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Health Insurance and Pre-Existing Conditions in 2018

With the barrage of news reports coming out of Washington regarding the repeal of the Affordable Care Act (ACA), also known as Obamacare, two big unanswered questions are whether insurance companies will be able to charge high-risk individuals with pre-existing conditions more for coverage, and if monthly premiums will go up or go down once Congress revises the health care law.

Today all qualified health insurance plans must guarantee access to individuals regardless of their gender, weight or health history. This includes anyone who suffers from a pre-existing condition, including chronic conditions that might have high claims every year. On the other side of the spectrum, non-qualifying plans like short term medical insurance or limited beenfit health insurance are allowed to ask medical questions and disqualify individuals with some pre-existing conditions. This helps keep the cost of the plans at more than half the price of regular health insurance.

What is a Pre-Existing Condition?

Historically, health insurance companies have determined what pre-existing conditions will not be covered. Before the ACA, each insurance company followed a set list of pre-existing conditions for its major medical plans in all but five states. For example, one insurance company in one state might accept a patient with sleep apnea while another would not. But it’s an important factor to keep in mind when shopping for a new medical plan once the ACA is repealed, replaced or amended. Will the insurance company cover claims that have the potential of being considered a pre-existing condition?

Short term health insurance typically requires some medical underwriting and asks questions about overall health. If you are pregnant, exceed a certain weight, have had cancer, a heart attack, suffer from diabetes, have a mental illness or abuse substances, you are most likely not eligible for short term medical coverage.

However, if you have high blood pressure that is controlled by medication (hypertension), high cholesterol, a hyperthyroid, sleep apnea or other ailments that require annual doctor visits and prescription drugs, you could qualify for short term health insurance. And at Pivot Health, we understand that having health insurance coverage is important to your financial well-being. If you see several specialists a year, you can find short term plans with a low deductible, doctor copayments and prescription drug coverage. Lower cost plans are also available if you are willing to accept the risk of higher out of pocket medical bills for affordable monthly payments.

Current Proposal for Pre-Existing Conditions

According to health care policy consultant Robert Laszewski, “Insurers have generally considered conditions treated within three months of the start of coverage to be pre-existing,” he recently told Business Insider.

Yet this rule was eliminated with the passage of the Affordable Care Act. In 2017, legislators are debating how to keep skyrocketing premium prices down, and one way to accomplish this is to change the rules for individuals with pre-existing conditions who traditionally cost more to cover than healthy individuals.

The committee shaping the Senate version of the American Health Care Act (to replace major portions of the ACA), is looking at whether individuals with pre-existing conditions should be moved into state-funded high-risk pools, and if they should be charged more for insurance because of their claims risk. The Republican bill taking shape could also penalize individuals if they drop their insurance coverage for a period of time, and then try to purchase at a later date. Re-enrollment could force a higher premium percentage for failing to keep continuous coverage. For those with pre-existing conditions, the threat of higher monthly premiums once Obamacare is repealed is a potential reality.

Social media firestorms have been charging that sexually related trauma, like rape, could be considered a pre-existing condition under the Republican plan. While the incident of rape would not classify as a pre-existing condition, any treatment, like therapy to help recover from the incident, could be considered pre-existing. The determination is not about the accident, illness or incident history, but rather, the medical care required to treat the situation. Obamacare advocates are concerned that pregnancy could even be considered a pre-existing condition, and the mother could be charged more because of her pregnancy.

History of High-Risk Pools

Before Obamacare, 18 percent of Americans were denied health insurance coverage on average. Of that 18 percent, it is unknown how many were flagged with a pre-existing condition or if there were other issues, like immigration status or eligibility for Medicaid.

To combat uninsurability and rising costs, high-risk pools were operational in 35 states before the ACA and offered coverage to individuals with pre-existing conditions. The state pools were met with mixed results. Some states ran successful risk pools, but others struggled, which forced extremely high premiums, maximum caps that reduced the number of claims the risk pool had to pay, and limited overall enrollment.

The first risk pools were formed in 1976 in Minnesota and Connecticut. By 1996 there were 25 state high-risk pools with more than 91,000 enrollees combined. By 2006 there were 35 state pools with more than 226,000 participants.

High-risk pools were not created equal, but most operated using similar principles that many argued kept the pre-existing condition population from enrolling en masse. Administratively they included:

Monthly Premiums Were Above Standard Market Rates

Most states capped the cost of health insurance between 150-200 percent of market rates. Of the 35 state risk pools, 19 offered subsidies to low-income households based on the federal poverty level. The remaining high-risk pools did not offer any premium cost relief.

