Blacklisted from Health Insurance

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19 Responses

  1. Jens says:

    You’re doing something wrong in the US, having one of the most expensive health systems in the world and not even being able to ensure basic insurance coverage for everyone.

    Plus, I don’t understand the reason why health insurance is usually coupled with a job. After all, it’s a private contract between an individual and the insurance company, no?

  2. anon says:

    This is awful. And an all-too-predictable result of the for-profit sector managing health care. Tell me why the U.S. government is protecting the interests/market share of these corporations again?

  3. A.W. says:

    Okay, let me explain health insurance economics 101 for the uninitiated (this includes you, President Obama).

    There is no magic wand at the insurance company. You cannot magically take the hundreds of dollars paid each month on your premium and magically transform it into $50,000 to pay for health bills.

    Health insurance depends on having a certain number of people on its rolls at one time being healthy. And the notion is this. You are not sick today, but you might get sick tomorrow. So you and, say, 50,000 people will get together and pay into a giant fund. Statistically speaking, one of you will get sick. And when you get sick, our collective fund will pay for that illness. Oh, and of course those of us who run that fund will get paid a salary, too.

    A rule forcing companies to take on people with pre-existing conditions upsets that entire balance. Again, you can’t just go to a company, pay $500 and expect them to magically turn it into $50,000. And if you can’t be excluded for pre-existing conditions, then what is your incentive to buy insurance when you are healthy? Why not wait until you are sick and then say to insurance companies, “okay, here’s my first month’s premium, now give me $50,000 of medical care”? The economics of that just don’t add up.

    Now, suppose you have diabetes and you want insurance. First, insurance against diabetes is silly; you already have it. What you need there, is a payment plan. But suppose you want insurance for conditions potentially related to diabetes, such as the adult onset kind, but you are still refused? What can you do?

    Well, you could follow the example of deaf people in auto insurance. Deaf people pay more for auto insurance. At first blush that sounds sensible, and then you notice that in fact deaf people are, on average, safer drivers than hearing people. Apparently hearing does more to distract drivers than help them. So deaf people, sick and tired of this discrimination decided to do something: they formed their own insurance company. Likewise, if people with diabetes feel like they are getting the shaft, they can do the same.

    As far as socialized medicine, it is a bad idea all around. First, it will give the government new power into your life on your health decisions. You see this already in New York City, where they banned trans-fatty acids because it will make their health costs go up. Its amazing in that city that what was once called sodomy is now a matter of personal choice, but going to McDonald’s isn’t. You would think those who support the former would be appalled by banning the latter.

    Second, whatever government does, it does incompetently. There are exceptions, of course. The police, the military, the fire department. Everything else is as a rule incompetent and wasteful. The government can’t even figure out how to educate your kids, and you are going to trust them with making your health care decisions? One commenter around here has repeatedly held up Cuba as a model socialized health care system, but those claims tend to fall flat when Fidel Castro, upon getting ill, had doctors flown in from another country to treat him. If anyone in that country gets the unvarnished truth about health care in Cuba, it is Fidel, and he would have nothing to do with their system.

  4. A.W. — Suppose you have a person who gets hired by a company at age 30 and is healthy. Then, at age 40, the person gets diabetes. A few years later, due to the bad economy, the person gets fired. After a year, COBRA runs out, and the person must find new health insurance. But no insurance company will take that person on. And despite his best efforts, he can’t find a job.

    Your answer to this problem? You could argue “tough luck.” According to your argument, the government can’t do anything to help — it’s just too incompetent. So, for you, the solution is totally within the private sector. But the insurance companies won’t insure him. Your only answer to this seems to be to let all people with diabetes form their own insurance company. But that won’t work very well. Insurance is about spreading the risk between the healthy and the not-healthy (so yes, insurance is redistributive to some degree, but that’s one of its functions). The premiums would be too high for the person to pay for the Diabetes Insurance Company — he might as well just pay the costs directly. But he can’t afford these costs — neither can most people. So what are we to do? Your answer seems to be “tough luck.” If not, what would you advise the person in my hypo to do?

  5. Anon says:

    I disagree with the premise that government does so many things incompetently. Maybe government run by persons who dont believe in government is incompetent, but I believe in the ability of the government to do right by the people. Dont believe me, ask a recipient of the G.I Bill, who went to a Land Grant college.

