Wednesday, August 5, 2009

The Cold Hard Facts About Pre-Existing Conditions

Imagine yourself shopping for car insurance. Would you allow yourself to enter a risk pool where the other members could forgo premium until they had a severe accident and then secure coverage to retroactively cover the damage while you and others paid your premium continuously? Seems a bit unfair, eh? Not too mention that no one would bother paying premium regularly if that was not necessary to secure coverage. And just think what the premium increases would be like in such a risk pool. Brutal. Now imagine Life insurance which can be purchased for someone after they had died or fire insurance after the house was smoldering in ashes. Think those policies would be cheap? Would responsible individuals who wanted to insure against future loss sign on to be part of this risk pool?

Insurance is designed to protect against an unforeseen future loss. Forcing an insurer to cover a loss which has already taken place is welfare as John Stossell points out in this article. We have a very imperfect health insurance market today. Alas the world is still flawed. In the nirvana that many on the left imagine when everyone is covered by health insurance Pre-existing conditions would all be covered and indeed the insurance industry has agreed with this reform. Theoretically, the problem would be solved. Realistically, costs will increase as the risk pool absorbs individuals with chronic health problems that for many reasons, some within and some out of their control, today lack coverage. Realistically there will be individuals who ignore mandates to buy health coverage as there are today in Massachusetts.

So when insurers are demonized by Nancy Pelosi and other left wing fringe elements just remember no matter how hot the August heat gets no one likes to swim in a pool someones just peed in, or worse.

1 comment:

The Group Guy said...

I told you so