This morning, the Department of Health and Human Services released a report headlined, “At Risk: Pre-Existing Conditions Could Affect 1 in 2 Americans: 129 Million Could Be Denied Affordable Coverage Without Health Reform.” Get the implication? Without Obamacare, half of America would be left without health insurance.
Well, admits the actual report, maybe not exactly. The HHS estimates that anywhere between 50 to 129 million non-elderly Americans have “some type of pre-existing condition.” Between 50 and 129 — I’ve gotten more reliable estimates of next year’s weather. But the real laugher is in how the HHS takes the term “pre-existing condition” and mutates it beyond all recognition, in order to prop up our benighted new health-care law.
Let’s understand first what the problem of preexisting conditions is.
Because our World War II–era tax system allows employers to buy health insurance tax-free, while making individuals buy it with after-tax dollars, the vast majority of those under 65 get health insurance from their employers. This, in turn, creates the phenomenon of job lock: Individuals who fall ill at one job (or have family members who fall ill under their health plan) are afraid to leave that job, because switching jobs means switching insurance plans, and a new insurance plan is likely charge more to cover someone who is already sick.
Note that the words “denied coverage” are not present in the preceding paragraph. Indeed, as Michael Cannon points out, a 2001 HHS survey found that only one percent of Americans had ever been denied health insurance for any reason. Cannon brings us to two other studies, one by a Wharton economist and one by the RAND Corporation, both of which echo the HHS data. As Cannon writes,
It is true that insurers charge higher premiums to many people with pre-existing conditions — and it is crucial that they have the freedom to do so. Risk-based premiums create virtuous incentives for people to buy insurance while they are healthy and to be cost-conscious consumers. They also encourage insurers to develop innovative products that protect against the risk of higher premiums. The real problem here is that the government has created an employment-based health insurance system that denies consumers the protections that unregulated markets already provide, as well as additional protections that insurers would develop absent this government intervention.
Our health-care system, pre-Obamacare, was far from perfect. But it’s exceptionally dishonest to say that half of Americans are at risk of losing their coverage without Obamacare’s blizzard of mandates and controls. Instead of creating two new entitlements and hundreds of thousands of pages of new regulations, we could have done something much simpler: equalize the tax treatment of individual and employer-sponsored health insurance.
There are lots of ways to do this, depending on if you want to increase or reduce taxes. You can eliminate the employer loophole altogether, raising taxes by over $300 billion a year, making a huge dent in the budget deficit. Or, you can extend the tax break to all individuals, whether employed, self-employed, or unemployed. Finally, you could split the difference: reducing the tax break for employers, but increasing it for individuals.
Once people are buying insurance for themselves, rather than depending upon their employer, their insurance stays with them. If you lose your job or change jobs, your insurance will still be yours, just as your auto insurance and your life insurance stays with you regardless of where you work. And if you have insurance, like most Americans do, the issue about preexisting conditions is irrelevant: If you are sick, your insurance provides the coverage it is meant to provide.
Sebelius and her HHS colleagues try to morph the definition of “preexisting conditions” into “conditions.” Take this random sample of Sebelius’ assault on the English language:
An analysis of a survey that follows people over time found that, among healthy people—reporting very good or excellent health with no chronic conditions—today, 15 to 30 percent (depending on their age) will develop a pre-existing condition within the next eight years.
So, let’s get this straight. Fifteen to 30 percent of Americans will, in the future, develop a preexisting condition. This only makes sense if the HHS has also invented time travel.
A person who has health insurance, and later becomes ill, does not have a preexisting condition. He has a condition of the plain old “existing” kind—one that his insurance will help pay for. This is exactly how insurance is supposed to work.
Millions of young, healthy people who can afford health insurance today choose not to buy it. Obamacare will allow them to buy it after they get sick — because, aha! They now have a “preexisting condition.” This is exactly the opposite of how insurance is supposed to work.
Obamacare’s advocates want you to believe that, without their 2,300-page, trillion-dollar extravagance, half of America would lose their health insurance. The reality is that preexisting conditions is a problem affecting a minute fraction of Americans, a problem that could be solved with a simple, one-page bill.
If Republicans repeal Obamacare and replace it with a straightforward law that equalized the tax treatment of employer-sponsored and individually-purchased health insurance, they will have done more for real health-care reform, and for people with real preexisting conditions, than the last forty Congresses put together. Let’s hope they get their chance.
— Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co. in New York City. He blogs on health-care issues at The Apothecary.
Personally, I hope it will be another 40-50 years before I will have had a pre-existing condition.
Reply to this commentLinkReport AbuseJudging from her recent actions, Jean Sibelius' greatest regret is that she was born too late to be an Old Bolshevik.
