The Pre-existing Condition: Continuous Coverage Guarantee

This essay was also published in economics21

No American wanting to responsibly purchase health insurance should be unfairly treated due to a pre-existing medical condition.

Unfortunately, previous efforts to meet this goal have been inadequate. For example, the Health Insurance Portability and Accessibility Act of 1996 promised most Americans the ability to purchase insurance regardless of pre-existing conditions, but the guarantee was only available after consumers met a laundry list of requirements. Even if they followed the right steps—a feat by any estimation—consumers had no assurance their premiums would be anything close to reasonable.

Sadly, the most recent attempt to address this issue, President Obama’s health reform law, has actually increased the cost of health insurance. Under the Patient Protection and Affordable Care Act (ACA) the cost of coverage has continued to climb; even with hefty federal subsidies, many Americans with pre-existing conditions still cannot find products with affordable premiums and deductibles.

While the ACA included a ban prohibiting insurers from considering pre-existing conditions when they set individual premiums, it was coupled with draconian, overbearing mandates stipulating that American individuals and employers must purchase insurance or pay fines. Other measures in the ACA, like restrictions on how much older consumers can be charged compared to younger consumers, have already started driving up the cost of coverage for millions of Americans and have limited the formation of innovative plans that are well-suited to what consumers want and need. Insurers have often had to trim the size of their networks or raise deductibles, leaving consumers with little to choose from besides a handful of bad options. Healthcare spending by the federal government and consumers is ultimately on an unsustainable course, which is why so many of the ACA’s provisions should be repealed.

An Alternative to Ineffective Provisions of the ACA

Our nation needs a way to protect access to health insurance for those with pre-existing conditions and empower patients to make the best choices for themselves and their families. The Patient Choice, Affordability, Responsibility, and Empowerment (Patient CARE) Act—a healthcare reform proposed by Senators Richard Burr, Orrin Hatch, and myself in January 2014—would achieve these goals.

To safeguard individuals against being charged more due to pre-existing conditions, the Patient CARE Act would include “continuous coverage” protection for all Americans. Individuals could not be medically underwritten and charged higher premiums, nor could they be denied access to a plan on the basis of a pre-existing condition as long as they have had health insurance for at least 18 months without a significant break in coverage. Protection would apply regardless of which type of plan someone has currently or had previously, whether through a state individual market, an employer, COBRA, Medicaid, or another provider.

A transitional, one-time open enrollment period would allow all Americans to get coverage regardless of prior insurance status and without fear of being medically underwritten. An annual open enrollment period thereafter would give people the opportunity to buy insurance or switch plans.

Benefits of the Patient CARE Act

The Patient CARE Act’s continuous coverage provision would reward individuals for purchasing and maintaining insurance but would not impose burdensome and expensive mandates, as the ACA does. While free to choose whatever seems best, individuals would have a strong disincentive to wait to enroll in health insurance until they become sick, lest they be medically underwritten and potentially charged more as a result.

For example, consider the case of Jane, a cancer survivor and mother of a son with severe asthma. She was recently laid off and lost her employer-sponsored health insurance. Under our proposal, she could purchase a new insurance plan on the individual market within 60 days of leaving her previous job, protected by the Patient CARE Act’s continuous coverage safeguards. Health insurance companies would be prohibited from charging Jane’s family a higher premium based on any pre-existing health conditions. She and her family would essentially be rewarded for their responsible coverage.

If Jane could not afford a new plan, she could still get coverage: targeted tax credits would help eligible families and individuals cover the cost of insurance. The refundable, advanceable credits would be available to individuals and families making up to 300 percent of the poverty level to help them purchase quality health insurance suitable to their needs. These credits would be age adjusted, with older beneficiaries receiving more than younger ones, and also income adjusted.

The Patient CARE Act includes provisions that would help actually lower the cost-drivers of care, putting downward pressure on healthcare costs. People with pre-existing conditions—and all other consumers—would have access to more affordable products than under current law. Eliminating one-size-fits-all mandates would allow insurers to design products that fit the actual needs of consumers rather than following requirements imposed by federal bureaucrats and politically appointed officials.

Access to insurance and protection from unfair denials of coverage or skyrocketing premiums would not be the only benefits of the Patient CARE Act.

States would have the opportunity to use high-risk pools to provide affordable, quality health insurance for high-cost patients. Targeted funding envisioned in the Patient CARE Act could be used to support traditional, single-state pools, or more innovative solutions such as multistate pools that diversify risk regionally. Patients with chronic, costly conditions would benefit from long-term disease management and coordination provided through these pools. And high-risk pools have the potential to reduce premiums across the individual market because costly patients are less likely to be moving among different plans every year—a risk for which insurers otherwise have to account.

Consumers would also gain new tools for comparing and using their insurance. Plans would be subject to strong transparency measures regarding which services are covered and what they cost. These kinds of tools have demonstrated value for consumers, leading to a 13–14 percent reduction in the cost of advanced imaging and laboratory services used by patients, according to recent research published in the Journal of the American Medical Association. Other protections included in the Patient CARE Act are prohibitions against lifetime limits and rescissions, except in limited circumstances such as fraud, deliberate misrepresentation, or failure to pay insurance premiums.

Conclusion

Our proposal offers a market-oriented path toward making the U.S. healthcare system more competitive, sustainable, and affordable. Moreover, our proposal also respects individual liberty. For example, a 24-year-old in perfect health could make an informed decision to forgo insurance. If he were to later develop high blood pressure and decide to purchase insurance, the insurer would be able to assess his health to determine his risk profile as a beneficiary. His premiums would likely be higher (due to the higher blood pressure) than if he had simply maintained insurance the entire time. This approach protects the most vulnerable, encourages responsibility, and is fair to all Americans.

In the wake of calls to repeal the ACA, anyone with a pre-existing condition (or who may develop one) is right to ask: If I take steps to make responsible choices, will I be denied health coverage at any time because of a medical condition? Will my premiums be fair, or will they be significantly higher than my peers’? Under the safeguards built into the Patient CARE Act, individuals with pre-existing conditions will be protected and all patients will have more freedom and better choices so they can make the best healthcare decisions for their families.