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Wednesday, May 3, 2017

Chronic Illness And Health Insurance

With the return of the Obamacare repeal and replacement bill to the center of attention, it's important to talk about how all this affects people with chronic illnesses or "pre-existing conditions" as the media refers to it. 

First let's discuss exactly who is included in this group.  One sub-group includes those who are being treated for a disease when they buy the insurance and who will have additional treatments needed.  For example, suppose a person breaks his or her leg and, after the initial treatment, buys insurance.  There will be costs for removing the cast and possible physical therapy after that, but then the costs from the broken bone will end.  Then there are people who have had some illness appear and who fear it will recur.  A good example of these people are those who have had a heart attack and who are at elevated risk of another one.  Then there are people who have diseases which appear and which do not cost much for medical care at first but which carry the risk of getting much worse with major medical costs resulting.  A good example of this is someone with diabetes who can control his or her disease with diet and daily medication in the form of a pill like metformin.  This person will probably visit the doctor every three months or so and get blood tests to monitor the condition, but the costs are manageable at first.  If the disease progresses, however, all sorts of complications can result including some that lead to death.  A third category within this group are those with chronic diseases that are expensive and continuing.  Here a good example is someone with Multiple Sclerosis.  Some of the medicines for this condition cost many thousands of dollars each month, and the need for the meds essentially never ends.  No health insurance premium is ever going to cover the costs of such an illness.  The needs of each of these groups vary significantly.

Second, let's talk about what health insurance does for these people.  Basically, it serves two main functions.  First, the obvious function is that insurance covers the costs arising from the condition.  This allows people to pay a monthly premium instead of the full and exorbitant cost of treatment.  For people with pre-existing conditions, the insurance company knows before selling the policy that these costs are either certain or very likely to come.  That is why, for many years, insurance companies either would not sell to this group or else charged much higher premiums to them.  This is the area on which almost all commentary focuses, but it is not the only important one.  The second function that health insurance serves is that it substantially lowers the cost of medical care.  Because of the distortions that the government has injected into our healthcare system, patients are charged different prices based upon the nature of their insurance or lack thereof.  Here's an example of what I mean.  Recently, someone I know had some blood tests done at a lab which is part of a national chain.  There was a billing mistake because the lab sent the charge to the wrong insurance company.  As a result, a bill for the full charge was sent to the patient.  The total for the blood tests was $2400.  After a clarification with the lab, the bill was sent to the correct insurance company and the "discounted" bill was paid by that company.  The full payment for the lab test at the "discounted" rate charged to the insurance company was $159.  That's over a 90% reduction in price when the insurance company got involved.  Similar crazy high reductions in price are given for prescriptions, hospital care, emergency room visits, and doctors' services.  If someone with a pre-existing condition cannot get insurance, that person will be left facing the crazy high non-discounted prices for medical services which will inevitably wipe out that persons savings.

There are other functions for insurance for those with pre-existing conditions, but they are minor.

Without insurance, the people with pre-existing conditions are sure to be wiped out financially.  It may not happen immediately, but it will be inevitable.  Something like 4% of the population is hit by these conditions.  Can we really afford to have these people wiped out financially because they have these conditions?

When the details of the latest proposal are released, let's look at them closely to see how they will handle pre-existing conditions.

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