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Pre-existing Conditions

Yesterday I talked about why millennials might not buy insurance. The cost under the Affordable Care Act is much more than what they would have paid in the free market. But there is another reason why they (and many others) might not buy insurance. They won’t need it because of provisions requiring insurance companies to cover pre-existing conditions.

While that is an admirable requirement, it leads to a fear many proponents and opponents of Obamacare have about how Americans will try to game the system. Millions of healthy people may not decide to enroll. The process seems confusing and there have been glitches, but that is not the main reason they will not enroll. They may merely wait until they have a health problem and then decide to get insurance.

We don’t have to guess how this would happen since we already have a state that has implemented a form of Obamacare known as Romneycare. In the Commonwealth of Massachusetts, the insurance companies call these people jumpers and dumpers. When they have a medical problem or medical emergency, they jump into the insurance pool. They can’t be denied because of a pre-existing condition. They stay in the plan until their medical bills are paid. Then the dump the plan and go on about their life. I predict that one of the problems that will develop with Obamacare is the problem of jumpers and dumpers.

But let me mention one other issue. In order for insurance companies to survive, they will have to do all they can to attract healthy people and dissuade sick people. So I also predict that the plans they provide on the state exchanges will be structured so they can attract more healthy people and discourage sick people.

Forcing insurance companies to take people with pre-existing conditions may have been a laudable goal, but we should also expect a number of unintended consequences. We should have known to expect them if we just observed what was happening in states that had the precursor to Obamacare.

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