Pre-existing Conditions Dominate Healthcare Debate

 

The healthcare debate is reaching hysteria. A problem that affects 4% of the under age 65 population is dominating the healthcare debate.

I’m referring to coverage of pre-existing conditions. There is much confusion regarding coverage of those pre-existing medical conditions when you enroll in new private healthcare insurance. The Wall Street Journal editorial board tried to eliminate some of that confusion in a recent editorial.

“Liberals are inflating the pre-existing conditions panic with images of patients pushed out to sea on ice floes, but the GOP plan will ensure everyone can get the care they need. Republicans can win this argument, but first they need to join the debate and explain their ideas.”

Insurance Terminology

To begin, it is necessary to understand some insurance terms. Guaranteed issue refers to the promise to provide coverage for anyone seeking insurance, regardless of their pre-existing conditions. Community rating refers to a limited pricing structure that varies little between young and healthy patients and the older and sicker ones. With fewer price differences, the young and healthy pay more than the actual cost of their insurance and the old and sick pay less.

Prior to ObamaCare there was neither guaranteed issue nor community rating. Pre-existing conditions may or may not have been covered but usually required a waiting period of six to twelve months before coverage began for those conditions. Prices were spread out over six levels to keep the prices low for the young and healthy and higher in stages for the sickest of patients. In other words, prices reflected the actual risk of incurring medical expenses in the next year.

ObamaCare changed all that. Guaranteed issue and community rating were mandated by the new healthcare law. No one could be turned down for coverage – a good thing – but prices were higher for the young and healthy and less than the cost for the older and sicker patients. The young and healthy quickly figured out this was a bad investment and stopped enrolling. This meant those who did enroll had to pay more – but insurance companies still lost millions of dollars because there were not enough young and healthy patients enrolled.

The New Healthcare Bill

Republicans are trying to repeal and replace ObamaCare with a better healthcare system. The need for this is obvious to everyone except Congressional Democrats. Five states (Alabama, Alaska, Oklahoma, South Carolina and Wyoming) have only one insurer in their healthcare exchanges. Twelve states have only two. Next year promises to be even worse with announcements of more insurers leaving the ObamaCare exchanges. Something needs to be done.

As Republicans attempt a second time to pass the American Health Care Act (AHCA) with modifications to win more votes, confusion concerning how pre-existing conditions are treated is being used by Democrats to undermine the bill. Some media outlets are parroting the Democratic talking points in an attempt to frighten the public. Even a leading Republican like Congressman Fred Upton (R – MI) has publicly opposed the bill because he believes the Democratic distortions. Here’s the truth:

The new AHCA bill calls for:

  • Guaranteed issue
  • Relaxed community rating – more price variance
  • States may apply for a federal waiver of regulations to lower premiums
    • Only if they set up high-risk pools to cover those facing high medical costs

 

Since guaranteed issue is still required, no one can be turned down for coverage. By relaxing community rating standards, prices can vary more so that the young and healthy don’t have to pay rates more expensive than their risk justifies. This means more will sign up which means rates go down for everyone. Those with high-risk conditions will be covered by state-run high-risk pools, which keeps their premium prices lower than they would ordinarily cost.

In order for states to qualify for the federal waiver of regulations they must demonstrate that the purpose is to reduce healthcare costs or increase coverage for individuals. Under the waiver, states are required to establish a program for high-risk patients or premium stabilization, or they must participate in the federal risk-sharing program.

Although coverage of pre-existing conditions is an emotional issue, the number of people affected is actually quite small. According to WSJ only 4% of Americans under age 65 are affected. ObamaCare’s Pre-Existing Conditions Insurance Plan was created from 2010 to 2014 as a transition until the law debuted nationwide. Anyone could sign up for heavily subsidized coverage if they were denied coverage in the private market. Only 115,000 people enrolled in 2013.

WSJ says high-risk pools are a fairer and more equitable solution to this social problem, rather than hiding the cost by forcing other people to pay premiums that are artificially higher than the value of the product. The waivers also include protections for people who renew continuous coverage from major premium increases if they become ill.

These modifications to the AHCA are workable solutions to the coverage of pre-existing medical conditions. The American people must tune out the false narrative of Democrats who are needlessly spreading myths in a vain attempt to preserve the failing status quo.

2 comments

  1. Dear Dr. Roberts,

    It seems to me that dividing people into ever more finite risk pools defeats the whole purpose of insurance, i.e., to share the risk in common so as to keep the costs affordable for everyone. While health insurance may still be guaranteed, if insurance companies are allowed to price at will, it could easily result in the same effect as not being guaranteed. Although still technically guaranteed, it can be priced so that no one can afford it and as such is practically not available.

    You also make a point that the pool is only 4% of the population, but if you are one of the 4% that is of little consequence. Would you be satisfied if only 4% of the babies born in this country were aborted, or if only 4% of the people in this country couldn’t afford food and starved to death? The point should be, as Jimmy Kimmel said, if you have a baby who could be saved medically, you shouldn’t have to watch that baby die because you can’t afford to be in an insurance company priced high-risk pool. Respectfully, Romy

    Comment by Romy Tomlinson on May 4, 2017 at 1:48 pm

  2. Thanks for your comment.You raise some good questions that many people are asking because the news media is distorting the truth.The whole purpose of high-risk pools is to cover those with high-risk medical conditions at a cost to the patient that is lower than the actuarial real cost. In other words, taxpayers pick up some of the expense so that the premiums for those unfortunate people are affordable. This is a much more efficient and cost-effective means of spreading out the cost of coverage than ObamaCare – which forces everyone to pay more – and the insurance companies are still leaving the market. Insurance companies must be able to price their products in such a way as to make a profit – or they leave the market (as is happening now). With the changes of this new healthcare bill everyone will still be covered (guaranteed issue) but the cost will be lower. The Jimmy Kimmel narrative is disingenuous – no one will have to watch anyone die. That’s the whole point of the high-risk pools!The high-risk pool will keep the cost affordable and will compensate the insurance company for the excessive cost the patient cannot pay.

    Comment by Robert Roberts on May 5, 2017 at 1:02 pm