> > It's important to note that [NY already forced insurance companies to cover sick people, so the provision in the ACA that forces everyone else to do the same didn't hit them as hard.]
> Is insurance that vanishes when a patient becomes unprofitable really insurance?
It didn't vanish when the patient became unprofitable; the opportunity to buy it vanished when the patient became sick. That is, if you were covered and became sick, you stayed covered; it was if you were uncovered and became sick that it became almost impossible to buy insurance.
> Social issues aside, it looks like the health care market used to have a defect permitting the sale of fraudulent plans. Now that the defect has been closed, only real plans remain.
No, the plans were not fraudulent, and there was no defect. I don't know why you'd expect to not pay for a service and then receive it.
(There is a side issue, which is that once one became sick, it was common for insurers to try to demonstrate that one had defrauded them, and was therefor ineligible for insurance--but that's a separate issue).
> It didn't vanish when the patient became unprofitable
Yes it did. That was one of the "dirty tricks" pointed out in OP's article. The insurance company would intentionally enter contracts that the customer had already violated (by inevitably messing up somewhere in their paperwork). So long as the customer was profitable, they would take their money, ignoring the paperwork errors. If a customer became non-profitable, they would dig out the errors and kick the customer out of the plan.
And then the opportunity to buy care from anyone else also vanished.
> No, the plans were not fraudulent
Fraud is "A false representation of a matter of fact .. practiced in order to secure unfair or unlawful gain." Companies accepted money to insure a customer while secretly and intentionally retaining the option to drop them even if they stayed within the agreed-upon limits. If that isn't fraud I don't know what is. The act of accepting their money was the false representation of fact. I used a shocking word because the practice itself is shocking.
Rescission was vanishingly rare. Regardless, it is a side issue, since it's not what the quote from the USA Today article was discussing. New York may have outlawed rescission too, but it was the requirement that "insurance" be available to purchase when you're already sick that made their pre-ACA premiums so high.
Yes, and those vanishingly rare cases were the most expensive ones.
My point was that the latter was partially caused by the former along with every other mechanism of dumping undesirable patients on the open market. I suspect the major one is the exploitation of the fact that most people will underestimate the extent to which high health costs correlate with decreased income and a higher rate of premium lapse. It won't be counted as "rescission" even though the industry benefits from it (and the people hurt because of it) in exactly the same way.
These mechanisms might not constitute the entirety of the central issue, but they certainly account for a healthy chunk of it.
> Is insurance that vanishes when a patient becomes unprofitable really insurance?
It didn't vanish when the patient became unprofitable; the opportunity to buy it vanished when the patient became sick. That is, if you were covered and became sick, you stayed covered; it was if you were uncovered and became sick that it became almost impossible to buy insurance.
> Social issues aside, it looks like the health care market used to have a defect permitting the sale of fraudulent plans. Now that the defect has been closed, only real plans remain.
No, the plans were not fraudulent, and there was no defect. I don't know why you'd expect to not pay for a service and then receive it.
(There is a side issue, which is that once one became sick, it was common for insurers to try to demonstrate that one had defrauded them, and was therefor ineligible for insurance--but that's a separate issue).