ACA Deathwatch – The Problem with Pre-Ex

Back in the bad-old pre-ACA days the 27% of us who have pre-existing medical conditions often found it hard if not impossible to get insurance coverage in the individual and small group insurance markets.

As a result;

  • people didn’t leave their job to try something new – aka job lock
  • small employers’ costs went up dramatically if workers got sick or had specific conditions

For those not deep into the health insurance world, think of pre-existing medical conditions as:

  • houses that just had a fire,
  • people with dogs that just bit neighbors,
  • businesses that just had someone slip and fall on their premises, or
  • cars that just hit pedestrians.

No way you’d insure that house/person/business/car.

That’s the problem with requiring health insurers to cover people with heart disease, high blood pressure, bad knees, obesity, or any other condition. You’re insuring the car just after it crashed.

When considering ACA replacements, there are three general approaches.

1. Require everyone have health insurance – the so-called “mandate”.  That way the healthy people help pay for those with pre-ex conditions. Yes, this is a “subsidy”, using money from some to pay for services for others.  It’s spreading the cost across a larger population, while ensuring the currently-healthy are protected from bankruptcy if they get hurt or sick.

The GOP seems averse to this requirement.

Issue – people may not like paying insurance costs when they are at lower risk – which is why there are “age bands” that keep younger folks’ premiums substantially lower than we old folks.

2.  Require insurers to cover anyone who has had “continuous coverage.” That is, the person switches from one insurer to another with NO gaps in coverage. The idea is people will keep their insurance up out fo fear they will need it one day.

Issues:

  • if you lose your job, you have to pay the entire cost of insurance for you and your family yourself.  This is typically more than $1000 a month for a family.  Many people just can’t afford to pay this while they are between jobs.
  • if your job doesn’t offer insurance, you have to buy it – and pay for it – on your own. With wage stagnation affecting many, it’s just not affordable. 

3.  High risk pools – a few states used to have high risk pools; these ended with ACA. These pools were intended to cover people with major diseases or conditions who could not get insurance elsewhere and weren’t eligible for Medicaid or Medicare.

While a good idea, in reality these pools were a financial disaster.  They were very expensive and had a really small political constituency. Legislators continuously cut funding or restricted coverage to ever-smaller groups of patients.

The issue is simple – 1% of the population accounts for almost a quarter of health care costs.  Put another way, about 3.3 million people spend $800 Billion annually.

What does this mean for you?

Pay attention to ACA replacement plans if you or a loved one has a pre-existing condition. Or, for that matter, if you may have one some day…

If you aren’t sure, here’s a list.

4 thoughts on “ACA Deathwatch – The Problem with Pre-Ex

  1. Also, for consideration is building a Health Delivery System and getting government and our tax dollars out of the Insurance Business. Build the hospitals, or lease them and build the clinics, hire the professionals and allied health and have at it! If Spain can do it we can too!

    • Tony thanks for the comment. Not sure you are aware that Spain’s health care system is a government run tax financed single payer system. Far better outcomes that the us system as well.

  2. Joe, Didn’t the 2nd wave of HIPPA not address portability within the 2-50 small group market pertaining to Pre-ex ( that is if you didn’t have more than a 63 lapse of coverage). ie small Group to group portability as long as employee can present CCC (Certificate of Credible Coverage)

    • Jeffrey – thanks for the query. I think this is a different issue, as it isn’t just a small employer to employer switch. Moving between group plans is one thing – as long as you do it within that time period you should be OK.
      The problem arises when you don’t have “continuous coverage” as defined under the to-be-drafted Republican replacement bill.

      A LOT of people were not able to get insurance coverage due to pre-ex and hadn’t had coverage for years – which is one big reason ACA individual plan costs ballooned after 2014. These are the ones who may well not work at employers who have coverage, and certainly can’t afford the full cost of insurance even with the rather low “tax credit” that may be in the GOP plan.

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