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EDITOR’S NOTE: Rural residents have higher rates of chronic illness, many of which qualified as a “pre-existing condition” under the rules of private health insurers. The House bill that passed May 4, 2017, to repeal and replace the Affordable Care Act puts the issue back on the table. The Republican American Health Care Act would allow insurance companies to charge people with pre-existing conditions higher premiums and to not guarantee that treatments would be covered.
Pre-existing conditions became the focus of debate on the American Health Care Act, which was narrowly passed 217-213 by the House of Representatives.
The debate led to bitter disagreement, as Republicans sought to undo a requirement of the Affordable Care Act that insurers be forced to cover pre-existing conditions and at the same premiums as others.
The issue, long contentious, gained further fuel this week through two illustrative videos seen by millions of Americans. On the one hand, a tearful late-night show host Jimmy Kimmel described the nightmare of every parent when his son was born with a serious, complex, and costly birth defect. On the other hand, Rep. Mo Brooks (R-AL) stated that those Americans “who lead good lives” and “‘ve done the things to keep their bodies healthy” should not have to support Americans with pre-existing conditions.
Why should this be such a contentious issue? As someone who studies and teaches health care policy in West Virginia, one of the states with the highest percentage of individuals with pre-existing conditions, let me offer some answers.
What is a pre-existing condition, anyway?
Pre-existing conditions are health conditions which were diagnosed or treated by a provider prior to the purchase of insurance. Twenty-three states even include cases where individuals did not seek medical attention but when a “prudent” person would have sought care.
Pre-existing conditions apply only to those circumstances where the sale of insurance policies is based on individual risk, as opposed to risk spread across many people, such as in employer-sponsored insurance or Medicare.
Addressing the contentious issue of pre-existing conditions, and most importantly how to distribute the costs associated with them, is a crucial one for all health care systems. The issue has been with us from the very emergence of health insurance, particularly as for-profit insurers sought to minimize their risks and to maximize their profits.
However, while most other industrialized nations have long resolved the issue equitably, the U.S. continues to struggle with it, even after the passage of the ACA.
Before passage of the ACA, pre-existing conditions were subject to a confusing mix of state and federal laws, regulations and enforcement. Almost 20 percent of the states provided no definition of preexisting conditions at all.
Insurers hence had significant leeway in determining what counted as a preexisting condition unless a state specifically banned the practice for certain conditions.
States also differed on how far back health conditions were relevant, ranging from six months to indefinitely.
Insurers could elect to deny coverage altogether to individuals with preexisting conditions in most states. In others, insurers charged much higher premiums for those with preexisting conditions.
Insurers are generally not concerned about preexisting conditions per se, but only about those that are expected to incur significant medical costs in the future.
Basing their decisions on risk models, individual insurers have developed lists of declinable conditions (such as substance abuse, acne and sleep apnea), medications (such as heparin, Zyrexa and Interferon) or occupations (such as miners, pilots and air traffic controllers).
A congressional report found that 425 medical diagnoses have been used to decline coverage.
Certain reasons for rejection fueled public outrage more than others. For example, immediately prior to the ACA’s passage, being the victim of domestic violence counted as a preexisting condition in eight states.
How the idea of denying coverage got started
The issue of pre-existing conditions is not new to the American health care system. At the beginning – in the 1920s and 1930s – emerging health insurers like Blue Cross and Blue Shield were created as nonprofits with special tax treatment. Most plans charged the same rates to all consumers.
As the insurance market became more profitable, for-profit insurers entered the market. Focused on maximizing their profits, these companies sought to attract only the healthiest individuals. They did this by offering lower premiums than their nonprofit competitors to healthy individuals.
Naturally, this entailed excluding individuals with preexisting conditions. In order to avoid being left with only the sickest individuals, all insurers eventually had to move to medical underwriting, at least in the individual market.
Over time, both states and federal government enacted certain, albeit very limited, protections, such as high-risk pools, for individuals with preexisting conditions.
Some states also required insurers to issue policies to all comers. These guaranteed issue requirements, however, often did not address costs issues.
As result, while consumers may not have been denied coverage, they were penalized with higher premiums for having these conditions.
Common efforts to limit losses for insurers from those with preexisting conditions included the temporary or permanent restriction of benefits for certain enrollees based on their health condition; the creation of so-called bare-bone plans or allowing insurers to charge discriminatory premiums.
However, none of the approaches offered a comprehensive solution.
A study by the Commonwealth Fund in 2007 found that 36 percent of individuals had been turned down or charged a higher price for a preexisting condition.
An investigation by the Committee on Energy and Commerce of the House of Representatives showed that the nation’s four largest for-profit insurers covering close to three million individuals had turned down more than 600,000 individuals between 2007 and 2009. Moreover, during the same period they refused to pay medical treatment for a preexisting condition for more than 200,000 claims.
Those most closely affected were those 16 million Americans (in 2008) who held policies in the individual market and the additional 50 million who were uninsured.
However, transition between insurance is inherently frequent in a mobile society like the United States. A significant number of people in any given year lose their jobs. Both instances leave many Americans uncovered for at least part of the year, and potentially seeking insurance in the individual market.
Obamacare’s call for coverage
The pre-existing condition issue is one pretty much unique to the American health system.
The ACA sought to solve the issue through a variety of arrangements surrounding the insurance marketplaces including community rating, a minimum amount of benefits (the Essential Health Benefits), the elimination of annual and lifetime benefit limits, and subsidies.
In contrast, the American Health Care Act would allow insurers to charge higher premiums to those individuals.
The AHCA does offer some very limited funding to offset its negative effects. However, policy experts, providers and patient groups have described these as inadequate. The most recent Upton Amendment slightly increased this funding – something that possibly contributed to the law’s passage. But policy experts continue to see the funding as significantly too small.
Are we all in this together, or not?
Millions of Americans could potentially be affected by the changes under the new legislation.
The point is that pre-existing conditions remain ubiquitous in American society. A Kaiser Family Foundation analysis a few months ago found 52 million Americans under age 65, or 27 percent of the population would not be able to obtain insurance on their own under pre-ACA conditions.
The situation was considerably worse in states like West Virginia, Mississippi, Kentucky and Alabama, where more than one in three residents, according to the analysis, would not be able to.
Making sure that those among us with pre-existing conditions have health care is challenging and unquestionably costly. It also requires a degree of sacrifice, in terms of higher premiums, from those who, at any given point in time, are relatively healthy.
What is required is a degree of solidarity with our neighbors, friends and family members who, often through no fault of their own, have suffered from poor health. Not the least, it is a degree of solidarity with our own future selves as all of us could fall sick at any point in time.
Americans of all political persuasions seem to be willing to make the required sacrifices. Most Americans, including 63 percent of Republicans and 75 percent of Democrats in a recent poll, support the preexisting condition components of the Affordable Care Act.