Quora: Will Pre-Existing Conditions Affect the Bottom Line?

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Answer from Dan Munro, Author of Casino Healthcare:

What is the economic impact of insuring people with pre-existing conditions? Only in America would this question even be considered perfectly logical. I'm not faulting the person who asked the question, but it serves well to highlight our lack of understanding of how healthcare really works.

There is no such thing as a "pre-existing" condition because the question of a pre-existing condition is only a matter of when — not if. I consider myself reasonably healthy, but who knows what cellular mutation is occurring as the result of my genetic composition. Even beyond my genetic composition.

Overall, 66% of the genetic mutations that develop into cancer are caused by simple random errors occurring when cells replace themselves, according to a new study published in the journal Science. [1]

As "consumers", we rarely know when we'll need life-sustaining healthcare, and when we do, we don't know how much we'll need. When we do need really expensive healthcare (cancer or heart disease for example), we'll spend all the money we have, including money we don't have, in hopes of extending our life. This is not a rational "consumer" product that can be tiered based on a "pre-existing" condition.

This is also why every other industrialized country has adopted universal health coverage. Regardless of how that's paid for (single or multi-payer), the presumption is that every citizen has "coverage". America is the only country that uses a system of "selective" health coverage. We sort (or tier) coverage by:

  • Age (twice: 26 & 65)
  • Income (Medicaid)
  • Employment (itself an accident of WWII)
  • Military Service (VA)
  • Heritage (Indian Health Services)
  • Uninsured (about 10% of the population)

Why do we tier coverage this way? For one reason and one reason only — to support tiered pricing (as a way to maximize revenue and profits).

The idea of "pre-existing" conditions is simply another attempt at trying to "tier" coverage.

So how exactly does tiered coverage (like the U.S.) compare to universal health coverage (as in every other industrialized country)?

Can we change this? Yes. Should we change this? Absolutely, but there's a quote that highlights the enormous difficulty behind the change:

"How many businesses do you know that want to cut their revenue in half? That's why the healthcare industry won't change the healthcare industry." Rick Scott — Florida Governor

[1] Is cancer just a matter of random bad luck?

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