Healthcare, Part II: Pre-existing conditions and the Self-Employed

Obama has politicized and dramatized the coverage extended for pre-existing conditions. His Organizing for America website asked people to submit videos of showing pictures of loved ones who suffered when their pre-existing conditions were not covered. I heard that it was quite the emotional outpouring.

My guess is that people do not usually have their pre-existing conditions covered for the first year at a new insurance company. Or else they are not covered at all. Either way, families are left to pay for COBRA. My dad, who has a job with the City of Houston, pays $600/month plus deductible and copay. I can only imagine what that would cost for a family. It is an unfortunate problem.

The risk of a person with pre-existing conditions needing money from the insurance pool is 100% , so their cost to the insurance company are going to be higher than the average Joe. Insurance companies' main concern is minimizing risk, and if the risk of a patient/consumer is 100%, they are at an impasse. If that person is indigent or over 65, they already have access Medicaid/Medicare. Otherwise, the cost to treat their illness is spread to the rest of the insurance pool, and rates go up for everyone.

My Facebook friend suggested this: when everyone who has a pre-existing condition gets into the gov't insurance pool, they will pay their premiums to the gov't, and the cost will spread and be equally carried by the patients themselves. They will leverage the size of their group and more people will be paying less. If that works, great.

Insurers will not cover people with pre-existing conditions because they cut into the company's profit margin by filing more claims and because the insurance company needs to consider their shareholders. This is the rationale for taking health care out of the for-profit sector. The assumption is that the govt would not be out to make a profit, so they can take all of these pre-existing condition patients, cover their health care needs because they would not have to jack up the rates to cover a profit margin. BlueCross/BlueShield of NC reportedly posted a 2% profit margin last year. I am not sure what their overhead was, but windfall profits these are not.
Could the govt plan keep their costs low enough to make it affordable or would they have to add those people to the dole?

Would it be possible to take a group of people who are not joined geographically or by a common business, and increase their leverage to that of a large company? There is a saying that goes something like this, "Where does the 700 pound Gorilla sit? Where ever it wants." This is how you work with insurance companies: a large group of people and large groups of doctors have more to leverage against the insurance company. But the need for this approach might become obsolete with this new bill.

I just do not understand why the gov't is the only solution that people can come up with for this problem? This is another opportunity for someone to earn a living, feed their family: come up with this kind of plan. Surely someone has already thought of this...