Myth: Insurance for Pre-Existing Conditions

I’m tired of the myth about insurance for pre-existing conditions. The picture below motivated me to write this blog post:
I am Obamacare - Pre-existing Condition and Insurance

Short story, from her perspective: Her job did not include health insurance. She was diagnosed with tumors in her uterus. Then she couldn’t get insurance coverage for this pre-existing condition. So she favors Obamacare. For a fuller version of her side, see her blog post: I am Obamacare.

One key detail she does not mention: While her job did not include health insurance, she chose not to pay for health insurance out of her own pocket.

Now she complains that she can’t get insurance for this pre-existing condition. But this is a misunderstanding of what the word insurance means.

Please consider this analogy:

Her job didn’t include car insurance, and she did not buy any on her own. She got in an accident and the car was damaged. She went to a car insurance company, and they refused to pay for the pre-existing damage to her car. And this was a nice insurance company, so they didn’t laugh at her.

The more reasonable version of pre-existing conditions is where you have a condition that makes you more likely to suffer certain diseases, but you have no symptoms or evidence of such disease yet. That creates an adverse selection problem – the people who are likely to get sick are more likely to buy insurance, and they cost more to insure so that drives the price of insurance up. Then the people who are less likely to get sick are less likely to buy insurance. Removing them from the risk pool increases the total risk, further driving prices up. This is an area where some economists argue, somewhat credibly, for government intervention to address this form of market failure.

But the current discussion about Obamacare and pre-existing conditions is not about adverse selection or “insurance”, as the photo above shows. Insurance is about covering for the risk that something might happen, not about covering for something that did happen.

This part of Obamacare is about bailing out people who chose not to pay for health insurance. And the blame does not fall only on President Obama and the Democrats. Most Republican insiders are just as bad. Government bails out people who did not buy adequate insurance for floods. It has bailed out banks, car companies, and so on.

13 Comments

  1. “This part of Obamacare is about bailing out people who chose not to pay for health insurance.”

    The flaw is that no one in their right mind says “I just don’t feel the need to insure myself against health issues”. It’s that (to paraphrase someone from your past) the premiums are too damn high!

    Many people would have to give up basic necessities just to have even the lowest threshhold of healthcare. The insurance companies make more and more money, raise everyone’s premiums and co-pays, lower coverage, then blame the lawyers. The system is broken in too many ways and at least the president is trying to fix it versus saying “we just need more competition”.

    I understand this isn’t Utopia (far from it) and everyone can’t have the top tier plans available, but I do think we should do what we can to make basic health care avaialable to all. I doubt anyone would say “I just don’t want it”.

  2. The premiums are not “too damn high”. This woman is happy to pay higher premiums now under Obamacare than she would have paid before.

    Your use of the term “basic necessities” is troubling. Those who can’t afford basic necessities are eligible for Medicaid. Right?

  3. Actually, she may have diabetes. It is an instant disqualify, so you are sitting there judging her for “CHOOSING” when it is not possible. In addition, premiums are too high ESP for young women. Insurance companies force them to get maternity coverage which DOUBLES their premium. There are too many variables to talk about this intelligently, which is why you fail with this article.

  4. Well, I’ll disagree with you in this way: why do we even need to structure health care as insurance anyway? Do we really need to have private companies make a profit on sickness and healthcare? I think the nation is great enough that we could and should simply figure out a way to just provide healthcare period. Lesser nations have figured this out, and their general standards of living are much higher than what we enjoy here. I know that if you happen to be a wealthy American, you already have the best standard of living and healthcare – but that’s true everywhere. Simplifying the whole health care stack would reduce costs since we wouldnt have business at every level taking out their profit cut, and most every illness is treated better and at lower cost when identified and treated early.

  5. Quote: “I don’t have a car payment, an iPhone and I’ve literally never had a manicure in my entire life. It’s SO annoying when people presume things that are so far out in left-field they become a joke. How about I didn’t have insurance because my premium is literally HALF OF MY MONTHLY INCOME. At my last job I made about $400/month. How many people can afford to give up 50% of their paycheck each and every month??

    The only reason I have the PCIP now is because I, and my family and my friends have worked our asses off raising money month after month. And still, each month it’s a massive struggle to keep it. I want to keep it but coming up with $237/month in addition to my regular bills AND paying down my medical debt when laid off is nearly impossible.”

    http://giveneyestosee.com/blog/2012/01/assumptions/

    In Florida, Medicaid is through Department of Children and Families. Without having a qualifying child, or being pregnant, you are NOT eligible.

    QUOTE: “DCF determines Medicaid eligibility for:

    Low income families with children
    Children only
    Pregnant women
    Non-citizens with medical emergencies
    Aged and/or disabled individuals not currently receiving Supplemental Security Income (SSI)”

    http://www.dcf.state.fl.us/programs/access/medicaid.shtml

  6. Thanks for putting some perspective on this. I’ve often heard that buying health insurance on your own instead of going through your employer is actually cheaper. I don’t know if that’s true or not – can you clarify?

    Can you please put a twitter code on your blog so I can click “tweet this” and spread the message? thanks!

