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  • The Right Way to Limit Pre-Existing Condition Exclusions

    The inability of some Americans to obtain health insurance for pre-existing medical conditions continues to be used by Obamacare supporters as justification for the mammoth legislation.  The truth, however, is that the problem was nowhere near as big as portrayed, and the solution doesn’t require 2700 pages of legislation or $1 trillion in new government spending.

    Over 90 percent of Americans with private health insurance are covered by employer group plans where existing rules governing the application of pre-existing condition exclusions are not an issue.  Before passage of Obamacare, the law specified that individuals with employer-sponsored insurance cannot not be denied new coverage, be subjected to pre-existing-condition exclusions, or be charged higher premiums because of their health status, when switching to different coverage. Thus, group market, pre-existing-condition exclusions only apply to those without prior coverage, or to those who wait until they need medical care to enroll in their employer’s plan.

    These existing rules represent a fair approach: Individuals who do the right thing (getting and keeping coverage) are rewarded; individuals who do the wrong thing (waiting until they are sick to buy coverage) are penalized.

    The problem is that the same kind of rules did not apply to the “individual” (non-group) market—about 9.4 percent of the total market for private health insurance. Thus, an individual can have purchased non-group health insurance for many years, and still be denied coverage or face pre-existing condition exclusions when he or she needs or wants to pick a different plan.

    The obvious, modest and sensible reform is to simply apply to the individual health insurance market a set of rules similar to the ones that already govern the employer group market.

    Instead, Obamacare prohibits the application of pre-existing condition exclusions under any circumstances, thus encouraging everyone to wait until they are sick before buying health insurance. These perverse incentives are a recipe for disaster. To limit the effects of that disaster (of their own making), lawmakers included an unpopular individual mandate to buy health insurance in the health care legislation.

    The consequences of new insurance restrictions that go into effect this Thursday—particularly the requirement that insurers can no longer exclude coverage for pre-existing medical conditions for children—offer a foretaste of what is in store when the same, misguided rules apply to the entire market in 2014.

    Due to high uncertainty, several large insurers have chosen to discontinue child-only policies because of the new requirement.  The Washington Post’s N.C. Aizenman reports, “the result over the next several years could be that the pool of children insured by child-only plans would rapidly skew toward those with expensive medical bills, either bankrupting the plans or forcing insurers to make up their losses by substantially increasing premiums for all customers.”

    Current health insurance rules do not work for everyone, but the solution is not for the federal government to take over private health insurance. Congress can correct the gaps in the current system to make the market work better for those it serves without destroying the market for others.  As becomes clear as insurers shy away from child-only plans, heavy regulation will stifle choice and competition in the health insurance market rather than protect patients.

    There are several reasonable health insurance reforms that could be pursued instead in order to ensure equity and stability in the marketplace.  The right approach to health reform is for lawmakers to set basic rules that are balanced and fair to both consumers and insurers — instead of imposing the kind of poorly thought-out, overly-regulatory “solutions” in Obamacare that make existing problems worse.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to The Right Way to Limit Pre-Existing Condition Exclusions

    1. Kevin H, College Par says:

      You certainly know how to spin things, don't you.

      Earlier, you have post complaining about the law's mandate for all to get covered – unless they don't make enough money and are excluded from any fines for not having coverage.

      Now, today, you are saying people can wait until they are sick before getting coverage. Obviously, you have not read the legisaltive langauge, cannot comprehend it, or are just plain trying to misinform and confuse people.

      And to say the pre-existing conditions is an overblown issue obviously shows how the heritage foundation staff is full of silver spoon kids who have had everything given to them and never had to struggle, always had the best health insurance. For the millions of Americans who have been denied coverage, had procedures/tests denied, had premiums spike on them – this is certian a big issue. But i can understand how those who were born into the richest of families and never had to struggle can think this is not an issue. Shows how out of touch you are with the real americans and how you only look at how you can help the richest americans (which makes sense since Coors is who founded the heritage). Makes sense that a son of one fo the richest Americans (Joe, son of Adolph) founded the heritage, so the foundation just looks out for the very rich like Joe.

