Pre-Existing Conditions, and President Obama

Last week was week one of NFL football, and the left's favorite quarterback was watching from home, just like you and me.

During the Kavanaugh hearings, a lot of noise was made about "pre-existing conditions." Because Democrats govern by emotion, or more accurately, they campaign by preying on people's emotions, it may be useful to unpack this emotional issue.

Here's the scenario, at least as it's painted by the left: say an individual is chugging along through life, pursuing happiness as is her right. Then, life throws her a curve ball - she is diagnosed with cancer. Faced with staggering medical bills that she cannot hope to pay on her middle-class salary (even if it is up nearly 3% over the last year, and her tax burden is lower), she goes to get insurance coverage.

The heartless insurance company states that her cancer is a pre-existing condition (because ... well, it is, because she had the condition prior to her obtaining insurance), and excludes it from coverage. In other words, the insurer will cover any other medical expense she incurs, but it won't cover anything cancer-related, which is why she sought insurance in the first place.

That's unfair, the left cries, and the greedy insurance company is heartless and cruel. It should be forced to cover her cancer-related expenses, even if it is a pre-existing condition.

First, let's examine how the insurance game works. It's a lot like Vegas: insurers play the odds of different outcomes, and weigh the associated costs, then charge a premium that covers the insurance company in the event the odds go against them. Some of their insured customers will never get cancer or need surgery or incur any other major medical expense, so the insurance company collects premiums from those customers and never has to pay out any material benefits. Major win for the insurance company.

In the case of other insured customers, the customer in question will face major medical expenses, and the premiums they pay may not fully cover the benefits the insurer has to pay. So for those customers, the insurance company may lose money. However, if they average out the income and expense across all insureds, they earn a profit.

(I won't go into the topic of whether corporate profits are evil or excessive, other than to say two things. First, those insurance companies' stocks are likely owned by anyone with an IRA or a 401k that holds a diversified portfolio of mutual funds, so we should want them to earn a profit. If they don't, we can't retire. And second, if they don't at least break even, they'll go out of business, in which case no one will have insurance. One of the first things a prudent consumer of insurance does when choosing a firm - whether that consumer is an individual, a corporation providing insurance benefits to its employees, or a government exchange - is to scrutinize the financial health and well-being of the potential insurers. And that starts with their profitability.)

So this is why insurance companies ask questions about family history of cancer or heart disease, height and weight, tobacco use, etc. They're trying to bolster their odds, to optimize the trade-off between the likelihood of having to pay out benefits for major health issues against the premiums they'll charge. That's why they charge a higher premium for someone with a history of certain costly health issues than for someone without such a history.

(As an aside, part of why they do that is so that they don't wind up screwing those who manage their weight, have no family history of cancer or heart disease, etc., by charging them high premiums relative to their lower risk of having to receive benefits. Insurance companies have no obligation to make sure that high-risk customers pay low premiums at the expense of low-risk customers, nor should they. Otherwise, we'd all pig out on Oreos and Doritos.)

Having established how the insurance industry operates, and why and how they risk-weight different insureds, let's return to our scenario of the woman who's been diagnosed with cancer. There's one crucial element to her story that the left conveniently ignores:

She didn't have insurance to begin with, and only sought to obtain it after her cancer diagnosis.

That's the crux of the pre-existing conditions issue. By definition, a condition is only pre-existing if it existed before the afflicted sought to purchase insurance.

Now, the insurance companies could counter the higher risk posed by those who already have, say, cancer, and then apply for insurance, by charging them exorbitant premiums.

"Not fair!" cries the left. Well, what's the alternative? The alternative is to charge all consumers of insurance high premiums, to make up for the increased expense of having to pay out benefits to those who buy insurance only after being diagnosed with, in this case, cancer.

Well, as a reasonably healthy guy who doesn't have cancer, who keeps his high blood pressure under control with meds (that cost me money), who at least tries to manage the risk factors that could lead to greater risk of needing health insurance benefits, and has paid for health insurance since he finished graduate school and started working, that's not fair either.

See, those who seek insurance only after being diagnosed with a condition that would cost them a lot of money in medical bills are also playing the Vegas game. They're trying to keep as much of their money as they can by not having to pay insurance premiums, then, when life deals them a lousy hand in the form of a diagnosis that is going to cost them serious money, only then do they decide to shell out money for insurance premiums.

