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Denial of care is the model

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Has the Health-Insurance Industry Buckled on Reform? Sort of, But Not Really

The big news on this front came yesterday, when the two giant health-insurance trade associations — America’s Health-Insurance Plans and the BlueCross BlueShield Association — said their members could accept a reform plan that banned the key business practice of medical underwriting, under which insurers limit or deny coverage to individuals with pre-existing medical conditions (i.e., people who would otherwise cost insurers too much). The price: Washington would also have to require all Americans to buy insurance with the much-chattered-about “individual mandate.” (See the AHIP statement and the BCBSA statement.)

There’s no denying the significance of this concession, even if both organizations have hinted for some time that they’d be willing to broker a deal once momentum for reform started building. That’s because medical underwriting is, in many respects, the foundation of the modern health-insurance industry — one of the primary tools health plans use to keep medical costs down and profits up. For some insurers, in fact, medical underwriting seems to represent the bulk of their business plan – and when it fails, so do they.

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