Pre-existing Condition Insurance EXPLAINED

This post will give you a complete understanding of the healthcare debate over pre-existing conditions.

At the outset, let me say that it may be possible to pass a law that says that the sun must reduce its intensity by 20% in order to combat global warming, or that the value of Pi should just be rounded off to 3.0 in order to make mathematics easier, but neither of these laws will actually change reality.

So to can you pass a law that requires insurance coverage for pre-existing conditions, but this does not alter reality or make it possible. Let me explain....

The reality lies in the definition of insurance itself. Insurance is just an arrangement where you pay a fixed amount that you fully realize you are going to lose, in exchange for someone else taking a risk for you. In other words, you pay an insurance premium against fire damage to your house. You lose that premium and you know this. But in exchange for that premium, the insurance company now takes the risk that your house will burn down, because they have agreed to pay for that in the unlikely event that it happens. You have paid to transfer the risk from you to the insurance company. Fine.

Now let me ask you, what are the chances that your house will burn down next week, or next year, or within 10 years? The insurance company analyzes everything about your house and your neighborhood, and figures out a percentage probability that your house will burn down, and then uses that information to charge you an amount that is appropriate for taking that risk.

Now let me ask you this: what are the chances that your house burned down yesterday? Now you are done with probabilities and risk and uncertainty. Now the answer is either 0% or 100%. It either did burn down already or it didn't. In this context it makes no sense to say that you want to pay to transfer the risk to someone else. The risk has already been reduced from the field of possibilities down to a certainty of whether it happened or it didn't. You would not pay any amount of money to insure against your house burning down yesterday if it already did not burn down yesterday. Similarly, no insurance company would accept any amount of money to accept the risk of your house burning down yesterday if it already actually burned down yesterday - at least not without charging you at least as much as the entire value of the house. It makes no sense.

You cannot have insurance against a sure thing that has already happened. There is no such thing. It makes no logical sense to talk about insurance when things have already happened because there is no more risk to transfer. Risk requires uncertainty and probabilities. The past is already completely certain.

Bringing this back to health insurance for pre-existing conditions then, it is clear that there can be no such thing as insurance for pre-existing conditions unless the insurance costs at least as much as paying for the treatment for the pre-existing condition. Of course, this is not what people expect or what they mean when they talk about health insurance because they have been conditioned to be believe that health insurance is somehow not really insurance, but a way to get healthcare for free or more cheaply than just paying out of pocket.

So, the end result is that when people say they want health insurance for pre-existing conditions, they are really not asking for insurance. What they are really saying is that they want someone else to pay for their healthcare. That is the bottom line with all the nonsense smoke and mirrors stripped away. "Coverage" for pre-existing conditions is synonymous with socialized medicine where everyone just pays for everyone else.

Of course, like all socialized programs, it is easy to forecast the miserable failure that this would be, not just for the few people who will end up footing the bill for everyone else, but for the overall quality and availability of the care that everyone relies on. Trying to force insurance companies to cover pre-existing conditions will not work, any more than it would work to mandate that the sun should reduce its intensity. But what is sure is that it will ruin what is left of the healthcare system in the process as costs spiral increasingly higher to pay for the "risk" of sure things that have already happened.

Whatever your opinion on healthcare reform and the role or non-role that the government should have in it, the laws of reality do not allow for "insurance" for pre-existing conditions. It is a dishonest label for proposing socialized medicine.