Reply to this commentLinkReport AbuseI think the whole "pre-existing condition" conundrum could be substantially solved by adopting 1) a system in which insurance is purchased with pre-tax dollars whoever purchases it, be it an individual, an employer, or each contributing some percentage; 2) The ability to purchase insurance across state lines; and 3) an "open season" arrangement somewhat like that used in the Federal Gov't, in which insurance purchased at certain times (within a couple months of the birth of a child, a marriage, a divorce, or during an "open season" one month/year) can be purchased at a straight "community rating price" with no inquiry into pre-existing conditions. If you fail to prudently buy insurance during one of these periods and become terribly ill, have a catastrophic accident, etc, you are out-of-luck and will have to hope that you can manage with your own resources and perhaps the help of charity. For those of truly modest means, the government could provide vouchers for individuals to purchase their own insurance, and a nice website with ratings and price comparisons. A plethora of private websites would undoubtedly also pop up with this information. These policies, pursued accross the board for everyone, would eliminate the need for ObamaCare, for MediCare, and for Medicade all at once. One simplified system with the consumer driving the system and help for the needy, all at a fraction of the cost of the health care arrangements we currently have in place. What's not to love?
Reply to this commentLinkReport AbuseAt the risk of sounding ignorant, what about pre-Obamacare HIPAA protections regarding pre-existing condition exclusions? Perhaps some may think the protections didn't go far enough, but didn't HIPAA require an insurance company to insure someone if that person had prior coverage for a sufficient length of time, and if the gap between coverage was short?
Reply to this commentLinkReport AbuseAt the risk of sounding ignorant, what about the pre-Obamacare protections provided under HIPAA? Some may argue that they didn't go far enough, but at least it required insurers to cover someone with a preexisting condition IF that person had prior coverage and if the gap in coverage was short. (Sorry I don't recall the specifics.) I think it also had some provisions for renewability as well as some protection for those with pre-existing conditions trying to buy in the individual market. Or did I just dream all this?
Reply to this commentLinkReport AbuseI know what she means: I developed a pre-existing cold last week.
Reply to this commentLinkReport AbuseAfter its passage, ObamaCare became the ultimate "pre-existing condition."
Reply to this commentLinkReport AbusePeople have a 15-30 percent chance of being diagnosed with some chronic condition in the next eight years (depending on their age)? Say it ain't so!
Even Ms. Sebelius's assumptions are facile. I had already been diagnosed with cancer, was in remission, and was on dialysis. I was able to enroll in my employer's group health plan unconditionally during open enrollment.
Re: third party payers - if people had to pay more of their own health care, procedures like dialysis would probably be significantly less expensive.
Reply to this commentLinkReport AbuseOne thing the article or the Secretary fail to mention is the pre-existing condition exclusion very seldom applies to workers who change jobs from one large employer to another. For this discussion assume large employer has more than 200 employees. For most small group employers 2-200 employees, many do have the exclusion. However, most of these provisions have a set time limit, typically from 6-12 months where they may not pay for certain expenses. I have seen a few that go out as far as 24 months. After that timeframe, the plan will typically begin paying on those claims. Very, very rarely will there be a plan written that excludes expenses forever.
Reply to this commentLinkReport AbuseIs it just me or does it seem such a coincidence this comes out at exactly the same time Congress is debating the Obamacare bill. I think not.
Sorry, but this is about the most uninformed column I have ever read in National Review. You may be healthy today, but you might be diagnosed with cancer tomorrow, or you might be hit by a bus. You present insurance will cover you, but if you lose your job, you will have only 18 months of COBRA payments, and then you are on your own. If you are lucky enough to get a new job that provides group health insurance within 60 days of losing COBRA, then you will be ok, but you very likely will never be able to purchase health insurance on your own. If you still have bills, you will be bankrupt as well.
I am blessed with good health, but two of my adult children have pre-existing conditions that render them “uninsurable,” meaning that if they stay with a large employer, they will have health insurance, but if they lose their jobs and cannot find another with a large employer, they will not be able to purchase private health insurance, not even from an HMO. High risk pools are hard to get into and cover very little.
Every year insurance companies get better at excluding the unhealthy. Don’t kid yourself. You could be next. Really.
Reply to this commentLinkReport AbuseThere is so much to dislike and ridicule this Admin (and Law) for, but this is not it.
I resent having been put in the position of defending this, but yes - you can "develop" a pre-existing condition. Anything you've been treated for will qualify, if your insurance lapses, upon re-insuring.
It's going to take an extra cup of coffee to wash that taste out of my mouth, but to let the title and content of this article stand uncorrected would have been far worse. Don't let the desire to ridicule or blame stop you from research and checking facts. That's what Liberals do.
