Pre-Existing Conditions – The Big Barrier

Insurance companies aren’t stupid when they shun people with pre-existing conditions.  Given a choice, they only want to insure people that have a good chance of staying healthy.  Frankly, I can’t blame them.  I’m the type that spends extra time in the grocery store searching for the best apples or the leanest beef.  It’s the same with insurance companies. They want the customers that they have the best chance of making money on.

Unfortunately, it’s the sickest people that need insurance the most.  Before the ACA, those with diabetes, chronic disease, high blood pressure, or cancer were often turned down for insurance.  Sometimes they were “rated,” meaning that they were offered coverage but at a much greater rate.  Sometimes the rating would exclude certain coverages.  So a cancer survivor wouldn’t be covered for a recurrence, or a woman who had given birth by caesarean couldn’t get maternity coverage.

Pre-Existing Conditions and Insurance Companies

From a business standpoint, I can’t blame the insurance companies.  Their obligation is to return profits to their stockholders. But it’s not right.

Blood pressure cuff used to screen for blood pressure pre-existing conditions
High blood pressure affects nearly 1 in 3 adults in the U.S. and is the #1 pre-existing condition.

The Affordable Care Act tried to address pre-existing conditions.  The idea was, that if near everyone has insurance, then the higher risk of pre-existing conditions is diluted by the number of healthy insurance subscribers.  Unfortunately, it didn’t work out that way.  Healthy people could game the system by skipping the insurance, paying the relatively small IRS penalty for not having insurance, then signing up for insurance only if they got sick.

The result is that only the sickest and most honest people have bought insurance, and that drives up rates.

The Trumpcare proposal pays lip service to this problem.  The wording sounds good, but the economics aren’t there.  Their solution is high-risk pools with subsidies.  The amount of the subsidy isn’t specified, but it’s assumed to be much less than needed.  And there’s no assurance of continuing high-risk subsidy levels.  On top of that, the proposals call for giving States an option to take over the pools and pretty much do with them what they want.

The companion proposal to high-risk pools allows insurance companies to customize insurance coverage by eliminating some of the Obamacare requirements.  So, a cancer patient might be offered a policy that omits coverage for chemotherapy.  Or someone with high blood pressure might be denied coverage for a stroke or heart attack.

It’s All Crazy

It’s all crazy.  Congress needs to decide.  Insurance is the gateway to healthcare.  Either pass regulations that allow all to afford insurance, or just talk the truth about coverage.  We deserve better than the mouth service that we’re getting.

Problems with pre-existing conditions are part of the problem with Obamacare today. The act was originally written with a “risk corridor.”  Insurance companies are required to distribute a tax least 80% of their ACA premiums for medical care.  Small overages are refunded to their policyholders. Larger overages, under 77%, went into a risk corridor pool to partially reimburse insurers that experienced over 83% claims.

The risk corridors acted as a safety net for insurers by moderating possible losses in new territories. Congress removed this feature in 2014 during a budget reconciliation process. And it’s a large part of the reason why insurers are leaving exchanges and rates are going up dramatically now.

How Much More Will It Cost?

The Center for American Progress calculated the cost of some pre-existing conditions from the US Government Medicare site.  Here’s how much a pre-existing condition will cost an individual to be insured annually before adjustments and subsidies. Based on an average $4020 annual rate for a healthy individual:

  • Asthma will increase the rate by 106% or $4340 annually.
  • Autistic Disorder will increase the rate by 135% or $5510 annually.
  • Diabetes (without complications) will increase the rate by 137% or $5660 annually.
  • Colorectal, breast, kidney, and other cancers will increase the rate by 703% or $28,660 annually.
  • Rheumatoid arthritis will increase the rate by 652% or $26,580 annually.
  • Depression and bipolar disorders will increase the rate by 208% or $8490 annually.