Monday, April 21, 2014

Pre-Existing Conditions: The Case For The Unaffordable Care Act

John Lott points out that one of the strongest arguments for the Unaffordable Care Act -- people with pre-existing conditions who could not afford (or in some cases, even buy) health insurance, turned out to be greatly exaggerated.  At its height, this program covered 115,000 people with pre-existing conditions -- and then, even with premiums cut so low that they actually paid less than those without pre-existing conditions.  As Dr. Lott points out:
Still the issue is question is if you want to help out 115,000 people, why not provide those individuals with a subsidy rather than changing health insurance for everyone?
Think about it.  Even a subsidy of  $20,000 a year per person for 115,000 people would only cost $2.3 billion per year, and not have screwed up the rest of the health care system.

UPDATE: A reader indicates that the 115,000 people with pre-existing conditions is grossly too low.  He (like probably many others in that situation) found full-time employment specifically to make sure that he would have health insurance.

The pre-existing condition problem is definitely one of the difficulties with the system before the Unaffordable Care Act.  I won't claim that this was the result of a free market insurance system.  (There are many things to call the old system, but "free market" is not one of them.)  Nonetheless, insurers do have a history of refusing to renew what they decide are high risk insureds.  Short of the government requiring renewal of policies regardless of loss record (which is definitely not free market), what to do?  Any contract built around a free market with a fixed policy duration has to either allow the insured to not renew, or allow the insurer not to renew.  Both are serious concerns.

I have sometimes wondered about writing a science fiction story set in an alternative universe where people without health insurance become debt slaves to the doctors and hospitals that save their lives.  How many years of labor would it take to pay off an aortic valve transplant, or a double bypass, or cancer treatment?  That's a scary world.  Some people might start leaving instructions that say, "I don't want to spend the last fifteen years of my life mopping floors in a hospital.  Let me die."  And administrators would work studiously to see that such instructions were found and destroyed -- because they need the laborers.


StormCchaser said...

While I agree with your point about upending all health insurance to cover the un-insurable, this statistic is not relevant. There were lots of people who could not get insurance for pre-existing conditions who found that the high risk pools weren't adequate, or who couldn't afford them.

I was one of them. I got insurance by being employed by a company large enough to afford to cover those with PEC's. But it's a pretty nasty world where you have to take a job to get health insurance - the two should not be related. I was prevented from being a consultant or an entrepreneur by PEC's since I was a bit over 30 years old. High risk pools were inadequate - they had lifetime limits that made a joke of the word "insurance." Instead of insuring against catastrophe, they covered routine costs until you hit the limit. Then you had no insurance.

ACA is clearly not the way to "solve" this problem, but it's wrong to try to minimize the issue. The real numbers are much higher than 115,000.

asdf said...

Also, $20,000 a year isn't much of a subsidy depending on the illness. I was recently diagnosed with Chronic Myelogenous Leukemia, the cancer that killed Carl Sagan. Since 2003, it is treatable, but not curable. The cost for medication? $7,000 a month. That's every month for the rest of my life. Look up Gleevec on to check the cost, and that usually gives the cheapest price. The alternatives, like Sprycel, are even costlier.

Fortunately, I'm insured through my employer. If I'm dropped? That's my nightmare. Retirement? Can't do it until I move to medicare. I looked into Christian Health Network on your advice, but they don't cover medications.

Clayton Cramer said...

Wow. That's a pile of money. That's part of why I wrote that the pre-existing condition problem was one of difficulties with the old system.

Doug said...

Just wanted you to know I references this blog post in the latest episode of my podcast:

It doesn't officially post until Friday (it's post-dated on WordPress) but this link will get you to the episode page.