Should Politicians Force Insurers to Ignore Pre-existing Conditions?

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.

4 thoughts on “Should Politicians Force Insurers to Ignore Pre-existing Conditions?”

  1. Ari,

    Perhaps I am missing something, but as a person with a pre-existing condition, I have felt the sting of discrimination. It would not bother me if the discrimination had been in the form of a higher premium because, after all, I am a higher risk. What I found unfair is that I was DENIED coverage altogether by the corporate insurers. I was, therefore, forced into Cover Colorado, the state run insurance system. It upset me tremendously that I had to do so.

    While I totally disagree with the idea of government-run health care, there needs to be some legal provision stating that people with pre-existing conditions cannot be totally denied coverage.

  2. Steve, as much as I sympathize with your plight, you’re totally wrong. Politicians should not violate the contract rights of insurance companies and their customers.

    Please notice that I did NOT defend the status quo, but instead indicated how political controls have mostly destroyed the market for long-term insurance. The same is also true of higher-risk insurance in the individual market.

    Just as the elderly literally cannot buy private insurance because of Medicare, so those with pre-existing conditions today have often no individual option except for the government one.

    People with pre-existing conditions today are in quite a predicament. But don’t blame “corporate insurers” for this problem — blame the politicians (and their stooges in business) who advocated the controls that mostly destroyed the long-term insurance market.

    I too am fearful that I might develop a medical condition, then my insurance company will decline to renew my policy. The basic problem is politicians have so distorted the insurance market that the sort of insurance I’d like to get — a guaranteed long-term policy — simply is not available.

    We’re in a bad situation. But we don’t improve matters by expanding the same sorts of controls that created the problems in the first place. Political controls are the disease masquerading as the cure.

  3. I think you nailed it on this one!
    From what I can see we don’t have ANY major health “coverage” issues that need to be resolved, It’s all contrived! The problem is that when people choose not afford health insurance do we really let them die when faced with life threatening health issues? And if we have some sort of resources for them how do we discourage it’s use? Currently in Colorado we have, a pooled resource between govn’t, private companies and individuals to provide health insurance to those “discriminated” against for having pre-existing conditions. They do require premuims and it’s not super cheap as all of the participants are high risk but they do partially subsidize those making less than 50k. On top of that there are no pre-existing exclusions for medicare, medicaid and Who’s missing? It’s only those that coose not have it, illegals and a few unemployed that decided not to take COBRA but probably qualify for public assistance. The onlty issue is bringing costs down and portability. Pre-Existing discrimintaion is a scare tactic they use to create hysteria. As you point out by deregulating it would solve most of the current problems!!

  4. I basically agree with MIke. I would, however, encourage caution with the term “we.”

    I’m all for voluntary charities to provide care to hard-luck cases. My dad helps raise funds for Shriner’s hospitals, and various children’s hospitals provide care at no charge to families. On a free market, doctors would be free to offer sliding fee scales.

    I am not opposed to temporary, transitional political programs to clean up the existing “pre-existing conditions” mess caused by political controls. But the goal should be a consistently free market, in which people are free to finance as much of other people’s health care as they see fit, but in which people are never forced to do so.

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