Why in the world should **Insurance** companies cover pre-existing conditions? (salary, illegal)

[GregW]

One of the reasons I closed (without any outstanding debt btw) my own alternate energy consulting company was the increasing cost of health insurance. That was before my wife had a kidney cancer. I am still working for the health insurance and until we pay off the mortgage. I do not mind taking substantial financial risk but I do not feel I have the right to risk my spouse. After I retire I may rebuild the business or just ride my motorcycle. Maybe both.

[villageidiot1]

Originally Posted by sware2cod

Preexisting conditions ARE covered by insurance...IF you get Insurance from your employer.

Individual policies are treated different and they usually exclude you if you have diabetes(etc) or charge you a huge amt for the policy. Small business owners and early retirees(prior to 65 years old) rely on Individual policies if they can't get insurance via an employer.

Would be nice if Individual policies were administered the same as Employer provided policies...where we could buy insurance and pay for it even if we have a thyroid issue or diabetes.

Lots of people are working at age 58...63 ONLY to get health insurance from their employer. They have the funds to buy an individual policy, but that individual policy won't cover someone because of prior bre.ast cancer. So the person is stuck having to work until age 65 just to get health insurance.

Just think of all the jobs that are being taken up by folks that are only working to get health insurance. Once they can buy it elsewhere (without preexisting condition clause). then they will resign the job. The job related insurance does NOT have the preexisting clause, so work, work, work just to have access to health insurance, even if you have enough money to retire. working for the insurance, not for the money.

Excellent points! But take it one step further, why should employer-based health coverage be legal? If it didn't exist, everyone could buy health insurance in a competitive market. Health insurance companies would have to compete and educate consumers. My wife and I have both worked in the healthcare field and have difficulty understanding our health insurance policies.

Originally Posted by charolastra00

This is also true of retirees with children under 26 who have preexisting conditions. My college roommate was diagnosed with Chron's disease at 20. He has had several surgeries in the past 4 years and must take very expensive medications.

His mother cannot retire, despite being in her 60s, because her son needs her health insurance. Despite getting a hard science degree from a top 30 university, his health issues have left huge gaps in his resume (lack of internships and taking 6 years to complete a degree at a school that graduates 95% of people in 4) and he has been stuck working a McJob with no health insurance. He is uninsurable - no health insurance would be available to him and despite his low income, he doesn't qualify for low income insurance in his state. He's been trying to get into high-risk pools, but without much luck. Luckily his mother's employer offers insurance, but she has stuck around for 5 more years than she anticipated due to her son's illness.

People forget that young people get sick. It's not just the elderly. My friend will live a long life, with some medical intervention, just like I will most likely live 60+ years as a cancer survivor. And yet, from our early 20s, our yearly medical bills are WELL over our yearly incomes.

What do we do?

This is happening more often with the current economy and with many new jobs not providing health insurance.

Originally Posted by MTAtech

The problem arises when a person becomes unemployed or wants to become self-employed.

Knowing that one will not be eligible for health care coverage keeps some employees working at their firms instead of starting their own businesses. That's an unintended consequence to our pre-Obamacare system.

According to some fascinating economic research, Is Employer-Based Health Insurance A Barrier To Entrepreneurship?, there's an unexpectedly large numbers of Americans becoming entrepreneurs within months of qualifying for Medicare (over and above those you would expect to become entrepreneurs because they were fired, forcibly retired, etc.) The reason: They now have the security of healthcare, so they can take the risk of starting private companies. It's just one of the MANY, MANY ways in which a vigorous public and private sector support each other to create a successful economy that can't occur when there's only one or the other.

Another good point in how employer-based health insurance is making the US less competitive in a increasingly competitive global economy. Any talk about healthcare reform need to start with making the health insurance market more competitive, and this means eliminating employer-based health insurance.

[Grim Reader]

Originally Posted by ALackOfCreativity

Every country has lower costs than America. All of them. And not by a small amount either.

This is why it is meaningless to say that UHC would be cheaper in America than the status quo because it is cheaper elsewhere.

An argument 100% logically equivalent to this would be saying that every NBA player can shoot 3 pointers more consistently than I can shoot 2 pointers, and thus if I tried to shoot more 3 pointers while playing basketball and less 2 pointers I would get a higher proportion of my shots into the hoop. The problem with this logic is of course, that the reason the NBA players are doing better than me is that they are awesome at basketball and I, to put it mildly, am terrible. If you looked at players shooting 2 pointers instead, they'd also be doing better than me. Does why the comparison is meaningless make sense now?

