So many people are saying that we need to stop insurance companies from denying people coverage due to pre existing conditions. Is there a reason why they do this?
I have been trying to think that the reason why they do this is because if they were to accept these people, then there insurance premiums would be so high that the others in the risk pools would have their insurance premiums skyrocket as well. Or the problem could be that the costs for insuring the people with pre existing conditions would cost so much money that there is too much uncertainty for the company to take any risk.
But why can't they just charge them with higher insurance premiums and place them in a separate risk pool for people with expensive pre existing conditions? After all, the higher insurance premiums mean that they are more of a risk to the company insuring them and the higher premiums would be used to fund the medical care. I don't know.
How would someone handle this from an austrian point of view?
"So many people are saying that we need to stop insurance companies from denying people coverage due to pre existing conditions. Is there a reason why they do this?"
Because they aren't a charity, they are an insurance company. They can only make money by satisfying the consumer. When they accept those people, they must charge higher premiums to others, and thus they satisfy the consumer less.
Furthermore, once the pre-existing condition mandate legislation is passed, then individual mandate legislation must be passed to avoid people only signing up for insurance once they get sick/hurt.
I believe there are insurance plans for people at high risk. If there aren't, then I guess there isn't enough of a demand for them. I remember reading an article here (about how government created the problems which makes health care so expensive), and there actually isn't as a high of a demand for health insurance as the government would like one to believe.
I think some people would save more paying out of pocket than having health insurance.
In any event, Obama's goal with this legislation was clearly to raise prices so that everyone will become dependent on the government because he's an asshole.
You can't really insure a pre-existing condition because it already exists; there is a known cost. Insurance works by spreading risk; unknown costs. What you are describing is a cost-sharing program. If everyone in the cost-sharing program has expensive pre-existing conditions all you're adding is an administrative middle-man that charges you a little extra. Your "premiums" would just be a forced savings program to go towards your health care and you'd be better off just paying for it yourself.
The government mandates are simply a subsidy for unhealthy people at the expense of healthy people.
Tantamount to saying that insurance companies should be outlawed. You cannot insure anything retroactively.
I an not 100% sure of the Austrian answer, but I can say that I have already felt the effects of the new US Health laws, with my insurance costs increasing, and I have a pre-existing condition. I can say for a fact though that my pre-existing condition is now considered mild/no-existent as I had my open-heart surgery when I was 6-months old, otherwise I wouldn't be here now. To me, the reason they would refuse us with pre-existing is that we have a guaranteed cost, as we already have something that will cost money, unlike the others where they have the possibility of never using their policy. In my mind this is similar to flood insurance, comparing a yearly flood zone with a 100-year zone to a 10,000 year zone, where the yearly is preexisting, and so on upwards. You would expect the yearly to be so costly that the difference between insurance and bearing the cost yourself is next to nothing, while the 100 or 10,000 might be cheap, but unnecessary for all but the most risk-adverse.
What needs to happen is to open up the market for new insurance companies to compete. Right now, only a selected few are granted the right to provide insurance.
Who cares about insurance? Not me.
The excerpt below is part of a larger libertarian healthcare explanation:
Viception: Health insurance means the insured do not pay the full medical costs. Thus the insured demand the best and care less about cost. Buyers prefer surgery instead of drugs, even if the medical benefits are small. Buyers use every life-saving intervention despite costs and low benefits. Most people do not pay the full cost of their health insurance. In this country, the poor and the old get free or subsidized insurance via Medicaid or Medicare. Medicaid and Medicare helped raise healthcare costs because they subsidized healthcare usage. The more demand, ability and willingness to pay, that exists for anything allows its cost to rise. Health insurance hurts individual incentive to compare prices. What if you had gasoline insurance? Why would you care what gasoline’s price is since your insurance is paying for it? Health insurance should be for unpredictable, catastrophic events, not a pre-payment plan for routine care. Some homeowners have fire insurance, but usually not maintenance insurance. The fire insurance is for a catastrophic loss which is an unlikely, but costly event. Thus, fire insurance is affordable since the premiums paid by all the homeowners whose houses do not burn down pay for the homes that burn down. State governments require health insurance to cover routine physicals, mammograms, chiropractors, and hundreds of other procedures which raises costs. What is and is not insured should be determined by buyer preferences, not political lobbyists.