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Here's a secret that almost everyone has missed in all the gnashing of teeth about this reform bill. If the bill passes, we won't have to wait until 2014 or 2020 for universal health care. We will effectively have it in 2010. It won't be pretty, but it will be there.

How? It's all about the clause that you can't be turned down for pre-existing conditions starting in 2010, a policy called guaranteed issue. The full guaranteed issue policy won't kick in until around 2014, but until then there will be a special government-run pool set up that will take all comers and with premiums capped at 125% of the standard rate in a given state.

If I develop a condition that needs coverage, including cancer, diabetes or heart disease, then as soon as I apply for insurance to cover my condition I will get it. But here's the kicker: I don't need to have been insured in the run-up to getting sick. I only need to get insurance once I know I'm going to have high medical costs. In other words, I don't need to pay rates that are too high for me while I'm healthy.

If you ever wanted a way to screw insurers, your golden opportunity might come in 2014.

Here is recent language on the high risk pool in 2010, though perhaps not the most up to date:

H.R. 3962

       * Establish a temporary national high-risk pool to provide health coverage to individuals (and spouses and dependents) with pre-existing medical conditions. Individuals who have been denied coverage, offered unaffordable coverage, have an eligible medical condition or who have been uninsured for at least six months will be eligible to enroll in the national high-risk pool. Premiums for the high-risk pool will be set at not higher than 125% of the prevailing rate for comparable coverage in the state and could vary by no more than 2:1 due to age; annual deductibles will be limited to $1,500 for an individual; and maximum cost-sharing will be limited to $5,000 for individuals. (Effective January 1, 2010 and until the Health Insurance Exchange is established)

So, effectively, if I have a condition that will incur big costs down the road, I am covered. And I don't have to get the crappiest insurance, either. If I know I'm going to get chemotherapy or have open-heart surgery to fix heart blockage, I will want to make sure I get the best coverage even if it means I'll be paying higher premiums for a few months. A few months of coverage won't bankrupt me, but those few months without it easily could have.

And I only have to wait as long as it takes to process the paperwork on my insurance application. There will probably be a mandated window of days, perhaps weeks, a month tops before I am eligible.

Yes, you could nitpick that it's better to have immediate coverage rather than having to wait even 24 hours. And true, it still doesn't help if you have to go to the emergency room. But the vast majority of health care costs are predictable. They aren't sudden, unexpected events. Over half of our health care costs come from chronic diseases. Much of the rest comes from preventive care, elective procedures, and acute events like cancer that are treated over an extended period of time. Almost all of this would be covered.

Now, those out there who get how insurance works will recognize that there is a problem with this strategy.

Those health care costs will have to be paid by someone, and if I haven't paid into the system and lots of others are doing the same thing, then the only people actually paying for insurance will be the sick. And if only sick people are paying for insurance, then either the premiums will skyrocket and become unaffordable, or premiums will skyrocket but be covered by huge subsidies, or insurers won't be allowed to cover the losses with higher premiums and they will go broke.

The one group that really got this issue, not surprisingly, is health insurers. This is why they wanted a substantial penalty for not having insurance. But, for the next 6 years there will be either no penalty or a very small one for not having insurance according to the present bill. You can think of the small penalty as the cost of your "insurance," which you can activate with a lag of a few days or weeks if you were ever to need it in a serious way.

If you hate insurers, you might have a couple years in which to use this strategy to cost them more than you pay them. And if you are sour on this bill because you think it doesn't create universal health care for 4, 8 or more years, think again! And if you think it forces healthy people living on the margins to pay $5,000, $10,000 or more per year even if they don't have significant health costs, think again, again!

Originally posted to jd in nyc on Mon Dec 21, 2009 at 10:34 PM PST.

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