Meanwhile, those of us who are responsible and prudent, who know that some diseases and conditions, including cancer, don't discriminate, pay insurance premiums for what insurance is: insurance, against unforeseen risks. (Trust me, I'm in the risk management business; I know this stuff.) Should we have to pay higher premiums because someone else got to enjoy the savings of not having to pay for insurance as a hedge against unforeseen risk, then suddenly wants to buy it because life dealt them the cancer card?

Look, these situations are sad; I get that. And I don't have a good answer. Should the medical profession be expected to provide these people with care at a loss? Should we just let them die because they chose to play the odds by not paying for insurance until they needed it, and the odds rolled against them? I know good, smart people who have argued both sides of that debate, and again, I don't have a good answer.

What I do know is this: everyone should avail themselves of health insurance, even if at present they don't believe they'll ever need the benefits: they're young, they're healthy, etc. And if they choose not to, they can't hide behind the pre-existing conditions lament if they're denied insurance, or charged premiums that are actually in line with the risk they now present, now that they have a condition that will likely require significant outlays by the insurance company.

Consider an analogy from another aspect of the insurance industry. What if I were able to not have to buy auto or homeowners' insurance? (If you own a car, you're required by law to carry insurance, though some don't. And if you have a mortgage, as most homeowners do, you absolutely have to carry homeowners' insurance, or your mortgage lender will deny your loan application.)

So what if we let drivers and homeowners elect to not carry insurance? Then, when they get in a wreck, or a fire burns down their house, they buy insurance after the fact, and expect the premiums to be the same as for those who bought that coverage prior to an event that resulted in a claim?

That would drive up premiums for all of us auto and home owners, simply to subsidize those who elected to save the money from having to pay for insurance until they had a claim. Talk about not fair. If that were allowed, the left would collectively wet themselves.

Denying coverage for pre-existing conditions isn't heartless. Not being insured against potential future conditions that would require it is heartless, when we consider the impact on our fellow man. And more to the point, it's stupid.

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President Obama recently hit the campaign trail on behalf of Dems seeking election or re-election in the mid-terms. In doing so, he departed from time-honored practices of former Presidents in avoiding a return to the political fray.

However, Obama is different from those other former Presidents in that, while he was an ineffective leader, he is a professional campaigner, and cannot resist the teleprompter, or the TV camera.

But the strategy may backfire. President Obama wrapped up Donald Trump and tied a bow around him, and delivered him to the Oval Office. Trump's victory in 2016 was a clear repudiation of eight years of driving America further and further left, of politics as usual, of "we won" and "I have a phone and a pen," of political correctness gone mad, of identity politics dividing America.

The more Obama speaks, the more he motivates the right and independents to vote to ensure that America does not return to those days. Even if some of us find ourselves smacking our heads, or at least shaking them, every time Trump opens his mouth, we know that a return to those days is unacceptable.

Meanwhile, those with whom Obama's message resonates were already going to vote Democrat anyway, and were already plenty motivated to get out that vote. So what does the left gain?

Nothing. The only winner is Obama, in that he once again has an audience, his ego once again gets stroked, he once again hears the roar of applause that so motivates him.

As for Obama's claim that the economy today is to his credit ... please. Let's look at his words: he told us that 2.5% GDP growth was going to be unattainable in the future, that we should get used to 1% output growth because that was the "new normal." So for him to claim that 4.2% GDP growth and 2.9% unemployment is all thanks to him is laughable.

(As the Curmudgeon has said too many times to count, we haven't had a new economy since we were all wearing animal skins and trading rocks.)

Look at his policies: this was the most business-unfriendly President in our lifetimes. He over-regulated big business and thwarted small business with claims that "you didn't build that." Does he seriously believe that he deserves credit for the trajectory of economic growth and prosperity today?

I'm usually the last one to attribute the performance of an economy or a stock market to a President, but consider this: the stock market began to rally in overnight trading after Trump was elected, and it hasn't stopped rallying since, even as Trump has rolled out tariffs that have produced market volatility. And again, looking at policies, things like tax cuts, rolling back regulations, promoting growth in various industries that had been stymied by Obama's policies, all those things lead directly to better economic and stock market performance.

So keep stumping, President Obama. You're the best hope the GOP has in the mid-terms.