Saturday, February 21, 2009

Covering Pre-Existing Conditions

One piece of health care reform that has been long discussed but not resolved is what to do for people who have pre-existing conditions who want to change health insurance policies. Changing policies could occur for many reasons. This could happen because the person is changing jobs, or because the small employer for which the person works is changing insurers, or because the person is a new college graduate who is looking for the first job that actually offers health insurance as a benefit. People who move from one large employer to another do not often have difficulty getting pre-existing conditions covered, although even this type of job movement is sometimes associated with a lack of coverage for pre-existing conditions. Sometimes people end up with a condition called "job lock" because they cannot remain insured for a pre-existing condition without staying in a job that they may want to leave.

So, what to do? Should insurers be required to cover such conditions? That is one option and is part of what is described by the President's plan. However, expenditures associated with a pre-existing condition are not "uncertain". Insurance is intended to cover unexpected or somewhat random expenditures. Of course, from a lifetime perspective, all costs are unexpected. However, very few insurance policies in the United States are lifetime commitments.

For costs that are relatively certain, if we require insurers to cover them, we will have to pay not only the costs of care but also the markup that insurers charge. In that case, we'll end up paying more for the care than necessary. Policy makers should be open to rethinking the nature of a possibly longer-term commitment between the insurer and insured and whether the relationship should remain private or move toward a more public financing framework. There is no easy answer for this. Making the risk public (e.g. Medicare) is one possible solution but not one consistent with values embedded in the US health care system at present.

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