Pre-Existing Conditions

Terrorists and politicians are practiced at using children as human shields to cover for their nefarious deeds. Politicians put pathetic teary-eyed children in front of the television cameras. They voice-over these heart-wrenching images in a whiny, plaintive, Ozarkian twang:

Not doing this will hurt poor kids, including kids with special needs like Downs syndrome or Autism. I don’t know how families are going to deal with it.

Making their case for coverage of pre-existing medical conditions, these politicians mask distinctions between those who have insurance, those who have had their coverage cancelled, and those who have never purchased insurance. They paper over differences between those who are ill through no fault of their own, and those who fell ill by engaging in reckless behaviors. They mandate one-size-fits-all coverage for all pre-existing conditions; yet offer no cold hard cash in payment (We’ll pay for this from “savings”).

Contents

  1. Pre-Existing Conditions
  2. Proposal
  3. Mechanics
  4. The Uninsured
  5. Closing

Proposal

Trotting out suffering children is a powerful political tool. It paints anyone not in favor of the advocate’s solution as a cold‑hearted bastard. I proudly don the mantle of cold-hearted bastard. I give my solution for the problem of pre-existing medical conditions; one that is actually workable (Note: my proposal for acute medical care is found here).

If you have insurance and come down with a chronic condition, we mandate the originating insurance company pay into an escrow account a lump sum for all your future medical costs. You receive all the money you need for treatment until you are cured, or die.

We predefine a generous lifetime payment amount for each chronic condition, including complications and medical inflation. A one‑time lump sum payment is placed into escrow for use by the patient to purchase treatments as stipulated in a generous treatment formulary.

This payment is generous, but capped. Hypochondriacs and malingerers can purchase Cadillac coverage.

This is a pure insurance scheme. The hurricane does its damage, and the insurer upfronts all the monies needed to bring our house back to where it was before the storm. We don’t expect the insurer to stick around and supervise the restoration work. If during restoration we uncover further damage, the insurer coughs up additional money.

Mechanics

Should you change jobs, your new insurer does not need to assume any risk or responsibility for your escrowed condition(s). You are not stuck with the same employer or insurance policy for the rest of your life. You get to choose from the basket of insurance options as offered by employers or as individual policies, without prejudice due to your prior condition(s).

Patients know the assumptions that went into the calculation of their lump sum monies. They will be required to sign an affidavit as to their responsibility to husband escrowed monies for a lifetime of treatment.

Patients receive periodic reports as to their remaining coverage versus the spend-rate of their escrow account. Exhaust the escrow account by paying a premium price for new or offbeat treatments and you’ll end up paying your own nickel.

Payments are based on actuarial estimates of remaining lifespan for patients within each chronic condition. Since we are not really repairing a beach house, we need a mechanism to continue paying for those who live beyond their expected lifespan. We adjust for this ‘human factor’ through the use of annuities, or annual limits. Die early and any money left over in your escrow account goes to cover expenses for others who live beyond their actuarial estimates.

Insurers pay patients for state-of-the-art treatment available as of the date of their initial diagnosis, as negotiated between the insurer, an independent estimator, and the patient’s physician(s). Future patients may find themselves with more money than past patients, as more expensive technologies become available. I wouldn’t hold off on getting sick though since new technologies can just as easily lower prices and therefore monies in the escrow account.

The escrow pool for a patient does get reevaluated over a limited time period (e.g., the first 3-5 years). Even though patients ‘own’ their escrow accounts, monies are initially based on estimates that are often quite uncertain (e.g., inflation, severity of the disease). Escrow monies get adjusted (up or down) based on actual outcomes.

Patients are always free to make their own treatment choices, hopefully with advice from their personal physicians. If a patient uses a $60 x-ray from a discount center at a strip mall instead of a $1,000 x-ray from the hospital, then these savings accrue to the patient’s escrow account for his or her future use.

Patients select treatment options from a formulary tailored to their medical condition, which is generously updated as new technologies and medicines become available. There can be many more treatment options available (e.g., holistic medicine) than those considered when calculating the initial lump sum paid to the patient. Again, alternative treatments are wide open to the patient, subject to the availability of monies in their escrow account.

The Uninsured

What happens if you don’t have insurance and become chronically ill? Well now we’re talking charity. You want someone else to pick up your tab. This has nothing to do with insurance.

Should the government wish to help the poor they can deposit lump sums into the industry escrow accounts, subject to the same payment schedules and rules as the insurance companies. No discounts. No cheap seats. No strings attached. No free lunches. Since individuals spend their own escrow monies, there are no bulk purchase “savings” that accrue from government participation.

I don’t want a handout. I just want access to insurance at affordable rates!

Bullsh*t. You want someone to give you $10 in medical care for every $1 you pay in premiums. That’s charity.

As a society we help those unable to help themselves. But we don’t do this with a hidden tax on those who act responsibly by buying health insurance. As a society we force prioritization of explicit tax spend for these worthy charity cases as against tax spend to sequester carbon dioxide to avoid the human health impact of AGW. We’re looking at several billions of dollars a year to pay for this coverage.

There must be strings attached; consequences for not having purchased adequate chronic care coverage. Without these consequences, if you responsibly buy health insurance then you’re a chump. We are not a nation of chumps.

Have the government set up its own cheap seat escrow accounts, funded with cold hard cash. Recipients get treatment but perhaps not their preferred treatment: a smaller escrow account and a greatly restricted treatment formulary.[1] This is not broad-brush health insurance – it’s indigent citizens waiting in line for charity whenever they come down with a new chronic condition. Buying insurance continues to have significant meaning for those who can afford it.

As a society we give a gold pass, move to the front of the line, for those who, before this proposal is passed, came down with a chronic condition and then were dropped from insurance coverage due to unemployment or insurance company shenanigans. Why? Because pre-existing conditions has been known to be an issue for decades and we the people have done nothing about it.

Teary-eyed children get a gold pass.

Cold-hearted bastard, remember?

Closing

Insurance is intended to repair the damage from the hurricane, and no more. Once we are diagnosed with a chronic medical condition we do not want the insurance company continuing to look over our physician’s shoulder trying to save money.

It’s up to the patient to husband their finite escrow account, and to police as best they can any unnecessary treatments. Often docs are mandated either legally or bureaucratically to perform frivolous (defensive) tests, but patients can and will refuse to pay and play in these games when it’s their own money.

If you believe the insurance industry provides valuable services to help stop unnecessary treatments, obtain price discounts, or better navigate the complexities of the healthcare system, then a business model will emerge where escrow patients can purchase these stand-alone advisory services, and compare the cost of the advice given to the savings realized in their escrow accounts. We can even add a few extra dollars to the escrow account just so this can happen.

We put the patient in charge. Do you exhaust your escrow account on a new medication that promises a three month statistical increase in life expectancy, at a cost of two years of chronic nausea? Or do you use your escrow account for home nursing care, to lower the burden of your final years on loved ones? I prefer to leave this choice to the patient, physician and family.


1. Note: even with charity cases I prefer to keep Federal bureaucrats away from micro-managing physicians. Hence escrow accounts, and not an expansion of Medicaid.

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