If your house has already burned down, you can't buy fire insurance. That's the way insurance works. In a market economy, you have to get it before something goes wrong.
And this system generally works well. But it's a disaster as applied to health care, since it means that the exact people who as a society we want to get care—people who are sick or disabled—can't access it on affordable terms. And that's why we don't have a free market in health care. The elderly, who'd otherwise be uninsurable, are covered by a single-payer program. Large employes receive enormous tax subsidies to form large group health insurance pools that are regulated to prevent price discrimination within the firm. And by law insurance companies can't screen you out on the basis of pre-existing conditions as long as you maintain continuity of coverage—i.e., never find yourself jobless or self-employed or otherwise uninsured.
But a crucial question is what to do for the people who fall through the cracks of that system.
Gov. Mitt Romney and President Barack Obama came to the same conclusion about this. You set up regulated exchanges on which individuals can shop for insurance as individuals. You by law ban companies from charging people with pre-existing conditions higher prices. You by law require all individuals—whether health or not—to participate in the marketplace and expand the risk pool. And you provide subsidies to make the plans affordable to everyone.
Last night at the debate, Candidate Romney was deeplly critical of President Obama's implementation of Gov. Romney's idea. Obama, in response, noted that Gov. Romney knew this was the only way to handle the preexisting condition problem consistent with keeping the insurance industry in private hands. Candidate Romney suggested that, no, he had an alternative plan that would make this work.
But he doesn't as top adviser Eric Fehrnstrom conceded after the debate:
Pressed by TPM’s Evan McMorris-Santoro, Fehrnstrom said those who currently lack coverage because they have pre-existing conditions would need their states to implement their own laws — like Romney’s own Massachusetts health care law — that ban insurance company from discriminating against sick people.
“We’d like to see states do what Massachusetts did,” Fehrnstrom said. “In Massachusetts we have a ban on pre-existing conditions.”
In other words, while Obama implemented a national version of what Romney did in Massachusetts, Romney's plan is to repeal that and then suggest it'll be okay because each state could go do the same thing on a step-by-step basis.