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Insurance, Rights, and Privileges

by: mattw

Mon Jan 01, 2007 at 22:39:25 PM EST

In the LA Times via JET_powered:

Healthy? Insurers don't buy it
By Lisa Girion, Times Staff Writer
December 31, 2006
[...]
Blue Cross of California, which dominates the market, declined to disclose its rejection rate, as did its chief competitors. A 2004 industry survey found that health plans said they turned away about 12% of all applicants. But the rejection rate rose with age to 30% for people 59 and older. (emphasis added)
[...]
Health plans also reveal a portion of their underwriting guidelines in letters notifying applicants why they were rejected, as well as in communications with brokers who sell their coverage. According to regulators' postings, rejection letters and interviews with brokers, conditions that can lead to outright rejection or a higher premium include:

AIDS, allergies, arthritis, asthma, attention deficit disorder, autism, bed-wetting, breast implants, cancer, cerebral palsy, chronic bronchitis, chronic fatigue syndrome, chronic sinusitis, cirrhosis, cystitis, diabetes, ear infections, epilepsy, gender reassignment, heart disease and hemochromatosis (a common genetic disorder that causes the body to absorb too much iron) [...] hepatitis, herpes, high blood pressure, impotence, infertility, irritable bowel syndrome, joint sprain, kidney infections, lupus, mild depression, muscular dystrophy, migraines, miscarriage, pregnancy, "expectant fatherhood," planned adoption, psoriasis, recurrent tonsillitis, renal failure, ringworm, severe mental disorders, sleep apnea, stroke, ulcers and varicose veins.

So one can be refused health insurance outright because of prior miscarriage, breast implants, asthma, impotence, or migraines. You can be refused insurance because you are planning to adopt a child (an indicator of infertility, perhaps), and men can be refused insurance because of the statistical likelihood that they will soon be a father.

Wow.

I wanted to throw a thought out there for criticism: it strikes me as relatively non-controversial that we have a government as a tool to insure and maintain our rights, while market forces can be used to manage privileges.

Government provides for a police force to protect our basic rights, though one can always hire a bodyguard or private security if you want more protection than the government can reasonably provide. On the other hand, there is no absolute right to drive, or to have your widow and children cared for should you die: I don't think too many people would object to a car insurance company refusing to insure someone with 5 DUIs, or a charging more for life insurance for someone at age 80 than age 30.

There's plenty to insure, and plenty of ways for private industry to make a decent profit enabling personal privileges and offering additional piece of mind to people who insist on having it. But if 12 percent of America will never be allowed to get health insurance because, well, they just might use it, then the cost of preserving the private health insurance system is just too high.

Can you think of any cases where this rights/privileges formulation breaks down?

mattw :: Insurance, Rights, and Privileges

Tags: healthcare, Universal Healthcare, Insurance, Rights, (All Tags)

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Insurance, Rights, and Privileges | 5 comments

a great diary (0.00 / 0)

this is a terrific analysis, and if this basics-only writer knew how to do it, i'd recommend it all over the place.
it helped clarify my thinking on this issue, which is that health care and health insurance are two separate things and need to be discussed separately. we need to define a basic health care system that would be available to all, single-payer, and then if private insurance can come up with a role for themselves within the framework WE DICTATE, god bless 'em.
i don't, by the way, think we should be shy about saying single-payer is our goal. even if it's not what we ultimately get, it is certainly the bargaining position we should start from.
thanks again for the post.

by: glasskat @ Wed Jan 03, 2007 at 13:12:34 PM UTC

by: you @ soon

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A key point from the article (0.00 / 0)

I'm not sure about the assumptions of the model you pose, mattw. And I'm not sure I want to use it as a basis for arguing how to think about this, because what occurs as merely a privilege to some is not optional for others.

I would rather focus on what the insurance companies are supposed to do, and what they have become. I suspect that if we looked at deregulation in the finance industry, and the way insurance companies make use of (re-invest) the money they take in as premiums, and perhaps the financial structure of insurance companies in the past and at present, we might come closer to understanding a basic difference in how this business is run compared to the past. IMHO there is a definite speculative feel to it now that reminds me of Wall Street's increase in speculative, short-term investing over the past couple of decades.

There's a paragraph in the article you linked, which is highly important in considering EXACTLY what we are doing with Rell's plan or any other plan (such as the high risk pools a number of states have adopted):

"Insurance companies are offloading sick people onto the county system," Svonkin said. "They want a guarantee that they are going to make money. That's why they won't take sick people. They are missing the whole point about assuming some risk."

When you float a plan, if it costs more than what healthy people are currently paying for their plan, it will have the effect of not motivating them to enroll, but instead motivating only those who are either uninsured and not healthy (who already spend more than the plan costs), those who are in groups with high rates -- those who are healthy and think they can risk it won't enroll. Will that result in reducing the rates to the remaining, healthier group and ensure profitability for the insurance companies as more and more Americans come into their senior years?

If in any way the design of the plan makes the state and its taxpayers the fall guy for the unprofitable citizens the insurance companies would like to offload anyhow, and under the guise of providing health care for all, and effectively they're providing profitability care for the health insurance companies without providing genuine relief to the citizens, I'd hope legislators -- and citizens -- would take a cold, hard look at whether such a plan is acceptable.

So I think it's very important to look at the difference between voter intent (affordable health care) and realistic effect of the proposal (improving conditions for the industry by offloading high risk ndividuals), and always ask: is this genuine health care reform or health insurance industry finagling?

by: greenpeas @ Wed Jan 03, 2007 at 13:51:38 PM UTC

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adverse selection (0.00 / 0)

It's why for-profit health insurance is a disaster, while other kinds of insurance work just fine.

I agree that the formulation might not be the best one, just tossing it out there. There might be a big gap in my logic, though I think there'd need to be a pretty vast consensus (or a constitutional amendment :) for something to be considered a government-enforced right.

–7.25 / –7.28 | http://imgs.xkcd.com/comics/tw...

by: mattw @ Wed Jan 03, 2007 at 23:08:03 PM UTC

[ Parent ]

where I was getting stuck (0.00 / 0)

had more to do with possible perils with where this seems to go: "it's a privilege; therefore market forces is the right approach". I'm not completely enamored of the market forces arguments. The market, for example, is not taking care of electricity too well, though it will never be voted in as an unalienable right (tho clearly a necessity).

Some decisions don't have a lot of wiggle room, and while the market is sorting things out, people are really, really struggling. That was my incomplete unease.

And I do mean Incomplete. Maybe you've nailed it and it will take awhile for it to sink in!

by: greenpeas @ Wed Jan 03, 2007 at 23:31:09 PM UTC

[ Parent ]

Electricity is interesting (0.00 / 0)

... because that's the argument that opponents of universal healthcare try to use for our health system: all you need is access to the system, even if you can't afford to utilize it.

–7.25 / –7.28 | http://imgs.xkcd.com/comics/tw...

by: mattw @ Thu Jan 04, 2007 at 00:53:31 AM UTC

[ Parent ]