Should a life insurance company “discriminate against” an 80 year old smoker with lung cancer by declining to offer the same policy available to healthy 20 year olds?
Should a home insurance company “discriminate against” a home owner whose house is on fire by refusing to offer a policy on that house?
Should a car insurance company “discriminate against” a five-time convicted drunk driver by failing to offer the same policy available to safe drivers?
Anyone who suggests that such “discrimination” is wrong should be deemed insane.
Yet, when it comes to the health debate, various politicians and pundits pretend it’s perfectly sensible to force health insurance companies to ignore pre-existing conditions.
On August 15, Barack Obama said in Grand Junction: “A recent report found that in the past few years, more than 12 million Americans were discriminated against by insurance companies because of a preexisting condition.”
Democratic chair Pat Waak wrote for the August 19 Denver Daily News, “There should be no discrimination for pre-existing conditions.”
But this is not merely a Democratic phenomenon.
Jeff Crank, Colorado director for Americans for Prosperity, said at a July 28 rally in Denver that the “right kind of health care reform” includes “eliminating the pre-existing conditions exclusion.”
And in a July 30 op-ed for the Denver Post, Republican Congressman Mike Coffman wrote that he wants to “require health insurers to cover those with pre-existing conditions.”
Such insurance controls are wrong because insurers and their customers have a moral right to voluntarily associate and create contracts, according to their own best judgment. Forcing insurers to ignore pre-existing conditions violates the rights of both parties. The only proper role of government over insurance contracts is to prevent fraud and ensure fulfillment of contract.
Forcing insurance companies to ignore pre-existing conditions forces those without such conditions to subsidize others through higher insurance premiums. One consequence of such political controls is to price many out of the insurance market altogether.
Forcing insurers to ignore pre-existing conditions means allowing consumers to wait until they get sick to buy insurance. By the same logic, a home owner could wait until his house was on fire or in the path of a tornado before buying an insurance policy. Likewise, a person might as well wait until he gets cancer or some other medical condition to get insurance.
Such controls destroy the very purpose of insurance, which is to enable a group of people to pool resources in advance to cover unexpected high-cost risks. (See my previous article, “What Is Health Insurance?”) For instance, we know some of us will get cancer, but we don’t know who will get get it, so we voluntarily agree to spread the risk of paying for treatment.
The logical consequence of forcing insurers to ignore pre-existing conditions is to force everyone to purchase insurance, so that people don’t wait to buy insurance until they get sick. That’s what Republican Governor Mitt Romney advocated in Massachusetts, and that’s what Democrats now advocate nationally.
As I argued previously, there is indeed a problem with pre-existing conditions with respect to health insurance. This problem was caused by political interference in medicine. Tax policy drove most Americans into expensive, non-portable, employer-paid insurance. Various insurance controls discourage long-term health policies. Politicians have mostly destroyed the market in long-term health insurance. Now, failing to take responsibility for the problems that they and their fellows caused, politicians wish to try to “solve” those problems by imposing yet more political controls on health insurance. The result would be only more distortions, more unintended consequences, and renewed calls for politicians to “do something” to solve the new problems.
The alternative is to restore a free market in health insurance, roll back insurance controls, and offset the tax-supported employer-paid system by allowing people to buy insurance through expanded Health Savings Accounts.
We need fewer political controls on health insurance, not more. We need more protection of individual rights in medicine, not more violations of our rights. If we value our health and our lives, we need liberty.