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Changing the Game: "Health Insurance Reform" Means Making Sure Only the Government Can Win

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Posted on September 2 2009 1:00 pm
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This is a "pre-existing condition."

This is a "pre-existing condition."

If you watch cable news at all, you’ve seen the ads for health care reform, now called health insurance reform. Certainly we have, over and over and over again. They range in content from this blatantly offensive ad from the AARP:

… to the seemingly benign ad from Americans for Stable Quality Care (an astroturf group funded by SEIU, PhRMA, and the American Medical Aassociation — all big-money Obama supporters):

Now, this second ad makes some good points. Insurance companies dropping patients because they get sick is not a practice we support. But notice how the ad conflates that practice with refusing to cover people who have pre-existing conditions.

This ad is funded by smart people (some of them, anyway): doctors, lawyers, pharmaceutical manufacturers. So we doubt that they don’t know what a preexisting conditions actually are, or how they factor into insurance rates. We can safely say that this ad is intentionally misleading.

Let’s take a short look at the definition of insurance:

the act, system, or business of insuring property, life, one’s person, etc., against loss or harm arising in specified contingencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved.

Health insurance is not a “get-out-of-medical-payments-free” card. It is a codification of risk. You’re putting a small amount of your money up as a wager that you will get sick and need medical attention; the insurance company places a much larger amount of money at risk as a wager that you won’t get sick. The reason that insurance works is that some people “win” the bet and some lose — not everyone who pays into the insurance pool winds up needing expensive medical care.

Now, imagine that SEUI, PhRMA, and the AMA get their way. Insurance companies are no longer allowed to consider preexisting conditions—a major element in determining their exposure to risk. If you got diabetes before you got medical coverage, even if it’s due to your lifestyle, that must be covered. If you got lung cancer because you smoked,  you could buy insurance the next day and be completely covered for the consequences of your own actions. If you broke your arm riding a motorcycle, you could buy coverage the next day and get it paid for.

If insurance companies are no longer allowed to assess risk and charge accordingly, then such a mandate changes health insurance into a completely separate product. Insurance companies would be forced into a situation where they are guaranteed to lose money, and unlike the “public option” of ObamaCare fame, wouldn’t have the U.S. taxpayer to fall on. Try keeping your current insurance when your insurer goes out of business.

Think of it this way—you’ve no doubt seen the footage of the wildfires in California. They’re on the news every night as well. You’ve seen homes destroyed in the fire. Now, we can’t come in after the fact, buy one of those homes, buy insurance for it, and demand that the insurance company build us a new house. Likewise, we can’t buy a car, get into an accident, and then buy insurance and demand the company pay for a new car. That’s not how insurance works. But if this is what “health care reform means,” then the game is entirely different.

We remember what happened the last time the government began to mandate that certain people not be allowed to do their jobs and assess risk – we got the Community Reinvestment Act. When banks were, in some cases, not allowed to assess risk when granting loans, we got a huge contributing factor to the mortgage meltdown.

This is what conservatives rightly fear when they say the public option is stealth socialized medicine. Sure, Obama can preach all he wants about how his reforms are about “competition.” What he doesn’t say is that this competition will be held on grounds where only the government can possibly win.

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