No, because that is not how comparisons work.

In your example, you belong to the group of "Non-NBA players", while you are comparing yourself to the group of "NBA players". A group selected for skill at basketball.

In terms of basketball, this is an intuitive group selection. In tems of health care provision, the USA does not belong to any such intuitive group. It belongs in the group of Bismack-type, employer based insurance provision right next to Germany. I wish I knew how to make and insert I diagram here but try to imagine a group of circles really close, Germany, Netherlands, Japan, the US, and Switzerland. A distance away, another cluster, the Beveridge-model countries such as the UK and the Nordics. A third group, separate from the two other groups are the NHI-model countries such as Canada and Taiwan.

These are reasonable groups based on how health care is provided in various nations. We'd expect costs per person in the US to be close to the costs of other Bismarck-type countries. In reality, costs in the US are vastly much higher than they are in countries that the US naturally compares to.

The point summarized: "UHC countries" is not a natural group. It contains countries very similar to the US in healthcare and lifestyle issues and countries very very different.

You are advancing the hypothesis that the group of "UHC countries" by coincidence overlaps 100% with the group of "countries intrinsically better than the USA at cost control"

This is, to put it mildly, very unlikely. The error you are making is that you see the foreign countries as far more similar to each other, and different from the USA, because they are foreign. In actual fact, the US is simply a Bismarck-type country with poor regulation and incomplete coverage.

Now, let us look at the theory. Economic orthodoxy states that health care is very badly suited to market-based delivery. Kennth Arrow won the Nobel prize in Economics in 1972 for his work on uncertainties. Among that body of work was Uncertainty and the Welfare Economics of Medical Care a work that cam to be fundamental in the discipline of Health Care Economics. I recommend reading it, it points out some of the reasons why markets do not work well as providers of health care.

The point summarized: That markets are not well suited to health care delivery is not only a conclusion we can draw from real-world observation, it is also economic orthodoxy.

Originally Posted by ALackOfCreativity

although I doubt it makes up a large magnitude of the US/Europe difference

The amount of money wasted in US health care each year is possibly more than 1 trillion dollars. Or more accurately, a God-awful Lot. That doesn't happen without people noticing. This is how they have estimated the breakdown of the spending difference between Europe and America:

Originally Posted by Memphis1979

The number is not representative of the individuals reality in those countries.

There are people here who get better healthcare then they do there. We have the best hospitals in the world, along with the best doctors.

Well, factually the US hospitals and doctors do not compare very well.

If you meant that the best US hospitals are also the best in the world, that may be a bit more realistic. However I don't think that statement leads to the conclusion you think. Who actually gets healthcare in the best US hospitals? Well, for one rich people who can pay for their own treatment. Billionaires. But that does not mean US billionaires only. A billionaire from Norway, Ghana or Russia can have treatment just the same as an American one.

And then there are the non-rich people. If a European hospital cannot provide a lifesaving treatment, in some countries the patient can go to a foreign hospital and the government has to pick up the bill. For example, in Norway about 500 people each year get treated outside the country. That treatment is for the most difficult or severe cases, and will normally land only in the hospitals that can handle the most difficult case, i.e. the best ones.

Now I can't work out the numbers here, but given that thel number of people in Norway that come down with such severe problems in a year isn't huge....I suspect that if Joe Average, USA comes down with something like that, his odds of being treated by the best hospital in America are worse than those of Joe Norwegian.

So even if the best hospitals in the US are the best in the world, it does not follow that Americans benefit the most from them.

Originally Posted by munna21977

how expensive was american healthcare for common people in 1960s or 1970s? I remember many common people from other countries coming to US for their surgeries. now only presidents or film stars come. so many americans are going to countries like India for medical surgeries. So either american healthcare costs have risena astronomically in last 2 decades or people are becoming poorer.

Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted. Break in series: CAN(1995); SWE(1993, 2001); SWI(1995); UK (1997). Numbers are PPP adjusted. Estimates for Canada and Switzerland in 2008.

Originally Posted by ALackOfCreativity

The problem is the baseless numbers are of literally no value; you might as well say most insurance companies have loss ratios between 0 and 1 and it would be of equal value. The only thing it does is to imply (incorrectly) that there are a lot of company near either arbitrary extreme, and imply (again, incorrectly) a relatively even distribution across that range.

