Friday, September 14, 2012

About Pre-ex

Finally, a breath of fresh air regarding pre-existing conditions:
"The emphasis on pre-existing conditions is aimed at creating the false impression that the only way to cover anyone who might become seriously ill is with ObamaCare’s heavy-handed and government-centric requirements."
Quite so.

In health insurance parlance, a pre-existing condition (or "px") is generally defined as an illness or injury for which medical advice, diagnosis care or treatment was recommended or received in the 6 months or year preceding the proposed effective date. This is, of necessity, a rather broad definition, but the point is that it's not an insurmountable obstacle to coverage.

HIPAA pretty much did away with that problem when dealing with group (employer-based) coverage: once you'd been insured for at least a year, going from group to group (or even individual to group) meant that you'd be covered right away.

The real problem is in the individual market. Those HIPAA provisions didn't apply to individually underwritten plans, and companies could exclude conditions or people from coverage. Until ObamaCare, the options were so-called "HIPAA plans" (one of the very few individual marketplace reforms in that legislation) and state-based high risk pools.

As Bob's noted, the PCIP program was about the only bright spot in ObamaCare, and even that was hobbled by the stupid requirement that one go "bare" for 6 months.

What's needed is a simple, and ultimately fair, system that recognizes the problem, and applies the group rule to the individual market: once you've been insured for a year, you can "jump ship" to a new plan which would have to cover any (disclosed) px.

Regular readers will notice the problem: isn't that, then, "guaranteed issue?" Not necessarily: some carriers have already long since done away with exclusions and riders, making underwriting more of a binary decision. Coverage is either offered (generally with a higher than quoted premium), or not. I can tell you from experience that far more folks are accepted than declined, which brings us back to PCIP: the current iteration requires not just that one has been turned down, but that one has been uninsured for a half a year. How big a deal would it be to simply swap out that requirement with one that waives coverage for the pre-existing condition for the first 6 months of coverage?

Is this a "perfect" solution? Of course not, but it brings the (perceived) problem down to a manageable size. The linked article goes into some detail about how to "smooth out" some of the wrinkles, especially as regards premium subsidies, and is well worth the read.

I should add: The point of the 6-month wait for px (in the PCIP plan) is that it discourages folks who wait until they're sick to actually, you know, buy the insurance. Beats the heck out of a mandate tax penalty fine.
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