Health reform should cover everyone—even the sick

This article is the archived version of a report that appeared in the August 2009 Consumer Reports magazine.

It sounds like a joke—pleading for insurance to cover those who are ill. But insurers today typically refuse individual insurance to anyone with a chronic condition or serious past illness, even if the person is a doctor, like kidney specialist Ajit Kesani of Chicago.

Kesani's crime? He developed type 2 diabetes while at his first job after medical training. That was fine as long as he stayed put. But when he changed practices a year later, no private insurer would touch him. The only coverage he found was a state-mandated "conversion" policy at a steep $18,000 a year.

Like many, Kesani decided to roll the dice. He went without coverage for three years until he could join a group plan for hospital affiliates, earlier this year, at $320 a month. Now if he sees an uninsured patient, he may suggest that the person seek coverage before getting a diagnostic workup. "If they get labeled as having kidney disease," he says, "they may not ever be able to get insurance."

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We think it's an outrage that those who are sick have the hardest time getting and keeping insurance. Even well-intentioned previous "reforms," like the conversion policy Kesani was offered, turn out to be mirages. If a young doctor balks at paying $18,000 for insurance, how many others will be able to afford it in a country where the median household earns $50,000 a year?

Solving this problem would be a step forward, but the fix can't be one-sided. If insurers had to accept everyone, but individuals could decide whether or not to buy, people would wait until they got sick before joining. That would send the price of coverage through the roof and drive insurers out of business.

A fair solution would be to couple the above reform with a rule requiring everyone to have coverage. Those with good employer-based insurance could keep it. Others could buy it at an affordable price through the insurance exchange. Besides private plans, the exchange would also include a public insurance option offered by the government. The public plan would get no special favors or funding. But its administrative costs would presumably be lower because it would operate on a nonprofit basis, and its presence in the market would help keep overall premiums down. Then physicians like Kesani wouldn't have to ask about your health coverage before determining what care you need.