In what’s being called a surprise to legislators, the US health insurance industry has quietly reversed its position on charging higher premiums to enrollees with pre-existing medical conditions. While remaining adamantly opposed to any single-payer, universal coverage plan—which would basically put its constituents out of business—the health insurance industry now says it will end its pre-existing condition policy in exchange for mandated health insurance for all.
In other words, the industry saw the writing on the wall and is deciding to cut its losses on an unsupportable position.
Until now, the health insurance industry has consistently claimed that its business model was dependent upon pricing insurance for those with pre-existing conditions much higher than everyone else. If insurers couldn’t charge more for pre-existing conditions, the industry argued, insurance rates for the young and healthy would skyrocket to unaffordable levels. What was unaffordable for the young and healthy was perfectly acceptable for the ill or those likely to become ill.
What changed?
The health insurance industry is clearly seeing that there is going to be significant movement in the near-term on healthcare and health insurance reform and it’s simply trying to get ahead of the curve on the issue.
Taking a cue from the financial services industry, Karen Ignagni, president of the industry’s trade association, America’s Health Insurance Plans, told elected officials yesterday that insurers “could accept more aggressive regulation of not just their premiums but also their benefits, underwriting practices, and other activities,” reports Robert Pear in today’s New York Times. “Such strict regulation, they said, would make a new public program unnecessary.”
Pear reports that in a letter to the US Congress, Ignagni and Scott Serota, president of the Blue Cross and Blue Shield Association wrote that if the US Congress was willing to mandate health insurance for the entire citizenry, the industry “could guarantee issue of coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.”
Recognizing that change is coming and it’s best to get ahead of it, the health insurers are now falling back to a position of giving whatever ground is necessary in order to subvert any hint of a single-payer, universal coverage system. The industry seemingly desperately wants to cut a deal that eliminates what it considers to be the nuclear option.
The problem is that even the least expensive, mostly full coverage health insurance is inordinately expensive. On the order of US$1,000 per month for a couple with no children. A single-payer, universal coverage system would lower that cost significantly through streamlined administration and scale. And if you believe that the health insurance industry will voluntarily eliminate pricing differentials for pre-existing conditions, well, you just haven’t been paying attention.
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