Having recent experience this this area, it is not quite like the common conception.
Having had insurance and need some change the company that provided insurance certifies that you were a covered individual. Said certification mitigates the effects of applying to a new provider. As you had insurance in force you are not a person with an existing condition but a transfer.

Quote Originally Posted by SadisticNature View Post
The largest problem I find with the American system is that the insurance is largely done through companies as a work benefit. This means many individuals lose their insurance if their company downsizes, and then when they try and get new insurance if they have a pre-existing condition they are denied coverage or quoted a massive rate. This is the case even though the condition did not predate their work insurance.

Also, while officially employers are not allowed to discriminate on the basis of medical conditions for hiring, people with visible medical conditions are hired at a lower rate than the general population which suggests it is taking place nonetheless. This means someone can be laid off, lose their health insurance as a result driving their costs through the roof, and then not get hired because companies don't want the additional cost of the insurance (although officially its always for a different reason).