I found this piece on Real Clear Politics today and felt it needed discussing. This column shows why any real health reform is a pipe dream. When the only method of properly rating a plan or managing risk towards a carrier is called "A Circle of Hell", we have problems.
As usual, my comments will be in red.
By John McDonough and William Seligman
February 15, 2017 Real Clear Health
All leading Republicans who are committed to repealing all or key parts of the Affordable Care Act (ACA) also emphasize their commitment to maintaining the law’s most popular part: banning pre-existing condition exclusions and medical underwriting by preserving the ACA’s (also known as Obamacare) policy of “guaranteed issue.” But the fine print in Republican proposals betrays that commitment, including legislation filed on January 26 by House Energy and Commerce Committee Chairman Greg Walden (R-OR) threatening health security for tens of millions of Americans.
Medical underwriting is the insurance industry practice of issuing and pricing health insurance based on an individual’s current or prior medical condition. Insurers use medical underwriting and pre-existing condition exclusions to avoid covering anyone who might cost them money. The Walden bill, called the “Preexisting Conditions Protection and Continuous Coverage Incentive Act,” pretends to continue the ACA’s ban on medical underwriting, but would, in reality, do the opposite.What are pre-existing conditions that can prevent you from obtaining coverage?
Excuse me, but Medical Underwriting and Risk Management are the only ways to effectively the level of risk a carrier is taking on with this member. Guaranteed Issue with coverage for pre-existing conditions is what is causing your 200% rate increases as the carriers chase prior year losses.
What are pre-existing conditions that can prevent you from obtaining coverage? Here is a list of hundreds that are used to exclude or limit health insurance: acne, cancer, domestic violence, leukemia, pregnancy, sleep apnea, and much more.
Not every Pre-X gets you a decline letter. Some pre-X conditions will get you a premium increase to cover the increased risk. Some Pre-X conditions will get you limited coverage but considering we have plans with $2500 deductibles and $8500 Out of Pocket limits, this will probably never be an issue.
Walden’s bill would require that insurers not use medical underwriting and pre-existing condition exclusions against applicants for insurance, though with provisos. For example, though insurers couldn’t refuse to issue a policy because of someone’s current or past medical condition, nothing in his draft prevents insurers from using medical underwriting in setting premiums. In other words, health care consumers could acquire insurance despite their medical history, yet still see huge increases in month premium expenses.
This makes sense. The carrier won't decline the applicant but will instead rate the policy just like they do with life insurance, disability insurance, long term care insurance and even auto and homeowner insurance. For an insurance company to remain solvent, they must have a reasonable understanding of the risk they are taking on. That doesn't change in a single payor system either. Risk Management and Actuarial Science exist no matter who is adjudicating those claims.
Even more important are the bill’s final words: “Title II – Continuous Coverage Incentive [Placeholder].” That’s it, there is no more. What does Walden mean by “continuous coverage”?
Just about every ACA replacement proposal advanced by Republicans since 2013 includes this “continuous coverage” provision. It means that you are protected from pre-existing condition exclusions only if you are able to maintain coverage for the minimum required period and have no gaps longer than allowed by law. The proposed time periods vary between 6 to 18 months. Walden’s new Republican draft is silent on this detail and everything else. Under Speaker Paul Ryan’s “Better Way” plan released last summer, those who fail to maintain “continuous coverage” will be newly subject to medical underwriting and pre-existing exclusions when they try to purchase coverage. In other words, they get a one-way ticket to the medical underwriting circle of hell.
Continuous Coverage prevents Adverse Selection, plain and simple.
How many Americans might fall into this circle of hell? It's hard to say, but it is likely that most of the 28 million to 29 million currently uninsured Americans would fall into it, plus a large share of the 20-22 million who gained coverage under the ACA. Most people in the latter group receive subsidies through Medicaid or tax credits for private insurance. But Republicans want to replace these income-scaled subsidies with a flat tax credit. This would harm the tens of millions of Americans at the bottom of the income ladder, many of who have health coverage under the current law.
In other words, some of these folks don't have money to provide coverage and want an already bankrupted government to pay their premiums for them. Using pretend money to pay for real services has always been a really bad idea.
Guaranteed issue with continuous coverage is the Republicans’ favorite path to repeal the ACA’s unpopular individual mandate. However, the mandate was built into the health care law to ensure the workability of guaranteed issue, among the most liked parts of the ACA. The irony here is that both continuous coverage and individual mandates try to get at the same thing: to create broad insurance risk pools that attract healthy and younger enrollees to keep premiums as low as possible.
The risk pools aren't for the young and healthy. The state High Risk Pools are for the folks who utilize their coverage. To pool these less than healthy members into a government system is asking for the taxpayers to "buy claims". That is the fast track to insolvency.
Which is more punitive – the individual mandate or continuous coverage? In 2015, about 6.5 million Americans paid the individual mandate penalty of $325 dollars (which rose to $695 in 2016) versus tens of millions who would be vulnerable to medical underwriting under Republican continuous coverage provisions, and left with no other option but to buy insurance through re-invented state “high risk” pools in which premiums are often as much as 50 percent higher than in regular markets.
Asking people to have continuous coverage is not punitive. Ok, no problem. Let's say I agree with you gentlemen that Continuous Coverage is punitive and the only compassionate idea is to eliminate this draconian policy, then lets restrict what activates a Special Election Period. We eliminate the Continuous Coverage provision while reducing and nearly eliminating the opportunity for Adverse Selection.
The health insurance industry – though they are willing to work with congressional Republicans to modify the ACA – don’t want to return to medical underwriting, and many in the field advise against it. Most of the industry does not appreciate being the bad guys who deny coverage. Typically, health insurance providers prefer the Affordable Care Act, so long as the market ensures a broad risk pool, and mechanisms such as reinsurance are set in place to prevent excessive costs.
Who the hell told you that nonsense?!?!?!? We are ALL ABOUT underwriting. It is the only way a carrier can protect itself against catastrophic loss. Oh and about reinsurance, can you guys please stop using that silly talking point? No worthy Reinsurance carrier is going to take on a secondary payor role on non underwritten risks. A Reinsurance carrier is even more restrictive than your standard risk management company. Do you know what health insurance carriers "typically" liked? They liked the idea of the individual mandate until they saw what a train wreck it was now they don't "typically" like it.
It’s the Republican Party, standing alone, who wants America to return to the medical underwriting circle of hell. Across the country, Americans are saying “no.” Let’s hope members of Congress listen.
And it was the Democrats standing alone who shoved this mess down our throats. What Americans are saying No? Donald Trump was elected on repealing this abomination. The people did indeed speak, let's hope Congress does in fact listen to them.
John McDonough and William Seligman are with the Harvard TH Chan School of Public Health in Boston.
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