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The basic idea of insurance is that people in a block have certain risks. They pay the costs collectively, and collectively the costs are predictable. The alternative is some few of them have life-destroying costs.
As someone who has worked in an actuarial department, I have sympthy for companies which won't insure pre-existing conditions. You don't get to insure your house after it catches on fire. On the other hand, fire insurance companies don't try to cancel your coverage after your house catches on fire either.
A horror story in a recent diary describes how health-insurance companies are doing the equivalent. This is not only heartless, It contradicts what they are selling. They are charging you to take on the risks; if they are avoiding the greatest risks without stating that explicitly, they are committing massive fraud.
More details after the jump.

Generally, you (or your employer) buy health insurance to pay for whatever health costs come up in the future. If you get one of several serious illnesses, you can't buy health insurance thereafter to cover the costs. That is fair.
But the other side of this fairness is that if the illness develops while you are insured, the insurance company should cover the entire cost of treatment -- however long it takes. Raising your rates -- or your employer's rates -- to the pay for the coverage is immoral; it should be illegal. Your premiums while you are healthy are paying for the risk.

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Now, a public option should not -- and, almost certainly, will not -- behave in the fashion that private insurers do. It will pay for all illnesses that develop while the insurance is in force. That means, that it will pay out more than private insurers currently do. That explains why the industry fall-back position is to require that the public option pay for itself fully. They figure that they can drop their rates below those of the public option and make a healthy (sorry!) profit from the money they save through recissions and rate raises on the employers of the sick.

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ASnother game that rewards insurance companies by ignoring the idea of insurance is embodied in the Bush plan for Medicare part D.
Various "insurance companies" pay for diffiernt medicines. So, if your doctor prescribes you medicine A, you buy part D from company X; if he prescribes medicine B, you buy part D from company Y.
But this is

not

insurance. Insurance would be something you buy before you come down with the disease that pays for whatever medicine your doctor prescibes to treat it.

Originally posted to Frank Palmer on Mon Jul 13, 2009 at 08:03 AM PDT.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    wsexson, Neon Mama, Fossil, Norbrook

    "I'm not opposed to all wars; I'm opposed to dumb wars." -- Obama in 2002

    by Frank Palmer on Mon Jul 13, 2009 at 08:03:25 AM PDT

  •  You're Presenting Health as a Market Activity (0+ / 0-)

    Housing is a market activity, recreation is a market activity.

    Health is intertwined with our deepest biological drives and instincts and with our genetic heritage.  

    On the risk side we are stripped of both choice and of predictability to a large extent. On the side of choosing services to submit for claims, we are stripped of choice fully for some kinds of conditions, and of the ability to choose rationally for many others.

    It's just a totally inappropriate sphere to be treated as a market.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Jul 13, 2009 at 08:46:08 AM PDT

  •  All reform proposals address this (0+ / 0-)

    Everything proposed by democrats would bar all health insurers from excluding or increasing rates due to pre-existing conditions.

    Numbers are like people . . . Torture them enough and they'll tell you anything.

    by Actuary4Change on Mon Jul 13, 2009 at 09:16:41 AM PDT

    •  Prohibit or prevent (0+ / 0-)

      Everything proposed by democrats would bar all health insurers from excluding or increasing rates due to pre-existing conditions.

      1. What I was describing was not increasing rates due to pre-existing conditions, but increasing rates due to conditions which arose while the insurance was in force.
      1. If the law prohibits it, does that prevent it. The first is easy; employers are prohibited from firing employees because of their health conditions. The second is difficult; employers fire workers with expensive health conditions for other reasons.

      "I'm not opposed to all wars; I'm opposed to dumb wars." -- Obama in 2002

      by Frank Palmer on Mon Jul 13, 2009 at 09:45:54 AM PDT

      [ Parent ]

      •  Good questions (0+ / 0-)
        1.  It would prohibit any rating based on health status, so this situation would be included.
        1.  Insurance companies would not be allowed to know about the health status of prospective insureds.

        Obviously, they would know about the health status of current insureds.  IMHO, the prohibition against using this information in making rate decisions would be effective.  It's a bright line, unlike employment decisions.

        Companies that buy health insurance, therefore would not have an incentive to discriminate against less healthy workers (although increased probability of absenteeism could be an issue).

        I could see that there might still be a problem with companies that self-insure for medical.

        Numbers are like people . . . Torture them enough and they'll tell you anything.

        by Actuary4Change on Mon Jul 13, 2009 at 10:20:05 AM PDT

        [ Parent ]

  •  health care (0+ / 0-)

    in this country went down hill after it became a 'for-profit' business.  

    Life is full of surprises, and there is always hope. - Ruth Reichl

    by Hope Despite All on Mon Jul 13, 2009 at 12:22:35 PM PDT

    •  They're not talking about health care. (0+ / 0-)

      They're talking about insurance. That started out as a for-profit business -- life insurance and fire insurance.

      Hospitals, OTOH, started out as charity.

      "I'm not opposed to all wars; I'm opposed to dumb wars." -- Obama in 2002

      by Frank Palmer on Tue Jul 14, 2009 at 08:44:28 AM PDT

      [ Parent ]

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