Fwd: How to Cover Pre-existing conditions

From: larry.r.trout

This is a thorough discussion of how to insure Pre-existing conditions

http://www.nationalaffairs.com/publications/detail/how-to-cover-pre-existing-conditions

 

Here is a must-read sample:

 

'Moreover, in 1996, Congress provided an important protection to workers by making it unlawful for employer-sponsored plans to impose exclusions on pre-existing conditions for workers in continuous group insurance coverage. This means that if a person stays covered by job-based plans long enough (usually six months), he can move from one job to another without fear of losing insurance protection, or of having to wait longer than other new hires before gaining coverage for ailments he may have developed. If a new hire maintained insurance in his old job, his new employer's plan must cover him — even if the worker has developed an expensive medical condition.

 

In theory, this law — called the Health Insurance Portability and Accountability Act (or HIPAA) — also provided "portability" rights to people moving from job-based plans to individually owned coverage. The law gave state governments a few options for meeting this mandate: They could establish high-risk pools (which, as discussed below, is the approach most states have followed); they could require that all individual-market health insurers within their states offer insurance to all eligible individuals, without any limits on coverage of pre-existing medical conditions; or they could use their regulatory powers to create a mix of rules that would have similar results. But unfortunately, none of these approaches has worked well enough, and today many people still end up falling through the cracks.

 

The problem starts with HIPAA's requirement that a worker first exhaust his right to temporary continuous coverage under his former employer's plan (through a federal program called COBRA, which lets workers keep buying into their employers' insurance plans, generally for up to 18 months after leaving their jobs) before he can enter the individual insurance market without a pre-existing condition exclusion. Many workers are not aware of this requirement (though employers must advise them of it in a written notice); even if they are, the premiums required to stay in an employer's plan through COBRA are often too high for them to pay. This is because COBRA premiums must cover both the employer and employee share of costs, and generally provide more expensive comprehensive benefits than individual-market alternatives. And unlike premiums paid in employer-based plans, these COBRA premiums do not receive any tax advantage — making them more expensive still. As a result, many workers facing this fully loaded "sticker shock" price choose not to pay the premiums, simply hoping for the best until they can find new jobs (and new coverage). In so doing, they inadvertently waive their HIPAA rights — leaving themselves vulnerable to exclusions and high costs for pre-existing conditions when they try to buy insurance on their own.

 

But even if a sick person abides by HIPAA's requirements and remains continuously insured — thereby protecting himself from pre-existing condition exclusions in the individual market — nothing in current federal law prevents insurers from charging him more than they charge healthy people. Insurers are prohibited only from denying coverage for a pre-existing condition altogether; it is quite permissible, however, for insurance providers to charge unaffordable premiums (unless an individual state's laws happen to prevent or restrict the practice), thus achieving essentially the same outcome.

 

Likewise, current law and regulations provide no premium protections for persons moving between individual insurance policies. A healthy worker who leaves an employer plan for the individual market might find an affordable plan at first — but if he ever wanted to switch insurers (or was forced to by, say, moving to a new state), he would fac e the risk of having his premium recalculated based on a new assessment of his health.

 

Of course, the fact that the problem of pre-existing condition coverage is limited almost entirely to the individual market does not mean that it pervades that market. In 2008, at the request of the U.S. Department of Health and Human Services, health economists Mark Pauly and Bradley Herring examined how people with chronic health conditions, and thus high anticipated health-care expenses, actually fared when seeking insurance in the individual market. Pauly and Herring found little, if any, evidence that enrollees in poor health generally paid higher premiums for individual insurance. Nor did they find that the onset of chronic conditions is necessarily associated with increased premiums in subsequent years. Existing "guaranteed renewability" requirements in federal and state law already prevent insurers from continuously reclassifying people (and the premiums they pay) based on health risks. And most private insurers already provided such protection as standard business practice before they were legally required to do so.

 

But even if the exclusions and prohibitive premiums caused by pre-existing conditions are not a universal problem in the individual insurance market, they clearly affect many Americans. Estimates range from 2 to 4 million, out of a total population of about 260 million people under the age of 65. More important than the sheer number, however, is the fact that many Americans know someone who has faced this situation directly, and fear that they could find themselves in the same boat — which explains the strong public support for changing the way insurance companies treat pre-existing conditions.'