    2. Paul, Albany NY says:

      Kevin H – After disregarding all of your ad hominem attacks it looks like the only factual statement you are offering is that millions of Americans have been denied coverage, had procedures/tests denied, or had premiums spike on them. You should understand that the President's health reform program will not fix procedure/test denials and will not fix premium spikes. If what you mean by "denial of coverage" is actually denial of eligibility (due to pre-existing conditoin, for example), it is true that the health reform law will limit the bases that insurers can use to deny issuance of a policy. But if you don't understand how that will translate directly and unavoidably into increased premiums then you need to stop commenting on insurance issues altogether.

    3. Anne C, Suffern, NY says:

      Agree. The health care reform bill should be tailored in such a way that it will be fair for everyone involved in the health care industry- consumers included. The changes should be well thought of with consequences taken into consideration.

      I believe that people with preexisting condition should be given access to health care but with guidelines that will not be open to abuse.

      Anne C

      Vista Health Solutions

    4. Gregory Young, Charl says:

      Is this really about the author of the Heritage article not understanding the legislation and having a "silver spoon in the mouth?" Or, does Dr. Kevin want to engage in class warfare? Really, what does the Coors family have to do with the author's point?

      Imagine, Dr. Kevin, that a law is passed stating all physicians need to see all children under the age of 19 for 20 dollars a month. This law would allow these kids to come in as often as they wanted, no matter what their diagnosis and all physicians would need to provide any needed test,procedure or treatment that is applicable. Also, the families would be allowed to decide what month they wanted to purchase coverage for your services or drop the coverage. How would this workout for your profession?

      If we are going to engage in unrelated finger pointing, let me join the game. Didn't the AMA work hard to trade their support of healthcare reform for an increase in the physician's reimbursements under the Medicare fee schedule? Hasn't a law been passed that would reduce these reimbursements in order to prolong the life of Medicare? Yet, each year the AMA is able to lobby to have the planned reimbursement reductions overturned. Should the argument be made that these physicians that the AMA represents are a bunch of "silver spooned kids?"

    5. Kevin H, College Par says:

      It just appears to me that Heritage will do and say anything to bash the Democrats – even when they contridict what the foundation previously said. One day, complaints about mandates. The next day, saying mandates would solve the problem. It amazes me how incredibly biased the foundation has become, much like entertainment channels like FoxNews. And in my opinion, a big key is to follow the money, to see who funds these programs and organizations.

      Seems obvious to me, the author and most of funders, have never had to worry about lack of insurance and likley don't know anyone who has. If you have known a person who could not get coverage due to pre-existing condition, you would certianly be singing a different tune. Seems easy to understand why the silver spooners would oppose health reform – because they don't need it themselves, so why care about others.

      Paul – the bill will certianly stop the abuses you list – spiking premiums for those on pre-existing conditions will be outlawed, procedures and tests denials will be outlawed. Right now, major inurers play bonues to lawyers who are able to find recissions. If they can go through past paperwork and find something (whether it was having acne as a kid, back problems, or even a victim of domestic violence in some states) which leads to them denying you coverage, that lawyer receives bonuses. Seems like a perverse system to me.

      It's just frustrating as hell. I know people personally who have conditions and cannot get coverage. This is changing now.

      I hear attacks against the bill and they they are incredibly misguided.

      The first attack on this blog, as well as the GOP response yesterday, was about the length of the bill. Seriously, that first attack on a proposal is about the length of it?!?! That just makes me ill. Ove rnad over on the floor, GOP Member stood up and talked about how long the bill is. That's pathetic to me. Do you really think a bill overhauling the health insurance system is going to be a small bill?

