Pre-existing Condition

I am responding to a comment to my previous post that asked among other things about pre-existing conditions and health insurance. What I believe the comment was asking is why are pre-existing conditions used by insurance companies to determine coverage or the expense of coverage. A pre-existing condition is any diagnosed (and sometimes undiagnosed) condition that a person has prior to obtaining health coverage. Many insurance companies will deny coverage, set exorbitant rates, or establish exemption of coverage for anything related to that pre-existing coverage. All insurance companies use pre-existing conditions to deny coverage, but just how they do this differs from State to State depending on local laws (Massachusetts, New York, and New Jersey are a different case).

Insurance companies are for-profit corporations with a bottom line to defend. Here’s the real incentive for using pre-existing conditions: five percent of the population accounts for 49% of the health care costs or the fifty percent of the population with the lowest health expenses account for only 3% of the overall health care expenditures. Also, the 15 most expensive health conditions account for 44 percent of total health care expenses (Stanton 2006).

Armed with information and placed in the a position to defend the corporation’s bottom line I believe that the common sense tactic to adopt is to do anything to avoid the most expensive 5% of the population or more specifically, those people who have any of the most expensive 15 health conditions.

It’s all economics. Insurance companies will flatly deny coverage to those with certain pre-existing conditions or strategically impose astronomically high premiums to make such coverage unaffordable. The market at work. Do you like this system?

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4 responses to “Pre-existing Condition

  1. i dont know but can this all be understood by the common man like me ?
    i hope ill get more simpler language . rest is good .

  2. CoDV,

    Maybe that is exactly the point. Why does it have to be so complicated? A question our country needs to answer is whether we should as a nation/community provide care to the sickest without hoops and restrictions or are we so fiercely independent that the sick should pay more or be without quality care? The “pre-existing condition” tactic used by insurance companies shuts the door on some of the sickest people, but it makes economical sense. What wins out – taking care of your neighbor or economic sense?

  3. lpauls, your highly pejorative two options, “taking care of your neighbor or economic sense”, can be viewed from another, more realistic perspective. Consider these two alternatives:

    Seeing your insurance rates increase because your insurance company assumed the burden of responsibility for an illness that occurred under a prior provider’s (or no insurance) plan

    OR

    Keeping your rates affordable by ensuring that your insurance provider only assumes risks for those who were responsible enough to buy a policy (and begin paying premiums) BEFORE becoming ill.

    Restrictions on insuring those with pre-existing conditions do more than just protect the insurer’s bottom line. The keep rates affordable for all of their insureds. If a company were to break ranks and begin ignoring pre-existing conditions, they would have to raise their rates, causing them to lose all customers EXCEPT those with existing illnesses, or see their profitability decline, either one of which ultimately puts them out of business.

    The notion of insurance is that a pool of individuals pay premiums so that, in the eventuality that one of them incurs an unforeseen accident/illness, their bills can be paid from the accumulated premiums. Would if be reasonable for an insurance carrier to assume a fire insurance risk for someone who’s house had burned down the day before he decided to buy a policy? No…that’s crazy! But no crazier than providing insurance to those with pre-existing conditions. Unfortunately, our compassion for the ill and the indigent don’t always contribute to us looking at issues in the most rational manner. (As should be obvious from my posts to date, I’m not afflicted by such inclinations.)

  4. I agree that insurance companies would be out of business quickly if they did not pay attention to pre-existing conditions (and I do not blame them), but my point remains that this is a shame. Health care is there to benefit the sick, but the payment system in some situations discriminates against the sick.

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