Dig, the 10% was presented as a Massachusetts average....if we can extend that to the nation (which I doubt, but, doing the thought exercise lacking national data):

Total 'reduction' in costs from going to UHC model from insurance model (A) = Insurance industry average loss ratio (X) - added government administrative costs (Y) - reduced managed care efficiency(Z).

You formula contains a couple of errors, and is oversimplified.

First off, you are assuming that a UHC model and an insurance model are two different things. This is not true, many UHC models are provided by private insurance. You may have meant going to an NHI or Beveridge-model system, in which case you X vale is off by a lot. We'll look at that in a bit.

Second, you are assuming there will be increased government costs.

Real-world observation tells us that government administrative costs are lower in every country that has UHC. Further, the US is already running a number of public health care programs, Medicare, Medicaid, Veterans, Indians, childrens etc. Each of which has its own bureaucracy, rules renumerations, etc. This is why US public health care costs per person are already higher than most European nations. Running one set of rules for everyone is simply cheaper than running lots of different rules for different groups, and doing a lot of work to keep anyone not qualified from getting anything.

The same is the case for Z, real world experience simply shows that the care efficiency is better in a UHC environment. Thats also pretty fundamental theory, letting medical professionals control have control of the resources to maximize health care works better than letting companies have control of them to maximize profits.
Every public health measurement, average lifespan, infant mortality, amendable mortality, HALEs, DALYs, maternal mortaliy etc shows medical control of the resources to work better.

Now getting back to the formula you proposed...as I pointed out, you got UHC confused with Beveridge and NHI model systems. If you meant your formula to apply to the move to a Bismarck type system, it becomes quite difficult. That kind of system can theoreticllly have 100 % savings to government expense. I.e. it can all be financed by the employers. It all depends on the legislation.

In the case of moving to a Beveridge or NHI model, as pointed out, Z and Y will be positive qualities. Where you've really gone wrong though is X. Fist off, your savings are not only the loss ratio. You also save the entire administrative costs of the entire insurance industry, as well as the administrative costs incurred by all the health care institutions working with the industry.

Also...In the US the health care insurance industry is 600 000 people, mostly at very good salaries. The Beveride and NHI countries do not see that they actually do anything at all, and health care insurance is a small part of general insurance.

ALackOfCreativity, you seem to have though about this quite a bit, but without doing any reading up on it. Several of the things you state as fact are not just at odds with all serious economic theory, but also simply at odds with how we can see things work in the real, physical, non-theory world.

Originally Posted by MTAtech

The problem arises when a person becomes unemployed or wants to become self-employed.

Knowing that one will not be eligible for health care coverage keeps some employees working at their firms instead of starting their own businesses. That's an unintended consequence to our pre-Obamacare system.

According to some fascinating economic research, Is Employer-Based Health Insurance A Barrier To Entrepreneurship?, there's an unexpectedly large numbers of Americans becoming entrepreneurs within months of qualifying for Medicare (over and above those you would expect to become entrepreneurs because they were fired, forcibly retired, etc.) The reason: They now have the security of healthcare, so they can take the risk of starting private companies. It's just one of the MANY, MANY ways in which a vigorous public and private sector support each other to create a successful economy that can't occur when there's only one or the other.

Originally Posted by Dane_in_LA

Interesting link, thanks! I always wondered about that - I know a few self-starters back in OMG-socialist! Denmark who struck out on their own with varying success. I always wondered how people in the US with a sick spuse or a sick kid would be able to. Appears they aren't, which really isn't a surprise.

I've seen similar statistics. While the US scores higher than any other country on people who wants to start their own business, many countries have more people who actually do.

In fact the two countries with the highest rate of business startups are Norway and Denmark, countries with strong social policies. (Long article, some relevance)

[dub dub II]

We can argue all we want about the technical side of things, but at the end of the day the nature of insurance companies (particularly medical insurance companies) is such that it stops being about the business side of things and starts being about the moral side of things.

[OICU812]

The United states is not Europe or Japan, we are a very large country with a 300 million population. The tax structure, lifestyles and policies are different between the US and other countries too

In European countries most people live in tightly packed urban areas, where a few hospitals can serve many customers. In the US we live scattered all over, and we have many hospitals. I know we have more of the expensive medical equipment, like MRI scanners per capita then they have in Canada and Europe.

