Insurance Companies Propose Ending Practice of Setting Rates Based on Preexisting Conditions

The Administration's aggressive stance on health care reform has been a worry to the health insurance industry, which fears being marginalized (read: put out of business) by a possible government-run single-payer system.

The industry, not one to stand idly by as billions in revenue become endangered, has been working behind the scenes to ensure that they too, will have a voice in the new, reformed health care system.

To that effect, insurers have made three separate proposals for cooperation with the government, the latest of which represents a huge departure from the way in which the industry has historically operated.

Namely, a number of large insurers, among them Wellpoint, UnitedHealth, as well as the BlueCross BlueShield group of companies, have sent a letter to the offices of Senators Max Baucus (D-MT) and Edward Kennedy (D-MA), proposing the scrapping of the current system under which sick patients, or people with preexisting conditions, are charged much higher rates than healthy individuals.

This is potentially a huge development, because individuals with preexisting conditions historically make up a large portion of the percentage of Americans with no health insurance.

The quid pro quo that the industry is asking for, for now, is for the government to pledge not to set-up yet another publicly-run entity to compete with the insurers in seeking to cover those who currently lack coverage.

“We have outlined a path to achieving a health-care system where everyone has access to affordable coverage,” Zirkelbach said in an interview with Bloomberg. “This will accomplish the same goal that a government-run plan is designed to achieve.”

Well, maybe.

What the insurers want

As mentioned above, the insurance companies are looking for a pledge from the government to not create a public plan that would compete with the insurers themselves.

The industry is also seeking a government requirement that all individuals and families be required to purchase health insurance of some kind, whether directly from the private providers, or through some sort of public subsidy program for those who cannot afford to buy coverage on the open market.

In addition, insurers will continue to set rates based on age, geographical location, and family size, just as they do now.

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