The elimination of the pre-existing contions and its effect on rates

Everybody is discussing HC reform lately and one of the cornerstones of reform is the elimination of pre-existing conditions for those applying for insurance. How important is this and will it have an effect on rates?




It is very important, currently somebody that wants to buy health insurance and has certain pre-existing conditions or a history of illnesses will probably be denied and that cant continue. Unfortunately, guaranteeing insurance to all applicants and covering all pre-existing conditions will have a significant effect on rates. Rates in states that have passed similar laws are 2 to 5 times what rates are in CA so we are very concerned about the future of individual rates. The key will be if the government is able to force enough healthy people to purchase insurance along with those that are heavy utilizers of the system. If they are able to enroll enough low utilizers to offset the heavy utilizers then we will be ok.




2. Could they eliminate pre-existing condition exclusions while minimizing the effects on rates?




They could and there are a number of ways to do it. They could allow for a tiered rating approach where people could pay less if they are healthy and more if they are not. The government could subsidize a pool for the sickest group so rates would stay low for the majority of the population. I know that the only way it will work is if we can get everybody enrolled, something that is not likely to happen with the current bills.




2. Isnt that further evidence that we need a government run single payer system?




No it isnt. I cannot think of any government run program that has worked well or contained costs. For example, if Medicare was an insurance company then the government would be forced to take it over and shut it down. This is because they do not have the reserves to pay future liabilities. And this is while underpaying their physicians. 60 Minutes did a story a few months ago on the fraud in the Medicare system and it is estimated at more than 10% and some report as much as 20%.

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