Reply to this commentLinkReport AbuseIt is important to see the difference between a buyer and a consumer. My company of 300k employees has one buyer of health insurance, and 300k consumers. I consume healthcare services, but my employer buys it. I have always thought that an individual-based system would make insurance companies more responsive to consumers, since the consumer would be the buyer.
Reply to this commentLinkReport AbuseHow much of HHS' 15-30 percent is simple pregnancy? Pregnancy is a self-inflicted "pre-existing condition" that lasts a mere 9 months, then ends. Ten percent of women 15-44 will get pregnant each year for the next 8 years, at current rates according to WebMD. That's roughly 6 million per year, or 48 million in the next 8 years -- perhaps 40% of their "problem". Not one of these women is in any danger of being denied insurance permanently; nearly every one of them would be able to buy insurance if they do it honestly, BEFORE they're pregnant.
This is just one example of how HHS is gaming the statistics. How many others can you think of?
Learn the lesson, people: it's not just this instance, it's every use of statistics by every progressive. They do it constantly, and they are liars.
Reply to this commentLinkReport AbuseCAUTION: LOGIC REQUIRED (even from NRO commentators). The condition merely has to "pre-exist" before the starting date of the coverage in question, not from birth. You're healthy, you have insurance at work. You develop a condition. Then you lose your job. You now have a pre-existing condition regarding your next insurance policy. Sure, you can get insurance by getting hired at a company that provides insurance (as long as you didn't let your COBRA expire). But - as a practical matter - you can't live your entrepreneurial dreams because a personal policy is unaffordable - and you would need that money to start-up your dream company. A better functioning market would fix that. Obamacare merely puts a band-aid on it. But that doesn't mean you can't develop a pre-existing condition.
Reply to this commentLinkReport AbuseThe Republicans may have gotten us involved in some needless and iffy wars but the democrats are involving us in downsizing ourselves to a third world nation.
Reply to this commentLinkReport AbuseAdditionally, it bears mentioning that the Medicare (or Medicaid) denies coverage at a rate that is double that of the worst private insurance provider.
Reply to this commentLinkReport AbuseThere appear to be some misunderstandings of what I was trying to say above, so let me try again:
If you have insurance, and you become ill, insurance covers your condition. This is not a pre-existing condition.
If you choose not to buy insurance, but can afford to, and become ill, and are denied coverage, this is your own fault and it is not society's obligation to bail you out.
If you have a job, and are unable to switch jobs out of fear of losing your insurance or having to pay higher premiums, blame 1940s tax policy. If we equalized the tax treatment of employer-sponsored and individually-purchased health insurance, this problem would not exist.
If you lose your job, and thereby your health coverage, the concept is similar: equalizing the tax treatment would allow you to have health insurance regardless of your employment status.
HIPAA (as some commenters pointed out) already protects individuals who switch jobs from being denied coverage for a "pre-existing condition."
To those who are still trying to sort out issues related to the space-time continuum: if you have insurance, like nearly all Americans do, and you become ill, you don't have a pre-existing condition.
In a country of 300 million, there are only 8 million people who are truly uninsured (i.e., uninsured because they can't afford insurance).
External Link
We should help those 8 million people -- but not by ruining the system for the other 292 million.
Reply to this commentLinkReport AbuseSebelius & Co. kind of wimped out on this one. If they had taken an 80-year timeframe instead of an 8-year one they would have found that about 100% of the population "will" develop a pre-existing condition!
The problem, as Avik Roy so effectively puts it, is that the government gives our employers monopoly control over our health dollars. COBRA and HIPAA do not, will not, and cannot fully compensate for this.
Reply to this commentLinkReport AbuseObamacare is a travesty. I'm working hard within my state to defeat it.
But here is a real life situation. Person works full time for many years and has insurance coverage. Person has to leave job because of a chronic, inherited condition that didn't become symptomatic until adulthood.
Person works part time and uses COBRA at greatly increased rates (something usually left out of the discussion) for full 18 months. Since the person has been steadily insured, certain insurance companies have to accept him. BUT THERE IS NO CAP ON RATES.
So unemployed person takes policy at $600/mo. Two months later it jumps to $780. By year's end it has gone up to $960/mo. Person has to drop the insurance for financial reasons. Being able to get insurance is not the same as being able to afford it.
Now person unwillingly lives without any insurance to fall back on if serious accident or other disease should strike. Greatest irony? Person is basically healthy other than mentioned condition, almost never has to see a doctor and would be an excellent insurance risk.
The government needs to get out of the picture. Then, ideally, market principles and national competition would cause insurance companies to actually look at individuals and determine the risk level based on effects of condition,instead of class of condition,use of medical services and other health factors.
The sooner Obamacare is gone the sooner other possibilities may open.
Reply to this commentLinkReport Abuse