As we go along debating health insurance reform, I am constantly amazed by the myths people believe about US health insurance. As I run across these myths, I'll try to note them here.
1. Preexisting conditions: People seem to think that this limitation is some sort of trick. Instead, it is a fundamental part of insurance. You can't insure your car after the accident or your life after you die. But so long as you have insurance, a preexisting condition does not stop you from changing your insurance. You cannot get trapped in a job and you can't lose your insurance because your employer changes plans; so long as you have insurance, you can't be excluded from a new group plan. Under federal law (lots of states have more generous laws), preexisting condition exclusions only apply if you have been uninsured for at least 63 days, apply only to conditions for which you have sought treatment and only allow a look-back of one year. A nice primer on preexisting conditions and federal law is here.
2. What we have is "insurance": As implied above, insurance policies are basically bets we make against catastrophe. I bet that my house will burn down, the insurance company bets that it won't. I bet that I'm going to die in the next year, the insurance company bets that I won't. I bet that my car is going to get stolen, the insurance company bets that it won't. If I lose the bet, there I am with my life, my house and my car. If my car explodes when I plow into my house, my wife and kids have a big pot of money to sit up at family dinners and call "Daddy."
There are things I can do to adjust my odds in these bets. I can get an alarm for my car and garage it in Northampton Massachusetts rather than the Bronx. I can get an alarm for my house. I can stop smoking and flying airplanes. For each of these, my premiums go down. But note that I the insurance company doesn't take my higher premium and then pay for alarms. Because that would be nuts.
But my health insurance pays for costs that are entirely predictable. It pays towards my annual physical. It pays towards medicine for chronic conditions that are very common among men my age. There's no sense betting on my having an annual physical, so why am I insured against it? I'm sure that all of you know the answer, but note that, when it comes to paying for relatively small, foreseeable expenses, all of the carping about wasteful spending is entirely correct. It makes no sense for me to pay my employer (think about it) to pay the health insurer to pay my doctor for an annual physical. I should just pay for it directly.
3. People are dying because they don't have health insurance: OK, that's not exactly a myth, but the general conception of how people are dying from lack of insurance is wrong. People with acute conditions -- heart attacks, trauma, etc. -- don't die from lack of insurance. They get treatment regardless of insurance. Someone falls down clutching their chest, you call the ambulance, the paramedics start treatment and get him to an emergency room and they get to a hospital bed before anyone even starts to try to figure out if they have insurance. Outcomes from acute treatment are pretty much invariant by income status.
People die -- more exactly, their life-span is shortened -- because of chronic conditions. High blood pressure isn't treated, cancers aren't caught as early, high cholesterol isn't treated, diabetes isn't caught as early, etc. This is what people mean when they say that we substitute treatment for prevention.
The problem here is that "prevention" is of questionable value and is incredibly expensive. For every heart attack delayed (and delay is basically all that can be accomplished) by blood pressure or cholesterol drugs, a large number of potential victims have to be treated. It is that "unnecessary" but unavoidable treatment that will make reform incredibly costly -- and the costliness of reform will lead, in turn, to government guidelines that avoid new expensive drugs. But can the government really prohibit people with government insurance from getting access to the newest and best drugs available to people with private insurance? Isn't avoiding that the whole point of reform? So, in the end we either end up with incredibly expensive government insurance (the most likely result) or no new drugs (an even worse result).
4. Reform is meant to benefit the uninsured. For reasons we've discussed, the uninsured tend to be middle-class and young. Forty percent are between 18 and 34, as opposed to 23% of the population. Generally, the uninsured young are making a good bet; the average health insurance premium for an individual in the states is $4000 and the young -- barring acute need, for which they'll get care and then have to worry about paying -- never spend that much. Far from giving health insurance to these people, which seems to be what they assume is going to happen, the reform plans on offer now mandate that they buy insurance or pay a penalty for non-insurance. These premiums or penalties will be at "community rate," which is (more or less, we don't know the details yet) the average cost of health insurance in their county/state/region/nation. In other words, the purpose of reform isn't to provide free health care to the young uninsured as it is to force the young uninsured to subsidize health insurance for those who already get government funded health insurance.