movement to "taylor your own plan". Just remember, each "unique" plan will be a tiny bit of business. The insurers will probably focus more energy on getting a large client (i.e. an IBM) vs a lot little clients with difficult to administer individual plans. You’ll note that the largest governmentally run program, Medicare, doesn’t offer "taylor made plans". They have a package that you can get/buy and by and large leave the "tayloring" to you (i.e. Medigap coverage or your own dollars)
2 Nihat
April 22, 2008 @ 7:42 pm CESTRegarding employment-based group insurance and individual insurance…
Are there (or can there be) other scenarios to provide group insurance? I’m not talking about government-run programs, where the group is defined by need or age group. I’m curious as to why for example residents of a school district/town/city/etc cannot shop for insurance as a group. What is it that makes employment-based regime work (desirable for the insurer)? And what, if anything, would make the other undesirable? Is it that the premiums are guaranteed to flow in, or that people rarely opt out since the employer generally pays a good portion of the premiums in the employment-based regime? In a residence-based scenario, it’s hard to imagine a mayor or city council providing similar guarantees or subsidies. But other dynamics advantageous to all parties may well arise. Quality of schools is a big point of advertisement for cities; quality of health coverage could be another one, and cities may well have things to do better to help reduce costs.
3 Chris
April 22, 2008 @ 9:50 pm CESTThere are other means of gathering people for insurance purposes, an association for example. I beleive these have become less popular because of cost issues.
4 Nihat
April 22, 2008 @ 10:59 pm CESTChris,
"I beleive these have become less popular because of cost issues."
Is that because, in an association, there is no employer to subsidize the premiums? Or, is it because it is not as desirable a scheme for insurance companies, and hence, they don’t offer as good rates? I don’t know, but with a freely formed association not anchored firmly to a reasonably random sampling method, you might end up with a biased pool.
5 JudasPriest
April 22, 2008 @ 11:34 pm CESTHealth care costs can be reduced if the middle men, i.e., insurance companies, medicine importers, pharmacies are removed from the equation. Why cant each doctor/hospital offer a fee per diagnostic code that has a ceiling-cap regulated by the federal health organization. Likewise, the drugs can also be regulated in the same manner; a nominal price per medicine and let the market competition happen underneath these maximum values for the sake of the insured as something positive for once in this capitalist world. This is the root-cause of the high health care problem in US regardless of having private or universal insurances.
The insurances have a list of "reasonable" charges for each diagnostic code. They call this a nationally averaged health data for each geographical location that differs from one zip code to another. I asked to access this data but given a definite "no" by my insurance company. I’d be charged for it but I’d not be given the access of the data, what a nice-setup. I dont believe that Mc Cain’s plan if there is any would do anything that would harm these middle-men insurance and medicine companies as it’d be totally against the Republican’s party policy. I have at least some hope that the tables can be turned by Obama more aggresively than the other candidates.
6 Chris
April 23, 2008 @ 7:07 am CESTAdminstrative costs and profits across all payors total about 7% of the total expenditures for healthcare. Our percentage is higher than other western Democracies. The UK does about 3%, France 1.5%. Having said that we Americans annually spend more than 2.5 times what the average Brit does (slightly less than for the average Frenchmen). So while eliminating admin costs would help (and even the UK can’t eliminate them) that still would get us near our fellow western democracies. Bottom line, we Americans spend too much on healthcare across the board
7 Chris
April 23, 2008 @ 7:09 am CESTThat should say "that wouldn’t get us near our fellow western Democracies"
8 Tully
April 23, 2008 @ 4:24 pm CESTAdminstrative costs and profits across all payors total about 7% of the total expenditures for healthcare.
You mean for the U.S.? Source, please? (I agree with your conclusion.)