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Pre-existing condition coverage not insurance

A hot topic in the health insurance debate is the issue of covering pre-existing conditions. The accepted definition of a pre-existing condition is a physical or mental condition a person has prior to applying for health insurance.

When a person applies for health insurance with a pre-existing condition listed on the application, there are three things that can happen. The underwriter can issue the policy with no riders or no increase in premium; he can issue a policy with exclusion riders and/or an increase in rates or he can turn down the application and refund the premium if the condition is severe.

Private health insurance companies are in business to make a profit. They are gambling on the presumption of taking in more premium dollars that they must pay out in claims. When a company insures too many people with pre-existing conditions, it will surely lose money and go broke. This leads to all of their other policyholders scrambling for coverage.

Some subscribe to the theory that there are two kinds of people, “sickies” and “wellies” in the health insurance world. The “wellies” are normally younger and in good health. They do not normally consider health insurance as their top priority. Many with good sense will purchase standard coverage and many will wait until they need it. In contrast, all of the “sickies” will or want to buy coverage now. This is the pre-existing condition group.

The word insurance means an agreement or contract for reimbursement or financial protection against unknown possible future losses or damages. Insurance coverage on people with pre-existing conditions is an oxymoron.

Most pre-existing condition cases are already known predictable losses and therefore not insurable. It is a form of social welfare. It is a known financial burden being shifted to others. It is comparable to entering your driveway after work and suddenly seeing smoke pouring out of the window of your home. You will be unable to run down to your local insurance agent and quickly get a fire policy written on your home. This is also known as a predictable loss. The practice of covering pre-existing conditions is a huge factor in high premiums and increasing rates.

State mandates are another issue that drives the cost of health insurance higher every year. In Florida all individual health policies issued are mandated to cover the following: alcoholism, ambulatory surgery, ambulance services, birthing centers/midwives, bone marrow transplants, breast reconstruction, cleft palate, dental anesthesia, diabetes self management, diabetic supplies, drug abuse treatment, emergency services, hair prostheses, mammogram, mastectomy, mastectomy stay, maternity stay, mental health, general newborn hearing screening, orthotics/prosthetics, second surgical opinion, TMJ disorders, well-child care.

If you were able to remove several of the above coverages that you do not want or need, it would reduce your premium. You do not have a choice to remove any of the above.

Some states have very few mandates and consequently lower premiums. This is one of the reasons for the call to allow the purchase of health insurance across state lines.

There are several states that have established risk pools for their citizens who are unable to purchase health insurance because of pre-existing conditions. The funding for these risk pools normally is a mix of insurance company assessment, state taxpayer funds, and premiums from pool members. The plan benefits and premiums can vary widely from state to state. The number of people have a large impact on the pool, keeping in mind all enrollees are “sickies.” The Florida risk pool is called Florida Comprehensive Health Association. It was closed to new enrollees in 1991. It was too costly.

Florida has a new health insurance program enacted by the Legislature that opened in January 2009 called Cover Florida Health Plan. Several large insurance companies cooperate in supporting this plan. I like it because it has no government mandates, which holds the premium down. Details can be found at

Robert “Bob” Fowinkle, president of Moore, Fowinkle, & Schroer Agency in Bradenton, can be reached at (941) 755-2628.