Health Insurance and Preexisting Conditions

Selling health insurance to people with pre-existing conditions is like selling life insurance to dead people.

Can you buy automobile insurance after you have totaled your car?

Can you buy homeowners insurance after your house burns down?

Why do people think you can buy health insurance after you are injured?  I have a preexisting condition that doctors say will take $30,000 to fix.  Will you sell me a health insurance policy for less than $30,000?  Why would I buy a health insurance policy that cost more than $30,000?

Because we can not sell health insurance to people with preexisting conditions, we need to come up with another way for those people to buy or pay for health care.  A question to ask is “how did people buy health care before the invention of health insurance in the 1940’s?”

Before the invention of health insurance, people got sick and had medical expenses that exceeded their ability to pay on the spot.  How did they pay?  They talked to the hospital administrator and set up a payment plan.  Then they paid the hospital over a period of time. In short, they received a loan from the doctor or hospital and paid the loan back.  What would our model for health insurance look like if all health insurance was a loan?

Imagine 10 people sitting around a poker table.  Each day each person puts in an ante of $0 into the pot.  Each day the dealer deals a hand called “the game of life”.  Based on the hand people are dealt, some people ask the dealer for a loan.  This is what we know about this type of health insurance:

• The cost of a health insurance policy has been reduced to zero.
• All the money originally paying for insurance now goes to pay back loans.
• If someone with a preexisting condition sits down at the table and says, I have 2 aces, no one else cares.  It is not their money being given away because the insurance company is loaning money to the patient.
• If everyone tries to collect health benefits on the same hand, they can do so because they are getting a loan from the insurance company.
• Young people can save their money in their Health Savings Account and never buy the old type of health insurance again.

This brings up a valid concern.  Would you loan money to a sick person?

I have a $400,000 life insurance policy.  This means I could spend up to $400,000 on end of life care and leave some or all of my insurance benefits to my health care providers instead of my wife and kids.  This means my wife and I have an important decision to make.  How much insurance money should we spend on our health and how much should we leave to the surviving spouse or children?  What should we spend our own money on?

Conclusion

Greed had been removed from the health care system because people are spending their own money.  The cost of health care will not rise as much because people will not ask for extra testing and extra procedures that are being paid for by someone else.