Oct 21, 2017

An Eroding Model For Health Insurance


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11/17/2008
Brian S. King
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The title for this post is the title of an article in yesterday's L.A. Times by Lisa Girion and Michael A. Hiltzik.  It's the first in a three part article dealing with trends in the health insurance market.  The second part, appearing in today's paper, is found here and tomorrow's paper will, I assume, contain the final installment.  Post claims underwriting of individual insurance policies is one of the reasons for the erosion of coverage in the individual claims market.  This type of wrongful rescinding of claims is something I've discussed at length in a number of past blog entries.  If the individual insurance market expands, we'll see more of that noxious practice unless fundamental reforms occur in state insurance laws.  But there are other problems with individual policies ranging from cancellation of coverage after serious health conditions arise, to astronomical premium increases to unduly restrictive underwriting criteria. 

One of the troubling things about Senator McCain's proposals to reform the way healthcare is delivered and financed in this country is his promotion of individual health insurance policies.  To be blunt, the idea that competition in the insurance market will be effective in providing access to cheaper health insurance for anyone other than healthy young people is just plain foolishness.  Any honest person who understands how insurance risk pooling, cost spreading and underwriting works will tell you that.   

If you run across someone who tells you the solution to our problems of coverage for healthcare is to expand the availablity of individual health insurance policies, they are not to be taken seriously.  Without fundamental insurance industry reforms, this approach is a non-starter.  The first two days of the L.A. Times series help understand why.   

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