Wednesday, March 10, 2010

Health insurance companies cannot cover "pre-existing" conditions and stay in business.

Democrats have been rallying against health insurance companies for failing to cover those with "pre-existing" conditions.  However, it is common for insurance companies of all stripes to deny coverage for a condition after it has already happened.  To take one example: fire insurance.  You can't get fire insurance after a fire has taken place.  If a fire insurance company had to issue insurance after a fire, no one would pay fire insurance premiums until after a fire, and hence, the insurance company would only receive premiums from those who are already requesting a claim!  The fire insurance company would go out of business quite rapidly.

The same is true when it comes to health insurance.  A health insurance company does not have an unlimited amount of funds.  It receives premiums from customers, who wish to transfer the risk of a catastrophic health care bill to the health insurance company.  If one could receive health insurance after a pre-existing condition, such as an illness or an accident, then there is absolutely no incentive to buy health insurance until after one needs coverage.  That is not the way insurance works, and there is absolutely no justification for changing this standard industry practice.  The only reason to re-write federal and state law to cover pre-existing conditions is to put the health insurance companies out of business and institute single-payer, government-run health care.

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