Coverage of pre-existing conditions reduces competition

State Mutual Life Assurance Company of America Worcester, MAI started selling insurance in 1986 and I can remember the days when there were many companies selling health insurance including State Mutual right here in Worcester.  We had a product called MEGA and we sold the hell out of it.   Not only did we have State Mutual but I use to get quotes from other insurance companies:

  • Mutual of Omaha
  • Paul Revere
  • Principal Mutual
  • Guardian

There were many more private companies that I just not remember, then you had all the HMO’s

  • Fallon
  • CMHC
  • Blue Cross
  • Tufts
  • Harvard
  • Pilgrim
  • Bay State
  • CIGNA
  • US Healthcare
  • Health New England

Bet you there were at least 20 companies that I could go to and get a quote.  At that time there was always some type of underwriting.   Then Massachusetts stopped letting insurance companies from asking medical questions.  If an employee met the eligbility requirements, he or she was on the plan and everything was covered including pre-existing conditions.

Considering these changes, many insurance companies deciced to pull out of the Commonwealth of Massachusetts. Now we only have:

  • Blue Cross
  • Harvard-Pilgrim
  • Tufts
  • Fallon
  • Health New England
  • Neighborhood Health Plans

There are some small insurance companies but these 6 companies probably account for 99% of the subscribers enrolled in private employer plans.  Many insurance companies decided it was not worth the risk to offer provide health insurance when they could not ask any medical questions.  

Bottom line competition is reduced when no medical questions are allowed and pre-existing conditions are covered.

 

Massachusetts Healthcare Reform

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