3 replies to this topic

[rwac]

The Wisdom of the Ailing

The real reason health insurers won’t cover people with pre-existing conditions.


There are currently tens of millions of Americans without health insurance. Some can’t afford coverage at going rates. But as recently as 2009, one in seven applicants were rejected by the four largest insurance companies, who refused to sell them insurance at any price. Uninsurable Americans are mostly sick to begin with: They have heart disease, diabetes, cancer, and other pre-existing conditions that set off alarm bells for insurance sellers.
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An intriguing answer to that question comes from Nathaniel Hendren, a graduating Ph.D. student at MIT, in a study that got him offers from economics departments at Harvard, Stanford, and Princeton, among others. According to Hendren’s argument, not only are sick people a lot more expensive to care for, but they also know a lot more about what their cost of care is likely to be in the future. And it’s this inside information that makes the market for covering pre-existing conditions break down.

http://www.slate.com...ck_.single.html

[niner]

Does that change the way you look at the individual mandate of the ACA?

[rwac]

Well, the individual mandate is necessary to Obamacare, no doubt about that. But the question is, do we want to route all that money through insurance companies (eventually the government), which will lead to the third party payer problem?

It would be one thing to mandate a high-deductible insurance to cover catastrophic events, but instead the plan is to have the insurance company pay for everything, basically. So why do you want to make people insensitive to cost signals?

[niner]

Well, the individual mandate is necessary to Obamacare, no doubt about that. But the question is, do we want to route all that money through insurance companies (eventually the government), which will lead to the third party payer problem?

It would be one thing to mandate a high-deductible insurance to cover catastrophic events, but instead the plan is to have the insurance company pay for everything, basically. So why do you want to make people insensitive to cost signals?

It would have been my choice to have a public option that competed with insurance companies. Unfortunately, the idea of the government competing with private industry is anathema to Republicans, though I'm not really sure why. No one seems to mind that public police forces 'compete' with renta-cops, and you don't see many private fire companies.

I like your idea making the only mandate a catastrophic policy. The lack of pricing signals is probably the single biggest thing wrong with American health care.