Why would a health insurance provider reject someone with a preexisting condition?Does it happen often?
From what I’ve heard and read,this is supposed to be a big part of the present health insurance and health care coverage debate.Thankfully,I don’t know anyone who has this problem.I also know that,debates and all,if Congress passes a health insurance overhaul bill,that it won’t take affect until 2014 or later.
August 19th, 2010 at 6:22 am
The reason that a health insurance company rejects a person with pre-existing conditions is that the numbers suggest that such a person will have high expenses in the future. Rather than raise the rates on everyone to make sure that all the expenses are covered, which results in healthy people dropping coverage, the insurance company either rejects the person or issues a policy with a no-coverage rider (ie, if your pre-existing condition is diabetes, the policy won’t cover insulin, oral meds, etc.).
August 19th, 2010 at 6:25 am
Well, yes, it happens ALL THE TIME. Because once you’ve got the problem that you need expensive medical coverage for, the insurance company can’t charge enough to offset the KNOWN EXPENSE.
Insurance only works for UNKNOWN claims – then, all the POTENTIAL claims are divided among people, and the premiums are low. Look at it this way – if everyone could buy a lottery ticket AFTER the drawing, for $1,000,000, why would anyone buy one BEFORE the drawing? And who would pick LOSING numbers, when you know what the winning numbers are? AND, how much would each ticket then have to cost, to keep the same jackpot??
Insurance is kind of like that. Preexisting conditions, mean that an insurance company takes in $300 a month, for maybe $5000 a month in KNOWN chemotherapy costs, or a KNOWN $50,000 back surgery. Then, when the treatment is over, the person cancels. No business can stay in business, paying out more than they take in. That actually includes the US Government – you cannot indefinately run up a deficit, spending more than you take in. Eventually, it will all collapse.
August 19th, 2010 at 6:49 am
Insurers try to make profits. Paying out more in claims than they take in in premiums normally loses money.
If an insurer agrees to cover a person with certain preexisting conditions, who will certainly cost more than they will pay in premiums, it’s bad business. Investors, employees of the insurer, other insureds, would be damaged by that. Insuring many known preexisting conditions will make the insurers fall apart and disappear, then no one (but congress) would have insurance.
A BIG advantage of many group plans offered by employers, is that preexisting conditions can be covered. Normally, there’s a short window to sign up. In a group plan like that, the extra cost of the insurance for preexisting conditions is shared by all of the employees in the plan.
Until now, insurance companies operated for profit. It worked. (Warren Buffet’s primary businesses are insurance). It also attracted the shameful greedy, like we saw in AIG.
Like any business, there must be profit to stay alive. If the gas station pays $8.00 a gallon for gas and sells it for $3; or if the grocery store buys bread for $10.00 a loaf and sells it for $2; or if the shoe store pays Nike $500 for shoes and sells them for $200, they will go broke.
An insurance company that pays $50,000 a year to care for a preexisting condition and collects $5000 a year in premiums will go broke. So, they reject those of us with preexisting conditions, in order that they can stay in business and serve lots of others.
If a government will fill the gap in costs, the insurers can cover everyone, including all of us with preexisting conditions. Where does the government get it’s money? Taxes. That means everyone paying taxes will be required to pay the healthcare bill for preexisting conditions, which can be expensive.
Now ,what if the cost of all that care is too much burden on the government budget and taxpayers?
Instead of rejecting people with preexisting conditions, governments have been known to reject payment of certain treatments or procedures that are too expensive. The difference can be that instead of an insurer denying coverage upfront, the government chooses at the time the coverage is needed. If the insurer rejects, there may be other help, including government help. If the government rejects, the rejection seems much more personal – that a bureaucrat is choosing whether I live a bit longer.
Being rejected for insurance due to a preexisting condition IS devastating. The possibility of someone choosing not to pay for my treatment is horrifying.
There is no easy answer to your question. Thank you for asking. If we keep asking good questions, worthwhile answers will come.
August 19th, 2010 at 7:00 am
health-quotes.talk4fun.net – here is my health insurance plan. As I remember they can provide such a service.