Life as a Preexisting Condition

The must-read new story today is by Lisa Girion of the Los Angeles Times. In “Health insurers refuse to limit rescission of coverage,” we find the clearest case yet why the private health care industry will never, ever, not in a million years, come even close to solving the health care crisis.

In a nutshell — yesterday three big insurance company executives — WellPoint Inc., UnitedHealth Group and Assurant Inc. — told the House Subcommittee on Oversight and Investigations that their business models depended on being able to cancel the health insurance policies of customers who cost them too much money. An investigation by the Committee had found that over a five-year period, these companies had canceled the coverage of more than 20,000 people in order to avoid paying more than $300 million in medical claims.

One of the execs claimed the rescissions — industry jargon for canceling coverage — were necessary to protect the companies from fraud. People lie about preexisting conditions on their applications, he said, and this drove up the cost of insurance for everyone else. I’ll come back to this point in a moment.

In practice, this means insurers target people with high-cost conditions such as breast cancer and lymphoma and direct employees to examine patients’ paperwork for any pretense to cancel coverage. People with innocent mistakes and inadvertent omissions; people who were unaware of a preexisting condition at the time they filled out the application because the symptoms hadn’t developed yet; people whose preexisting conditions were minor and had nothing whatsoever to do with the disease costing the insurer money — such people found themselves dumped out of the health care system at their time of greatest need.

A Texas nurse said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.

The sister of an Illinois man who died of lymphoma said his policy was rescinded for the failure to report a possible aneurysm and gallstones that his physician noted in his chart but did not discuss with him.

Karen Tumulty at Time presents several other heart-breaking, and outrageous, examples.

Of course, you might remember that Michael Moore documented this practice quite nicely in Sicko. We all knew this was going on. Members of the House Committee feigned surprise.

But I want to go back to the part about rejecting people with preexisting conditions. Who above the age of 40 does not have a preexisting condition? For that matter, what percentage of young adults freshly cut loose from their parents’ policies find they cannot obtain insurance because they failed to get through childhood without a preexisting condition?

The insurance companies are saying they can’t make a profit unless they deny coverage to people with preexisting conditions. How is this not an admission the private health insurance industry is a big, fat FAIL?

Righties just love to tell us that the reason health insurance is so expensive in some states, like New York, is that those states have (Cue: “Fortuna, Imperatrix Mundi (O Fortuna)”) regulations. And what are those regulations? Chief among them are provisions that limit the insurers’ abilities to deny coverage to people with preexisting condtions.

So, in many states, a middle-aged person with no serious health problems who was once prescribed Lipitor for high cholesterol would be unable to obtain health insurance at any price. In New York, this person can get insurance. Yes, it’s so expensive most people can’t afford it, but it’s obtainable for those who can pay for it.

What this says to me is that relying on a private insurance industry to pay for health care costs is unworkable. A private insurance industry simply cannot do the job of paying for health care, because the only way a private company can make a profit is to deny coverage to people who are actually sick so that they don’t have to pay those bills.

My next question is, how obvious does this have to get before people see it?

I’m sure some people do lie on their insurance applications in order to obtain coverage. But in most industrialized democracies, this wouldn’t even be an issue. You’re a citizen, you get health care. Whether you once had acne treatments or took Lipitor or had a gallstone or even had a life-threatening disease, you get health care. Because the purpose of the health care system in most countries is delivering health care, not making a profit.

And for those worried about the cost to government of providing health care to sick people, let me present this handy chart:


This chart was adapted from a Canadian site calling for health care reform in Canada. The Canadian system has its problems, but I suspect seeing the mess we’re in persuades many Canadians to leave well enough alone. At least Canadians can get health care.

I believe the only way we’ve got a shot at lowering per-capita cost while delivering health care to everyone is to kick the insurance companies out of the picture altogether and going to a purely public system. At least a public health insurance plan would be a step in that direction.

Regarding the recently released CBO estimate of $100 trillion over ten years — see Extra Klein for why the CBO estimate is deeply flawed. See also “The Bright Side of the CBO Snafu.”

52 thoughts on “Life as a Preexisting Condition

  1. I have had excellent health insurance coverage for decades, and have spent way too much of my time as an adult battling with those insurers who refused to honor their contractual obligations. Most recently payment for a wheelchair has been denied after a fractured hip. It never ceases to amaze me that no matter what medical problem my family encounters, we are unlikely to be covered. The fight is wearing me out.

    BTW – what does SH stand for? I could guess…

  2. Ya know, if North Korean missiles and Iranian nuke programs are being run by their respective governments, and the U.S. missle defense system was completely privatized, with, as you know, the latter being at least ‘three times more efficient / better performance’… dude, they’d never catch up! And then that Minneapolis bridge woulda been rebuilt in like, a 4 months or less! Mail stamps would cost pennies, our streets might really be paved with gold…

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