  7. “Common Sense” – $400/month? At 40 hours a week, that’d be 170 hours a month, and you’re making well under $3/hour. How about we get real?

  8. She has chronic health issues and works PART TIME because of it. You’d throw a bitch fit if she went on disability for it but instead, she works as much as she can and you still throw a fit!

  9. No, I would not throw a bitch fit if she went on disability. If the problem is that she’s disabled, then we have programs for that, and she should be eligible for Medicaid.

    What I have a problem with is redesigning the entire health care system for the whole country because a small group has a specific set of problems and they choose not to use the program that deals with those problems.

    My problem with disability programs has to do with when they’re abused, as has been seen with certain government agencies in NY. E.g. http://queenscrap.blogspot.com/2010/11/firefighter-caught-lying.html

  10. @Common Sense – Let’s up this a notch…

    I did a search via United Health Care for private coverage for a single female age 34 in Florida (the girl in the picture). Coverage ranged from around $95 to $250 with most of the cheaper plans being better than her PCIP. Now obviously PCIP is going to cost more as Warren alluded to because it HAS to “insure” people after-the-fact which means the actuaries have to crunch the numbers to spread the now statistically biased costs across everyone, but the bottom line is that you can get catastrophic health coverages AHEAD OF TIME for about the same price as a cell plan, two fill-ups of gas, or insurance on an automobile.

    At what point do we have to factor some personal responsibility into the equation? How does someone make it to age 34 and still make minimum wage? If she had been working minimum wage full time BEFORE SHE GOT SICK, she would have had enough money to pay for the health coverage and probably gotten diagnosed and treated before her illness forced her to work part-time. I also find that part-time thing to be questionable. Generally the people I know who are PHYSICALLY unable to work ANY job full time qualify for disability. Just because I’m too physically weak to say work in the fields or stand up all day working retail doesn’t mean I’m not qualified for a desk job as a telemarketer or something. Also, minimum wage jobs are almost ALWAYS reserved for entry level people. If you work the same job for a couple years, you’ve hopefully gained enough skill and experience to get a better paying job. For instance, entry level for Best Buy’s Geek Squad usually pays about $11/hr. with each “level” moving to like $12, $15, $20, etc. It’s not unrealistic to move from $11/hr to $28/hr within 3-5 years. It appears that the “I am Obamacare” girl really needed a life coach more than she needed Obamacare.

    Finally, there are other red flags if you read her blog entries. For instance, she and her boyfriend went to Ikea one day and spent money on a DVD storage unit because they have 100′s of discs. Spending money on stuff from Ikea??? Buying 100′s of discs over the years? How about Craigslisting all of those discs to pay your bills? Another blog mentions her cat that eats too much / too fast and throws up. A pet??? Pet’s cost money (sometimes lots). She probably could fund a catastropic insurance plan just getting rid of cat.

  11. I am a CDA of 10 years. I make 20 an hour. I have no job security, medical/dental benefits ect. I can be asked to do things such as mop floors, pick up kids, get called the night before to not come in for a scheduled shift, I have had things thrown at me, yelled at in front of patients, you name it. I am not to complaining about it, just telling the truth. I am glad I have a job, but its not an easy profession to be in. There are no regulations since its privatized(no union), so the dentists do basically whatever they feel like to their staff. I used to like what I do, but the profession wears on you. Its all about the dentist making more money, when it should be about the patients and the treatment we are providing. I feel the majority of dental professionals are afraid to talk about how they truly feel about their jobs, and that’s sad because we should stand together to make a difference for our profession. I thought about being a hygienist many times but they don’t have it any better, if anything its worse, because they sure they make more an hour, but they sit in the same position all day doing repetitive motions, and they are on a time deadline to get as many cleanings done as possible. We have 3 Hygienist all working in my office part time, and one of them is working as a receptionist making probably less than I do. I would have chose a different career if I knew then what I know now. If you want a stable job with benefits then CDA/Hygienist is not it!

  12. It is a huge struggle for me to pay my portion of health insurance every month, and I may become homeless due to me having to balance the health needs of my family vs housing and other needs. I pay over 500 dollars a month for my portion of the health insurance coverage from my family. I make good money, I thought, except that coupled with the practice of making child support factored on gross pay instead of, well, my actual pay, I have nearly 1000 dollars a month coming out of my check. I do not quailfy for ANY federal or state program of any kind, due to my GROSS income. I make 1700-1900 gross every two weeks. but 900 dollars is what I see in my take home check. That is with 3 dependents (including myself), and my wife is disabled. She can’t qualify for disability, of course, because I make too much money.

    We need a single payer system, and need it now.

  13. Isn’t this the point of the insurance mandate. Everyone has to pay for insurance now. PCIP was supposed to be a short term fix until we had everyone under some type of insurance In Virgina if you drive a car you either have to buy car insurance or pay a fine. If you plan on entering a hospital in America I think you should be required to buy insurance or pay a fine. The insurance mandate is a crucial part of obamacare. No more pre-existing conditions because everyone will have pre-existing insurance

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