…from the annals of healthcare bureaucracy…

State regulators moved Tuesday to limit insurers’ ability to cancel medical coverage after patients get sick, proposing that companies be required to check up on an applicant’s health before issuing a policy in the first place.The Department of Managed Health Care, which governs health plans known as HMOs, and the Department of Insurance, which supervises insurance companies, said they would propose rules that reinforced existing laws forbidding rescissions except when they could show a policyholder was at fault
—LA Times, 10/24/07

We know Americans spend twice what citizens of other countries do on health care. Why? One major reason is bureaucracy. Insurance companies in America have an incentive to make someone else pay for sick people. That’s how we’ve structured the system, so that’s what they do. One way they do it is by “rescinding” policies, when possible, after people get sick. People fight back. Get lawyers. Go to court. Get new regulations enacted (as in California). Insurance companies fight back. Get lobbyists.

Aside from the sheer Dickensian inhumanity of it, it costs a load of money to do this. Does this make sense? No. Is this a major reason healthcare costs so much? Yes.

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Filed under healthcare finance, junglenomics

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