Health Insurance and the Three-Legged Stool

three legged stool The new health care reforms were built around a concept that has been referred to in the news as “the three-legged stool”. It seems that originally, these three legs were supposed to appear at the same time. Instead, each leg is arriving on it’s own timetable. The result is the turmoil that we are seeing around health insurance today. The good news is that it will all equal out, eventually.

What is the “three-legged stool”? It is the term that policy experts have given to describe how the new health reforms were supposed to work. One leg of the stool requires all consumers to purchase health insurance. This allows insurance companies to spread out the costs of medical care over all of it’s customers, both the healthy, and the sick. The second leg of the stool involves enacting a series of laws that prohibit the insurance companies from “cherry-picking” consumers. It requires health insurance companies to cover all consumers, no matter their age, their current state of health, or their potential pre-existing conditions. The third leg of the stool involves the government giving subsidies to people who do not make enough money to be able to afford insurance on their own. Together, these three legs will provide a stable base. Together, these three legs allow the new health insurance reforms to work.

Unfortunately, these three legs are not appearing at the same time. Consumers won’t be required to purchase health insurance until 2014, (when the exchanges are going to be ready). So, the first leg of the stool will not appear for a few more years. After the exchanges are set up, the government will be ready to provide financial assistance to people who have low income, (for example, McDonald’s workers), so those people can afford to purchase an individual health insurance policy. So, the third leg of the stool also will not appear for a few more years.

The second leg of the stool, however, has arrived. Recent reforms prohibit insurance companies from denying coverage to consumers who have a pre-existing condition. Laws require insurance companies to cover young adults who are under the age of 26 on their parent’s health insurance policies, and to cover children, including sick children. What happens when your three-legged stool has only one leg? You can let it fall over, or, you can try and spin it to keep it upright. We are experiencing the “spinning” right now.

Part of the problems we are seeing with health insurance at this moment is because the three-legged stool is unbalanced. Many Americans have no health insurance at all. This is either because they cannot get it through their employer, or because they cannot afford to purchase a policy. These consumers are not in the market for health insurance. This means that insurance companies are facing the challenge of covering the costs of insuring the sick without the extra income that would appear after everyone has to buy health insurance. Over time, things will balance out, but it will take time.

Image by Caliper Studio on Flickr

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About Jen Thorpe

I have a B.S. in Education and am a former teacher and day care worker. I started working as a freelance writer in 2010 and have written for many topics here at