Exclusions Due to Pre-existing Condition

Just because you enrolled in a high-risk pool for the uninsurable, didn’t mean you could use the insurance coverage for your pre-existing condition right away. Most state pools excluded coverage for any pre-existing treatment for the first 6-12 months of enrollment. A handful of states had just a three month waiting period before claims could be filed.

Coverage Limits

A majority of the state high-risk pools had a lifetime maximum cap of $1 million to $2 million (33 states total) on treatment and services. Some pools also imposed annual dollar limits on all covered services, and 13 state pools placed annual dollar limits on prescription drugs, mental health treatment and rehabilitation.

High Deductibles

Starting deductibles in most risk pools were a minimum of $1,000, but 10 states had a $5,000 minimum deductible.

By 2011 there were $2.6 billion in claims for the 226,000 high-risk population. Monthly premiums only covered about 50 percent of the claims, forcing states to pay off the $1.2 billion difference.

In 2010 the Obama administration set up a temporary federal risk pool for individuals with pre-existing conditions to help them stay covered until the federal exchange debuted in 2014. Federal dollars totaling $5 billion went to the program, and enrollees also paid monthly premiums to help fund the pool. Within a year the federal pool was broke, with individual enrollees averaging more than $32,000 in claims over the course of the year. The high-risk pool was in debt six times more than what it was collecting in premiums. Enrollments were halted by March 2013 to preserve the existing pool from complete bankruptcy. Once the ACA went into effect in 2014, the federal risk pool was disbanded and enrollees went on the federal exchange.

It is estimated that there could be 2.2 million people with pre-existing conditions on the federal exchange or the state exchanges today, which would cost approximately $67 billion to cover.

In a statement to CNN, Jeff Smedsrud, CEO of Pivot Health, said, “Risk pools should be looked at as a small step to make health insurance a little bit more affordable for most of the 20 million people who buy their own coverage. However, funding could be a problem if too many states opt out and choose to create their own state-based programs and if the definitions of what constitutes a pre-existing condition are too broad.”

Affording Health Insurance With a Pre-Existing Condition in 2018

It is unknown when Congress will agree on a bill to send to President Trump’s desk, but repeal/replacement/amendment of the Affordable Care Act is coming and could take effect on many levels by 2018.

Analyzing your health insurance options going forward will be a key to managing your monthly budget. If you do have a pre-existing condition, short term health insurance might not be the most optimal coverage option, and you may fail to qualify. But if you have controlled hypertension, high cholesterol, a hyperthyroid, sleep apnea or other ailments managed by prescriptions, short term medical insurance could be an affordable alternative. Let’s compare a short term medical plan against a regular ACA health insurance plan with low deductibles, lower out of pocket maximums and prescription drug coverage.

Insurance Comparison*

ACA Health Insurance Short Term Medical Insurance
$1,200 deductible $1,000 deductible
$5,900 max out of pocket $3,000 max out of pocket
20% coinsurance 20% coinsurance
HMO network No network, see any doctor
Out-of-network not covered All networks covered
Rx included Rx included
$435 per month $317 per month

Savings: $118 each month, for a total savings of $1,416 over 12 months.

The short term plan has a lower deductible, lower out of pocket maximum and has an unlimited doctor and hospital network. This is a definite option for individuals and families who are looking for ways to save on their health care expenses.

Short Term Solution or Annual Coverage

Current federal regulations limit short term medical plans to 90 days of coverage under one policy, also known as a certificate of insurance. However, Pivot Health offers you the convenient opportunity to apply for up to four back-to-back certificates at one time, allowing you to have coverage for nearly 12 months (depending on state of residence). You do not have to qualify again for the three additional certificates, and you can cancel at any time. While your deductible and any out-of-pocket responsibilities start over with each subsequent certificate, any medical conditions that arise and that were covered by your initial Pivot Health plan will be covered under your subsequent new plans, subject to limitations. After your initial enrollment, there are no medical questions to qualify or new waiting periods. Best yet, your rate is locked in and not subject to an increase during your coverage periods.

Change is coming to health care, and it’s wise to start planning ahead. Find out more about short term medical insurance and run a no-obligation quote to find out how much you can save.

 

*Quote from HealthCare.com for 40-year old male in ZIP code 60601 making $100,000 a year and not qualifying for a government subsidy. Both plans include comparable doctor office visit copayments.