NCPA - National Center for Policy Analysis


February 23, 2010

Most current proposals for dealing with the problems of preexisting conditions would completely divorce health insurance premiums from expected health care costs.  Yet a policy of trying to force health plans to take enrollees they do not want risks jeopardizing the quality of care people receive, says John C. Goodman, President, CEO, and the Kellye Wright Fellow of the National Center for Policy Analysis. 

Instead of suppressing the price system, we should make greater use of the price mechanism.  In a reformed health care system, the chronically ill, along with their doctors, their employers, and their insurers, should all find lower-cost, higher-quality, more-accessible care to be in their economic self-interest.  Here are 10 reforms to cover preexisting conditions, says Goodman:

  • Encourage portable insurance.
  • Allow special health savings accounts for the chronically ill.
  • Allow special needs health insurance.
  • Allow health status insurance.
  • Allow self-insurance for changes in health status. 


  • Give individuals the same tax break employees get.
  • Allow providers to repackage and reprice their services under Medicare and Medicaid.
  • Allow access to mandate-free insurance.
  • Create a national market for health insurance.
  • Encourage post-retirement health insurance. 

If the past is a guide, more than 80 percent of the 78 million baby boomers will retire before they become eligible for Medicare.  This group has the greatest potential for denial of health insurance because of preexisting conditions.  Fortunately, one out of every three baby boomers has a promise of post-retirement health care.  However, two out of three do not, and even for those who have a commitment, almost none of the promises are funded, says Goodman. 

Hence employers should (a) be encouraged to negotiate with insurers to cover their retirees, (b) be able to pay some or all of the premium for retiree-owned insurance or make deposits to the retiree's HSA with pre-tax dollars, and (c) both employers and employees should be able to save in tax-free accounts in anticipation of these needs, says Goodman. 

Source: John C. Goodman, "Ten Easy Reforms to Cover Preexisting Conditions," Heartland Institute, February 19, 2010.


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