      The thing that shines how absurd this argument is – the bill the Republcians passed in 2003 – MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003 – contains over 5 times the number of words than the health reform bill passed by the Democrats of this Congress. Yet you have GOP Member after Member and blogs like this one criticizing the size of it – yet it was far more comprehensive than the bill passed in 2003. But i guess you can't smell the hypocrisy when you are swimming in it.

      Anne – that is the biggest problem, there are so many different solutions to the different problems facing the health system right now. But it's tough when there are tens of milliosn of dollars being spent by Health Insurers, For-Profit Hospitals, folks like Freedom Works, etc. that are fighting against reform – because why would they want to get rid of the cash cow they are sitting on.

      GOP has had lot of chances to do something, but never did. That's says a lot to me.

    6. Billie says:

      Kevin H, you are mistaken. Heritage gets their information from the horses mouth, government. If you have an issue on this and previous writings, consider the source heritage gets their information from.

      Some of the exaggerated number of people with pre-existing conditions was used as a clever excuse taken from people that were actually denied but because of extenuating circumstances that weren't shared upon their application or their information wasn't completely given. I have personally witnessed this from an acquaintance.

      Just to mention, I have a chronic illness since childhood. I was told I'd need special $500 dollar shoes. I told my parents NO WAY! Its been over 25 years and my feet have always been wonderful.

      When I became an adult, the first thing I did was look for a job with benefits of health insurance. I haven't been denied yet! Because my illness requires daily medication, it is more expensive for me then someone without. Only makes sense to me. I don't cheat my insurance agency. I make my choice of what I need without the bells and whistles. Living with this illness taught me alot more than doctors or anyone in the industry has or can.

      My only request was the cost of prescriptions to be reduced. I don't think it is ethical of the government to interfere in the privacy of mine or anyone's personal health. And I've never seen a silver spoon in my life. But I loved the opportunities America once had for those that might have one.

    7. Benjamin W. says:

      People like Kevin Habib operate from the mindset which believes that private businesses, including healthcare companies, solely exist to charitably provide services to people, profits be damned.

      If these companies cannot profit, they will exit the marketplace, leaving behind publicly-funded medical practices and abhorrent-quality health care. It's that simple, and it is what Obama wants in the end.

      I'd like to buy some Coors for the staff at the Heritage Foundation for the great work they do. Cheers!

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    9. Diane Gregg says:

      I have no insurance so I pay out-of-pocket and my mother has Medicare/Medicaid. She goes to the doctor a LOT and they keep her coming back for check-ups on a regularly scheduled basis. Her doctors work in glass palaces with mirrored elevators. She gets upset when anything isn't covered by her government insurance such as eye glasses, hearing aids or false teeth. She even thinks massage therapists should be covered and won't buy services if she has to pay. I virtually never go to the doctor and when I do I call around and price-shop. I turn down procedures and tests if I think they are redundant or unnecessary. I solve a lot of my own health issues by researching them, eating right, and using over the counter aids. My daughter has the flu but we are not going to the doctor. She is resting, forcing fluids and taking pain killers. The key to solving the medical crisis lies with patients. A top down government approach to cost reduction is communistic, ineffective, creates a huge, expensive bureaucracy and give the government too much control. Government insurance policy writers will be no better than private insurers at knowing when procedures are really necessary. The thing that will really work is market controls. If more people have to pay for regular doctor visits and routine tests etc. out of pocket, that would exert a downward pressure on medical costs. Doctors, hospitals and pharmaceutical companies would have to compete and they would find ways to save. Some doctors would allow people to carry a balance and pay on time like they did in the 1960s and 70s. Dentists and vets did this too. Insurance policies should be catastrophic and cover big tragedies in people's heath lives like major accidents, cancer, diabetes etc.. Those policies would be affordable. Simple doctor visits for minor ailments like colds or aches and pains would be paid for out of pocket. Patients would shop around for the best product at the best price just like when they buy food, gas or a lawn mower. This is nature's way; economics is ruled by unchangeable natural laws.

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