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?