Tag Archives: pre-existing condition

Health Alerts

Rational Risk Pools

17 Comments

Today’s subject title is an oxymoron.

But before getting into that, note two things: (1) the Obama Administration’s approach to health reform envisions the creation of risk pools for otherwise uninsurable people — to bridge the gap from where we are now to 2014, when health plans will have to accept everyone, regardless of health condition; and (2) almost every feature of these risk pools defies rational explanation.

For starters, note that the Obama risk pools plan to charge people the same premiums that healthy people pay for insurance. This is in contrast to existing state risk pools which charge 125% or 200% of market rates. Also in contrast to existing risk pools, the new Obama risk pools will have no waiting period. You get full coverage from day one. As Grace-Marie Turner pointed out in The Wall Street Journal the other day, the new risk pools will be cheaper and more generous than what the states currently have.

So is that good news to the 199,000 people who are currently enrolled in a state risk pool? Actually, no. The new law is explicitly designed to keep that from happening. Specifically, you cannot enroll in an Obama risk pool unless you’ve been uninsured for at least six months.

So if you have a health problem and you have been “doing the right thing” and trying to stay in the insurance system — say, by making COBRA payments or paying premiums to a conventional risk pool — you are flat out of luck. But if you have been so antisocial as to have been willfully uninsured for a long period of time and suddenly discover you have a serious health problem, then the Obama pools are made-to-order for you.

Continue reading Rational Risk Pools →

New Health Care Law

Taking a Closer Look at Trivial Pursuit

10 Comments

John Goodman has given us a representative sampling of the “feel-good” applause lines in President Obama’s stump speeches on health “reform.” But there is more here than meets the eye. See if you can guess which president made the following statements:

For too long, tens of millions of Americans have been denied health insurance coverage because they have pre-existing conditions. We have all heard their stories: 

  • A husband and his pregnant wife lose their insurance and then find they cannot buy new coverage because her pregnancy is considered a pre-existing condition.
  • A young woman starting out in her career cannot accept a promotion with another company because its health insurance policy won’t cover her diabetes.
  • A small business owner faithfully pays his group health insurance premiums for years only to learn that his coverage won’t be renewed after one of his employees develops a heart condition.

Since taking office, I have been fighting for changes that would stop this kind of unfairness and make health insurance more accessible for all people, including the most needy.

Furthermore, according to the president:

This legislation will set into motion several key reforms. First, it will eliminate the possibility that individuals can be denied coverage because they have a pre-existing medical condition. Second, it will require insurance companies to sell coverage to small employer groups and to individuals who lose group coverage without regard to their health risk status. Finally, it will require insurers to renew the policies they sell to groups and individuals.

Answer is below the fold.

Continue reading Taking a Closer Look at Trivial Pursuit →

Health Insurance

A Private Health Insurance Death Spiral Will Begin on September 23

9 Comments

ObamaCare will have a very long roll-out. While some provisions have already come into effect, others will take many years. When will individuals and businesses first see a consequential impact on their health benefits? I believe that it will be the “slacker mandate,” which commands that health plans cover “children” up to 26 years of age on their parents’ health benefits; and comes into force six months after enactment.

September 23 will mark the beginning of the “death spiral” of private health insurance. Most people correctly anticipate the full force of the death spiral in 2014, when insurers will no longer be able to charge actuarially accurate premiums for applicants with pre-existing conditions. Applicants can wait until they become sick, and then apply for coverage which insurers must offer at a premium which is initially artificially low. This causes healthy people to drop out; and the cycle continues until the risk pool collapses. Insurers must then raise premiums to cover the guaranteed losses and avoid insolvency.

Continue reading A Private Health Insurance Death Spiral Will Begin on September 23 →

Health Alerts

Can There Be Scaled-Down Health Reform?

16 Comments

Yes and no.

On the affirmative side, I have ten reforms in mind and every one of them would be especially beneficial to people with chronic (pre-existing) conditions.

But let’s take up the negative side first. Here is Paul Krugman, writing in The New York Times:

Suppose, for example, that Congress took the advice of those who want to ban insurance discrimination on the basis of medical history, and stopped there. What would happen next? The answer, as any health care economist will tell you, is that if Congress didn’t simultaneously require that healthy people buy insurance, there would be a “death spiral”: healthier Americans would choose not to buy insurance, leading to high premiums for those who remain, driving out more people, and so on.

And if Congress tried to avoid the death spiral by requiring that healthy Americans buy insurance, it would have to offer financial aid to lower-income families to make that insurance affordable — aid at least as generous as that in the Senate bill. There just isn’t any way to do reform on a smaller scale.

Alert readers will recall that I made a similar point here and Uwe Reinhardt agreed with me. But I wasn’t arguing for ObamaCare. I was arguing against divorcing health insurance premiums from risk.

In a complex system — especially one that is hugely dysfunctional because of regulation, tradition and bureaucracy — there are basically two ways to go:

  • We can liberate people, giving them new opportunities to solve problems; or we can further constrain them, making problem-solving more difficult than ever before.
  • We can give people new tools to solve problems; or we can take away tools they already have.
  • We can unshackle the price system, allowing competition and choice to solve problems the way problems are solved in other markets; or we can suppress prices even more than they are already suppressed.

The former choices are the path to real problem-solving; the latter are not workable, not desirable and not real reform.

Continue reading Can There Be Scaled-Down Health Reform? →

Health Insurance

We Already Have Obama’s Goal of No Pre-Existing Conditions Limitations in Eight States

3 Comments

The result: higher prices and fewer people insured.

In 1994, there were just under 752,000 individuals enrolled in individual insurance plans, or about 4.7% of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today, that percentage has dropped to just 0.2% of the state’s nonelderly. In contrast, between 1994 and 2007, the total number of people insured in the individual market across the U.S. rose to 5.5% from 4.5%.

Parente and Bragdon estimate that repeal of community rating and guaranteed issue could reduce the price of individual coverage by 42%.