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Jean, an Arizona teacher whose employer provided group health benefits but did not contribute to the cost for family members, gave birth to her daughter, Alex, in 2004 and soon after applied for an individual policy to cover the baby. Due to time involved in the medical underwriting process, the baby was uninsured for about 2 weeks. A few months later, Jean noticed swelling around the baby’s face and eyes. A specialist diagnosed Alex with a rare congenital disorder that prematurely fused the bones of her skull. Surgery was needed immediately to avoid permanent brain damage. When Jean sought prior-authorization for the $90,000 procedure, the insurer said it would not be covered. Under Arizona law, any condition, including congenital conditions, that existed prior to the coverage effective date, could be considered a pre-existing condition under individual market policies. Alex’s policy excluded coverage for pre-existing conditions for one year. Jean appealed to the state insurance regulator who upheld the insurer’s exclusion as consistent with state law.
People hate Obamacare. People in “real” America really hate Obamacare. Kaiser Family Foundation convened a series of focus groups in counties that voted for Trump to find out what EXACTLY Trump voters hated about Obamacare (article found here). They hated that those that were really poor and on Medicaid didn’t have the same barriers to care (high co-pays and deductibles) as did those who were working hard. This was even when the groups included voters on Medicaid. They hated how expensive their premiums were, how high their co-pays were, and how much was not covered. They hated how complex the system is and how when you think you have it figured out someone throws another thing at you. They hated the mandate to purchase insurance.
There is currently a bill being formulated to “repeal” significant parts of the ACA and replace it either with a “To Be Named Later” or with a mismash of proposals which would be labeled “replacement.” How pre-existing conditions fit into this bill remains unclear but is worth understanding (Kaiser article here). Prior to the passage of the ACA, insurance companies were state regulated, and in all states were able to do medical underwriting, This meant that they could effectively eliminate people with preexisting conditions. Although it would be possible to repeal the ACA and keep in the current underwriting rules, it is not likely this will happen. In the case of our pre-Obamacare insurance at our work, the “lookback” was “270 days, known or unknown, manifest or unmanifest.” This meant that, the human gestation being 270 days from conception, if you had your first day of work and went home and celebrated with your significant other (and one thing lead to another) you had best hope the baby was a week late. If not, you were paying cash. Much worse was the patient we had whose cancer was manifest 4 months after his employment commenced and we got to tell him that he had to pay $100,000 up front or die of his cancer. Kaiser estimates that 52 million people will be denied coverage if the old rules are put back into place. Perhaps not denied outright but effectively denied by bringing back these old favorites:
- Rate-up – The applicant might be offered a policy with a surcharged premium (e.g. 150 percent of the standard rate premium that would be offered to someone in perfect health)
- Exclusion rider – Coverage for treatment of the specified condition might be excluded under the policy; alternatively, the body part or system affected by the specified condition could be excluded under the policy. Exclusion riders might be temporary (for a period of years) or permanent
- Increased deductible – The applicant might be offered a policy with a higher deductible than the one originally sought; the higher deductible might apply to all covered benefits or a condition-specific deductible might be applied
- Modified benefits – The applicant might be offered a policy with certain benefits limited or excluded, for example, a policy that does not include prescription drug coverage.
Some have suggested that a “high risk pool” would allow these folks to obtain coverage and keep the cost down for the 50% of the population who have no need to access the healthcare system in a given year. We actually tried that before, turns out. As the Kaiser article points out, these didn’t work for a number of reasons. First is the nature of health care expenses. Some folks have a lot of expense in a single year (car crash) and the next year are perfectly fine. Others have a lot of expense in an ongoing fashion for a very long time (think Magic Johnson and HIV).
Planning for these disparate situations was tough and no one got it right. The reasons for failure included:
- Premiums above standard non-group market rates – All cost a lot, the states with the most success provided a substantial subsidy.
- Pre-existing condition exclusions – Once again, how do you deal with folks who wait until they get sick to pick up a policy
- Lifetime and annual limits – Most ranged from $1 million to $2 million and others imposed annual dollar limits on specific benefits such as prescription drugs, mental health treatment, or rehabilitation.
- High deductibles – The plan options with the highest enrollment had deductibles of $1,000 or higher.
The conclusion was that they could work but it’ll cost a lot to get it right.
Back to the focus groups. What Trump voters said they wanted was low premiums and little out-of-pocket expense for drugs, visits, and procedures. They wanted no mandate and no increase in taxes but felt that not covering pre-existing conditions was “un-American.”
They expressed confidence that as a businessman President-elect Trump could pull this off. Hope they are correct.