Pre-Existing Conditions a Serious Issue For Health Insurance
The Healthcare Policy and Marketplace Review has posted an insightful article about John McCain’s health care policy proposal. I agree that it seems McCain is sidestepping the issue of people with pre-existing conditions who need to get their own health insurance policy. HIPAA allows people with pre-existing conditions to move from an individual health insurance policy to a group policy, or from one group plan to another, but it does nothing for people trying to switch from one individual policy to another, or from group coverage to individual coverage. The way the current system is set up, people with pre-existing conditions often find themselves forced to remain with an employer just for the health insurance benefits.
McCain is talking about working with governors on a state level to set up guaranteed issue policies. This doesn’t sound much different from the current high-risk pools that we already have scattered across the country. The states that have high risk pools have worked hard to try to find a solution for people who are declined by the private health insurance market. For our clients in Colorado, Cover Colorado provides a reasonable coverage option, although many people find that the only deductible they can afford is much higher than they would like. But what about people who live in the 40% of states that don’t have a high risk pool? Or the ones who live in states where the high risk pool was financially swamped ages ago and hasn’t accepted new enrollees in years? And what about the fact that the high risk pool are always much more expensive than comparable private health insurance, meaning that the people who need health insurance the most are less able to afford their coverage. This runs counter to the idea that health insurance is a mechanism for spreading risk over an entire population, letting the healthy people who go ten years between claims balance out the costs of the people who have chronic conditions that need continual treatment.
Currently, we have 47 million people in America without any health insurance at all. Many of them are perfectly healthy, and would be a “good risk” for health insurance companies. Of course some of them are not healthy at all, and would fall into the category of people who are unable to qualify for individual health insurance under the current underwriting system. If the 47 million people who are not currently paying health insurance premiums were to start doing so, the risk pool for health insurers would grow considerably. Underwriting on individual health insurance policies could be changed to allow people with pre-existing conditions to gain access to the same health insurance coverage the rest of us have, regardless of where they live. By spreading the cost of treating people with pre-existing conditions over the entire pool of people with individual health insurance (or even across the entire US population, if individual and group health insurance were to be combined into one industry), we would be much closer to actually having a fair health insurance system, where the costs are spread across the entire group, and people pay the same premiums, regardless of their health status. I’m still in favor of charging higher premiums to people who use tobacco or have self-inflicted health conditions, but excluding people completely from the health insurance system only works to drive up health care costs, as these individuals end up needing emergency care when chronic health conditions go unchecked, and the hospitals providing the care don’t get paid because the patients are uninsured.
It makes a lot more sense to try to find a way to include people with pre-existing conditions in the overall health insurance pool that includes all the healthy people as well, rather than expecting states to find a way to cover a group of people who are all sick, with no healthy members to offset the costs.
If the object of the game is to distribute the risk among a group you would think the insurance companies would try to increase the size of their groups. The assumption is that the larger the group, the lower the risk, the lower the premium cost for members, and the higher the profits for the insurer. It makes no sense when the insurers run afoul of logic and are steadily decreasing the membership of their group policies by over pricing them (making them unaffordable) even to the lowest or healthiest members.
From the perspective of a health insurance company, if an applicant has a health condition that costs $10,000 per year to treat. The insurance company needs to charge that person atleast that much extra on top of what they charge to assume the risk of covering other conditions that could happen. I think individual health insurance companies are only allowed to give a rate-up of a certain percent.
So that’s why a plan through an employer, or a risk pool like Cover Colorado is so expensive. There is such a high percentage of people with expensive health conditions and the insurance companies are required to treat them from day one (if they’ve had continuous coverage) and they also need to make a profit.
Rick - you make a good point, in that the health insurance companies have to cover costs as well as make a profit. But with the current high risk pools that states have, everyone on the plan is an expensive policy holder. There aren’t any healthy members, so the premiums have to be high and the benefits have to be minimal in order to make ends meet. The idea I’m looking at is to spread the load over a much wider group. So for the person with a $10,000 pre-existing condition, the health insurance company just needs to get that $10,000 in additional premiums from all the plan members combined, rather than just from the sick person. It would raise premiums for people currently on medically underwritten individual plans, but the options would be expanded for people with pre-existing conditions, and their premiums would decrease. So it’s more in keeping with the overall “fairness” aspect of insurance.
Great article. It’s understandable why insurance companies would need to charge a certain amount from a person with a health condition. It is however unfortunate that they decline that person coverage due to this condition. Why not put a rider on said condition for anything related to it?