Health Reform and Insurance Pools

Under the current health insurance system and until the new law takes effect in 2014, it is the most difficult to get insurance when you try to purchase it as an individual or family (as opposed to getting the coverage through your employer).   In the “individual market” people are routinely denied coverage for certain conditions or denied coverage altogether for a long list of preexisting conditions.

Why Do Companies Deny Health Insurance Coverage?

While this practice makes insurance companies appear heartless, the practice has historically existed to help keep insurance rates lower for other customers and to keep the insurance company solvent.  If a person with any physical aliment could buy insurance at any time, many might wait until they are very sick to buy insurance, generating large medical bills.  The way insurance works today, the customers’ premiums are pooled together to collectively cover everyone’s health care expenses.  This helps the insurance company spread the risk and ensure the solvency of the pool.

Enter the Universal Health Insurance Pool!

Come 2014, this will all change. Individuals will be able to purchase insurance (through the new exchange) regardless of their medical condition.  What makes this financially sustainable from the insurance companies’ vantage point is that the new law also requires all Americans to have insurance (with a few small exceptions).  Since young and healthy individuals will be in the insurance pool as well, the risk is spread and the company can better afford to cover individuals with pre-existing medical conditions who are highly likely to incur significant health costs in the near future.

A recent article in the New York Times points out, however, that is not exactly a party getting everyone into the pool.  The new law required that insurance companies immediately covered children with pre-existing conditions.  However, insurance companies balked and HHS backpeddled and agreed that children could only be added on during open enrollment periods.  Until the new system under the law is completely in place, there will likely be many more bumps in the road.

Back to top