    Sorry, but I think the era of Ronald Reagan’s “government IS the problem” has passed. At the very least, it is not tautological.

  6. A.W. says:

    Daniel

    You seem to be complaining more about reality than my critique. you don’t dispute that the government is incompetant. You can’t dispute the basic econmics of insurance. And you question whether an all-diabetes insurance company would work and I admit that is questionable too. Okay. So we are out of options then.

    Although I will note, that i support McCain’s idea of untying insurance from specific employers. In anti-trust we call that a “tying” arrangment and it is usually banned because it does harm competition.

    But even then, some people will fall through the cracks. Advocates of socialist medicine, God bless them, are irredeemable utopians who fail to recognize that the only equality they will achieve is equal crap for all.

    I mean look at the incompetance in Washington, today. By your own admission, saying you can’t discriminate because of a pre-existing condition doesn’t work, economically, but that is percisely what Obama has proposed. It is such a foolhardy proposal, that i often wonder if he is actually trying to destroy the health care insurance industry, so that then we can all be moved to his wonderful utopian care. i find it hard to believe that he doesn’t understand this basic economic reality, especially given his wife was GC for a hospital, although i suppose he could be blinded by personal trauma.

    And then there is Obama’s pledge that companies recieving TARP money will not be able to pay their executives more than $500K a year. These are companies in trouble, that need the best executives possible. Do you really think he will get the best at an entire order of magnitude less than the going rate? I mean, my God, a fifth year associate at a top 100 law firm earns more than that. It is economically illiterate.

    And so is the government’s scapegoating of those paid retention bonuses, because now companies want nothing to do with the TARP money. They realize there are worse things than bankruptcy–such as being afraid for your life from a lynch mob because you had the temerity to seek the pay you have earned by agreement beforehand. Not to mention James Taranto’s excellent work showing that with the confiscatory 90% tax, you will actually pay around 108% on it for taxes, and if you actually return it, you will pay an additionall 50% on it for taxes. So they agreed to keep working in return for these promised retention bonuses, and they are being rewarded with having to pay the government all of the money back and more. Lovely.

    And so we find out that increasingly firms are wanting nothing to do with tarp or tarp-recieving companies. Well, little surprise there. They looked at how AIG bonus recievers have been tarred and feathered and realized that the government is not a dependable financial ally. I could have told the President and Congress that. And you want Moe, Curly and Shemp from the Federal Government to run your health care? You are a braver man than i am.

    Sorry, in life sometimes there are “problems” with no solutions. And here, government is not the solution.

  7. Ken Arromdee says:

    You’re missing the point–the “make your own insurance company” remark was about conditions that are potentially related to diabetes, but which aren’t present in 100% of diabetes victims. Making their own insurance company spreads this cost out.

    The problem with forcing the insurance companies to take people with preexisting conditions is that this isn’t what insurance is. If you’re going to do that, then just take money directly from healthy people, give it to sick people, and call it a tax. Don’t try to launder your tax through insurance companies.

  8. itasara says:

    If the insurance company says: “Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson’s disease and AIDS/HIV.” I find this ridiculous in today’s world. MS medications cost about $1800.00 a month. Without insurance coverage it probably would not be possible for those inflicted with MS to afford the medication at all. If the MS gets worse, the cost of care would be multifold and I’m sure many end up on welfare. For young people who suddenly find themselves with a diagnosis of MS, and then they reach an age where they are no longer covered on their parent’s insurance, what are they supposed to do if they don’t have a job that covers their insurance or if the insurance company says this is a precondition that is not covered? I think there is no choice but that the government steps in somehow. If medications are going to be this expensive, then it cannot, in my opinion, be up to the individual to sink or swim if money is a problem and it will be in most cases.It is compounded if more than one person in the family has this (or other conditions.) If the individual sinks, then society will end up caring for this person for a long time. If medication helps delay or prevent this disease from getting worse, then it behooves all to be sure this medication is paid for or sold and an affordable price. I do not believe in preconditions. You come down with an unexpected illness and it needs to be treated whether or not it is a so called “precondition” which the patient has to deal with no matter what it is called.

