Pre-existing conditions and health insurance availability and cost

¶ … Pre-Existing Conditions to Affect the Availability and Cost of Health Insurance

The insurance industry is an industry based upon risk analysis. Sometimes the insurer's risk analysis can create unfair conditions for the insured, even though such a calculated approach is necessary to sustain the industry as a whole. Take, for example, the field of car insurance. Based upon his or her demographic characteristics, a young male will often pay a higher premium than someone not in those high-risk categories. Even if the teenage boy is a good driver, the insurance company has the right to discriminate against him based upon perceived risk, as determined by actuarial tables. Similarly, health insurance companies can -- and must -- have the right to make similar risk assessments, such as denying coverage or increasing premiums for individuals with pre-existing conditions.

A pre-existing condition is a health condition or illness that an individual had before the first day of coverage of his or her new plan. "Because a person with a pre-existing condition can cost an insurance company millions" it is often in the insurance company's self- interest to exclude those with potentially costly medical expenses (Preexisting conditions, 2010, How Stuff Works, p.1). The costs of these individuals' healthcare must be balanced with those who do not, for the health insurance company to remain solvent.

Protections already exist to aid those with costly medical expenses in finding insurance. In sifting through the rhetoric about pre-existing conditions, it is important to remember that in July 1, 1997, Congress passed the Health Insurance Portability and Accountability Act (HIPAA) which limited the maximum length of time a pre-existing exclusion can be applied in a group plan "and there are even ways in which you can reduce or eliminate this exclusion period altogether. Under the HIPAA guidelines, the maximum amount of time that you have to wait in order to get coverage for your pre-existing condition cannot exceed 12 months, or 18 months for late enrollees" (Preexisting conditions, 2010, How Stuff Works, p.2). Additionally, if an individual can prove that he or she had had uninterrupted coverage before his or her current plan, "this insurance coverage can be credited toward any pre-existing condition exclusion" (Preexisting conditions, 2010, How Stuff Works, p.2). In other words, someone with diabetes who had the condition under his or her old employer can have the necessary treatments covered under the new plan, provided there is no gap in time between the two policies.

This reasonable policy acts as an incentive for individuals to continue to have health insurance, even after losing it through their employer, and not to allow there to be a 'gap' in coverage -- in doing so, even the healthy are encouraged not to act as a costly drain upon the system, using only emergency care services should an unforeseen health event occur. There is also the option of group insurance plans, which are often more likely to insure individuals with preexisting conditions. "Group health plans have the luxury of numbers, so the insurance company can handle the costs incurred by a person with a pre-existing condition" (Preexisting conditions, 2010, How Stuff Works, p.3). Even freelancers and independent business owners can create unions to buy into collective plans, such as the Freelancer's Union, a national organization made up of independent contractors who buy insurance together as a collective. The Union charges a small administrative fee for membership.

There are, in other words, recourses for Americans who do not receive insurance through their employers. But by removing the ability of insurance companies to discriminate in their selection of who to ensure, buying insurance -- and insurance premiums overall -- will inevitably increase. Why? "If insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care. This raises the cost of insurance for everyone else, in particular those who are responsible enough to buy insurance before they need it; they end up paying even higher premiums. And the more expensive the insurance, the less likely people will buy it before they need it" (the truth about health insurance, 2009, the Wall Street Journal).

Prohibiting discrimination, in other words, will create a vicious cycle. Individuals who feel they are immortal -- like healthy young people starting new careers pinching every penny -- will not buy health insurance. More of the sick and the elderly, who desperately need insurance coverage and cost insurers more money, will make up the rolls of the insured. For those covered under their insurance buying it through group plans, their fees will go up and insurers will be forced to cover fewer services. Unable to spread out the costs over a large and diverse pool of insured clients, insurers will be forced to raise rates and co-pays, and impose new restrictions on coverage. As insurance becomes less attractive, and covers fewer services, healthy people will be even less apt to purchase it.

Finally, denying insurers the ability to discriminate against potential customers with preexisting conditions also acts as a disincentive for individuals to lead a healthy lifestyle. Prohibiting discrimination also means prohibiting discrimination against smokers, the obese, and individuals who have engaged in behaviors to give themselves chronic health conditions.