I think the US outlook on medical care has been to provide the best care, no matter the cost, while in Europe they provide adequate care for minimal cost. We don't scrimp on medical equipment, if you need an MRI in the US, you prob wait a couple days, and in cases when your doctor determines you need an MRI, you get it the same week. In Europe and Canada, you can wait months, because they're more concerned with cost saving, and not life saving.

[jmking]

Originally Posted by jojajn

Exactly. And since most health insurance policies are group policies linked to employment, one must be healthy enough to work to be covered. Once one becomes too ill to work, they lose their insurance after the expensive COBRA expires. It is a win-win for insurance companies!

If the company goes bankrupt (out of business) there is no COBRA to draw from. Many businesses failed these past few years, many Americans lost coverage all together. Those with pre conditions would have had extreme difficulty bridging the gap in coverage.

[legalsea]

Grim Reader: a very good post indeed. Very informative. Thanks.

[MTAtech]

Originally Posted by OICU812

The United states is not Europe or Japan, we are a very large country with a 300 million population. The tax structure, lifestyles and policies are different between the US and other countries too

In European countries most people live in tightly packed urban areas, where a few hospitals can serve many customers. In the US we live scattered all over, and we have many hospitals. I know we have more of the expensive medical equipment, like MRI scanners per capita then they have in Canada and Europe.

I think the US outlook on medical care has been to provide the best care, no matter the cost, while in Europe they provide adequate care for minimal cost. We don't scrimp on medical equipment, if you need an MRI in the US, you prob wait a couple days, and in cases when your doctor determines you need an MRI, you get it the same week. In Europe and Canada, you can wait months, because they're more concerned with cost saving, and not life saving.

Those all sound like excuses and not reasons. The reality is that while the U.S. is scattered "82% residing in cities and suburbs as of 2008," according to Wiki.

While you say the "US outlook on medical care has been to provide the best care, no matter the cost, while in Europe they provide adequate care for minimal cost," the U.S. is not the best in outcomes. France is rated #1. Your statement also is in conflict with the fact that a large percent of the population is uninsured in the U.S. and receives inadequate care.

[Dane_in_LA]

Originally Posted by OICU812

The United states is not Europe or Japan, we are a very large country with a 300 million population. The tax structure, lifestyles and policies are different between the US and other countries too

In European countries most people live in tightly packed urban areas, where a few hospitals can serve many customers. In the US we live scattered all over, and we have many hospitals. I know we have more of the expensive medical equipment, like MRI scanners per capita then they have in Canada and Europe.

I think the US outlook on medical care has been to provide the best care, no matter the cost, while in Europe they provide adequate care for minimal cost. We don't scrimp on medical equipment, if you need an MRI in the US, you prob wait a couple days, and in cases when your doctor determines you need an MRI, you get it the same week. In Europe and Canada, you can wait months, because they're more concerned with cost saving, and not life saving.

Having lived under two European systems and now the US one for a considerable length of time, I think you're incorrect, here.

Going with your example of MRIs, in the US, MRI scanners provide robust income for the hospitals running them - so of course they will tend to get them and use them abundantly. However, a three-fold increase of the number of MRI scans for emergency room patients led to no increase in the number of useful diagnoses: JAMA Network | JAMA: The Journal of the American Medical Association | Use of Advanced Radiology During Visits to US Emergency Departments for Injury-Related Conditions, 1998-2007

Putting more patients through MRI scanners may turn out not to be good medicinal practice.

That being said, the debate isn't so much on the care itself (and good US care is absolutely world-class), but on the financing model. Where the US holds the undisputed world record in administration costs as a percentage. The insurance company bureaucracy is above and beyond anything conceived elsewhere.

[Eleanora1]

Why the hell should insurance companies employees -- of all people on the planet -- be allowed to dictate who lives and who dies? Who gets access to medical care and who does not? We don't allow private companies to dictate who gets to drive on roads, go to school or get a fire put out if necessary. Why all of a sudden are we allowing someone who's only motivation is profit to decide if a breast cancer patient gets access to treatment?

How sick is that?

Insurance companies should have nothing to do with health care access. They suck at it frankly. They drive up costs, fail to provide us with value and primarily serve as parasites. Our country would be better off if we fired them.