  9. itasara says:

    If the insurance company says: “Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson’s disease and AIDS/HIV.” I find this ridiculous in today’s world. MS medications cost about $1800.00 a month. Without insurance coverage it probably would not be possible for those inflicted with MS to afford the medication at all. If the MS gets worse, the cost of care would be multifold and I’m sure many end up on welfare. For young people who suddenly find themselves with a diagnosis of MS, and then they reach an age where they are no longer covered on their parent’s insurance, what are they supposed to do if they don’t have a job that covers their insurance or if the insurance company says this is a precondition that is not covered? I think there is no choice but that the government steps in somehow. If medications are going to be this expensive, then it cannot, in my opinion, be up to the individual to sink or swim if money is a problem and it will be in most cases.It is compounded if more than one person in the family has this (or other conditions.) If the individual sinks, then society will end up caring for this person for a long time. If medication helps delay or prevent this disease from getting worse, then it behooves all to be sure this medication is paid for or sold and an affordable price. I do not believe in preconditions. You come down with an unexpected illness and it needs to be treated whether or not it is a so called “precondition” which the patient has to deal with no matter what it is called.

  10. Dan R. says:

    A.W.

    Lets take your “treatise on insurance” a bit further. I suffer from a disease that on average costs about $5000 a year to treat. So why can I not buy a policy with a 5000 deductible + what ever is normal?

    I maybe able to cover the normal issues with the disease, but if I’m the 1 of 1000 with the disease that has major complications, I’m in trouble.

    As for government being incompetent — I can say having dealt extensively with various health insurance companies and Medicare, Medicare is BY FAR the most competent at administering health benefits. They may not be the best paying, and they may have onerous rules, but at least they let you know what the rules are before you file, you know what your going to get paid, and you will get paid quickly — not the case with most private plans.

  11. A.W. says:

    Anon

    So is it that you don’t think that Obama believes in government? Or do you think the last 2 months have been a model of competancy?

    For instance take Katrina. Now i figure your comment about people not believing in government is a dig at Bush. Okay. but that levee had been up for some 80 years, and all that time everyone knew it was only designed to withstand a category 3 hurricane. That is called a major disaster waiting to happen. But for 80 years this problem was there, staring everyone in the face, and no one did a damn thing. That crosses party lines, cross several layers of the federal “cake” and so on. That is a monumental failure by all three branches in LA, the government in NO, and the federal government, too. Ain’t no one blameless there.

    Now i am not saying we could or should truly privatize levee building. Obviously its a government or nothing kind of proposition, so it is either government 100% or a government contract and either way, its up to government to see to it that its done. But that says to me that government should limit itself mainly to what it has to do, and leave the rest alone, if only from an efficiency p.o.v.

    As for the state college system, well, in truth that system has managed to acquire all the important features of a capitalist system. they compete for customers and employees just like anyone else. Sometimes government can do that, and that should be encouraged. You get more competant government, then. I would love to see us do something similar for the k-12 set, seeing what an abject failure that is.

    But don’t expect Obama’s people be anywhere near that competant in the near future. Certainly mandating that insurance companies can’t discriminate based on previous conditions, is only going to bankrupt our insurance companies. In the middle of a major economic crisis, no less. That is not economic competance.

  12. A.W. says:

    Dan R.

    > Lets take your “treatise on insurance” a bit further. I suffer from a disease that on average costs about $5000 a year to treat. So why can I not buy a policy with a 5000 deductible + what ever is normal?

    If you think you can swing the economics of it, then I suggest you try starting your own company for the “blacklisted” on that model.

    > I can say having dealt extensively with various health insurance companies and Medicare, Medicare is BY FAR the most competent at administering health benefits.

    I have dealt with both, and my assessment is 180 degrees different. They are a constant, over regulatory pain in the ass; they have so driven down profits that my company might drop them entirely and many doctors refuse to accept anyone on those plans; and private pay is more efficient.

    > you know what your going to get paid,

    And then they will come in and take your pay away because your aides didn’t write enough comments on their time sheets. No, you don’t know you are going to get paid. Which is another problem with them.

    > and you will get paid quickly

    Jeez, what planet are you on?

  13. Dan R. says:

    > and you will get paid quickly

    >> Jeez, what planet are you on?

    I’m on the planet where my Medicare A/R runs about 20 days, vs. everyone else who runs AT LEAST 35 days, and usually more.

  14. Elizabeth says:

    At my previous employer, I was on a subcommittee that examined health insurance premium costs.

    I vaguely remember learning that having a child was an expensive undertaking, *and* insurance premiums for families often ill-compensated for the increased coverage exposure.

    Is the solution for insurance companies, then, to include “female, of child-bearing age” on the list of reasons to decline coverage, right along with diabetes?

