Thursday, October 15, 2009

You break it, you own it

Colin Powell and Richard Armitage famously cited the Pottery Barn rule in talking about intervention into the affairs of other countries – “You break it, you own it.”

It seems to me that application of a corollary of that rule is a cure for one big problem that ails our current health care insurance system.

Currently, under COBRA, a company’s health insurance provider is required to offer continuation coverage at the company cost rate for two years after someone leaves the company. But after that the provider has no further obligation.

For people with pre-existing conditions continuation coverage is a great boon since they can’t easily get other insurance. On the other hand it’s a potential trap for people who don’t have pre-existing conditions when they leave a company because at that point they can get alternative coverage, but if they stay with the company’s provider they court the danger of developing a pre-existing condition during the two year continuation period.

If COBRA were amended to require insurers to offer continuation coverage to age 65 to anyone they once insure that problem would go away. People who develop pre-existing conditions would have the option of extending their coverage with the insurer who had them when they developed the condition.

Naturally, insurers would have to take this new obligation into account in setting their rate tables. And they would have to negotiate to swap responsibility with other insurers when people move to other states and such. But doing stuff like that is what insurance companies are good at.

All in all, it seems to me that this change would be far less onerous than what the insurers are going to get in the way of regulation because of the very understandable sympathy there is for people who become orphaned and uninsurable two years after being laid off.

Why can’t insurance companies be required to follow a “You own him when he breaks, you own him for life” rule.

Update: Another thing about the health care insurance debate. Why do many persist in saying that a new not-for-profit health care insurance provider is necessary without mentioning that there is already a national association of not-for-profit providers that’s a major factor in the market – namely the Blue Cross and Blue Shield Association?

I also posted this at Zombie Contentions -

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