  15. A.J. Sutter says:

    It’s good Dan put up his post, since it shows that, while not being an issue of first impression on this blog, it still has the ability to shock some people. Some of you might not appreciate what the future holds for you personally. For those who haven’t read it previously, here again is a true story:

    I was employed almost continuously for 20 years after law school. My salary or other income had gone up almost monotonically throughout that interval. Then a few years ago, when my income was at a lifetime peak, my multinational employer had a crisis and I found myself out of a job. First at nearly age 50, and later past it, I was unable to get re-hired no matter how much I downplayed my senior positions on my resume. Even though it was a period of robust GDP growth, most of my many dozens of resumes weren’t even acknowledged. (People assumed from the antiquity of my education that I’d be too expensive.)

    One benefit of being a lawyer is that “out of a job” means “self-employed”, so I was able to earn some income — but not enough to afford my $1,200/month COBRA payments once my severance plan ran out, on top of my other expenses. Moreover, I use a particular type of asthma inhaler more than once per 2 weeks (though not by much), which my doctor told me was enough to allow me end a regime of shots. I had never been hospitalized for my condition (still never, thank goodness). But once my severance plan ran out, thanks to that level of inhaler use I couldn’t get any health insurance on my own unless I waited 4 years to be considered for possible inclusion in a California plan for indigents (!), covering emergency care.

    Fortunately, my wife was employed, and I was able to join her plan as a dependent. However, she hated her job, and even senior managers with 20 years’ experience at her company made in the five figures, so there was no future. The job market in her field was already tight in California (where I am admitted), so it was hard to switch. We couldn’t do without her income or the insurance, but the stress and frustration were growing.

    We were luckier than most people, because we could move back to her home country, where she could get a job at the high level she abandoned when she moved to the US, and where I also had some business contacts. And from my first day as an immigrant, I was covered by a government health insurance plan that cost me US$45/month, with ridiculously low co-pays, and better care than I got in Palo Alto. Health care for middle age and beyond was absolutely a factor in our emigration decision. Most of you will probably not have that option.

    I hope that some of the bright young “Econ 101″ fans will learn something when they crash full-face into their theory some day. The way things are going in the US, that may happen at an earlier age than it did for me. (My even bigger hope about anyone crashing into this theory is “never again.”) But the “Econ 101″ story is historically contingent. Things did not always work this way in the US; rather, only since the life insurance companies muscled into the health insurance game. See Jonathan Cohn’s Sick for a more accurate explanation. See also, e.g., Blank & Burau’s Comparative Health Policy for an overview of the different possible shapes a health insurance system could have, instead of sticking on caricatures about socialzed medicine. And most of all, don’t think this situation can’t happen to you, or that you or your family will be saying “Shucks, I guess this is one of those problems in life with no solutions” when it does.

  16. A.W. says:

    > “Shucks, I guess this is one of those problems in life with no solutions” when it does.

    Well, my gosh, we should base all policy on the selfish desires of the individual who loses out, as opposed to the maximal good for society. *rolls eyes*

    Indeed, you can’t even refute my point: some people will fall through the cracks, period. And if government seals up the cracks, the cure will be worse than the disease.

    Again, the government can’t educate our kids. And you expect them to run your health plan? Sheesh, talk about cognitive dissonance.

  17. A.W. says:

    Silly, me, I failed to recognize the most basic argument that the socialist utopian created by universal health care won’t cause people to be blacklisted from health care: the government does it too.

    Click on my link to learn all about it, but here is the money quote, from Ireland:

    > Next Tuesday, having already decided to deprive Cystic Fibrosis patients of life-prolonging treatment units, the Government will announce new ways to help us “share the pain”.

    Go that? The difference of course is that in a capitalistic system, you can hope to take your business elsewhere, and if no one will treat you right, start your own business. in other words, if insurance company A won’t treat you, try B, C, D, etc. but when government beomes the only game in own… you’re SOL.

    And i have to kick myself for failing to recognize this reality sooner.

  18. Michael B says:

    A.W.,

    It’s true. Canadian governments run our health care just as badly as they regulate our banks, and you know how rough they’ve had it recently.

    :)

  19. A.W. says:

    Michael

    Who do you think ran our banks into the ground?

    The government, that is who. About 30 years of “affordable housing” silliness, where we try to get houses to people who can’t actually, you know, afford them.