The death of the pre-existing condition
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TESS VIGELAND: All hail the death of the pre-existing condition. Well, the condition may still be there, but it will no longer keep you from getting health insurance.
Sara Collins is with The Commonwealth Fund, a non-profit research group. She’s been making her way through this legislation for the last several months and will help explain how this is all going to shake out. But Sara, first let’s lay out the problem by hearing from 58-year-old Cincinnati resident Karen Maslowski.
Karen Maslowski: Our monthly health insurance bill is twice that of our home mortgage for a four-bedroom home. It’s for basic high deductible insurance, with no prescription drug coverage, no vision, no dental. My husband has pre-existing condition that prevents from switching plans. He’s kind of stuck. We get socked with annual rate increases, which over the years have ranged from between 15 to 40 percent every single year.
So Sara Collins of The Commonwealth Fund, this is really one of the issues that struck a chord with, I think, a lot of the nation — that it seemed patently unfair. If you are an adult with a pre-existing condition, what now are your options?
Collins: Under the bill, starting this year at least, children with pre-existing health conditions couldn’t have those conditions excluded from their health insurance coverage. So that goes into effect within six months of the bill’s passage.
If you’re an adult with a pre-existing health condition, there will be a temporary national high risk program that will go into effect within 90 days of the bill’s signing. And that will allow people who have pre-existing conditions who don’t currently have health insurance — so people who have been uninsured for at least six months would be eligible to the pool. It would provide subsidized coverage. So that is really significant for people who are currently without health insurance, who can’t get it.
Vigeland: When we talk about a high risk pool like this, what does that mean in terms of cost for those people? Obviously, it’s going to be great for them that they have insurance, but what kind of bill might they be looking at?
Collins: The benefit package would have to cover at least 65 percent of your costs. Your out-of-pocket costs would be capped at just under $6,000 for the year.
Vigeland: So this is what happens in the interim, but then, a few years down the line, there will be no pre-existing conditions, correct?
Collins: That’s right. So starting in 2014, people who don’t have coverage through their employers will be able to buy coverage through these new state insurance exchanges. So your premium couldn’t reflect your health status, and you couldn’t be excluded from insurance coverage because of your health status, and you wouldn’t have a condition excluded. So this will be a very big change for people who don’t currently have coverage through their employers, and they’re trying to buy it on their own.
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TESS VIGELAND: Another insurance industry practice that will be banned under this law happens on the other end of things. It’s called rescission, and this is when you have insurance, but they deny you coverage at the moment you need it most. They rescind your policy. CBS’s “The Good Wife” built a recent plot line around rescission. Here an insurance company lawyer argues against covering a risky procedure on a pregnant woman.
Patti Nyholm: All this litigation has lead to a higher level of scrutiny of the will of these policy applications, and I’m afraid we’ve uncovered some deal changing-issues.
Will Gardner: Oh, come on.
Nyholm: Yes, Mr. Gardner. When we began these proceedings, I didn’t expect Mr. Willoughby to misrepresent his medical history.
Danny Willoughby: What?
Gardner: Sit down. Sit down.
Nyholm: This misrepresentation gives LifeState the right to rescind his policy entirely.
Gardner: Your honor, this is not a buffet. Ms. Nyholm can’t pick one attack and failing that, try another.
Nyholm: Your honor, I would argue this goes to the heart of contract law.
Vigeland: So Sara Collins, we’ve just heard a fictional example of rescission. Under this bill, will insurance companies be able to deny you the coverage you’ve been paying for for years?
Collins: They will not and that will go into effect within six months of the passage of the bill. If you are currently enrolled in a health plan, insurers can no longer rescind that coverage, because of something that they find in your medical history.
Vigeland: Are there any exceptions? For example, if you lie on an insurance application — you say you don’t smoke, but you do — can they later deny you or a family member coverage, for something completely unrelated?
Collins: The way the law reads right now is that they are prevented from rescinding coverage, except in the case of an individual who has “performed an act or practice that constitute frauds,” so there are some exceptions. But some of the practices that are more common, when insurance companies investigate people who just happen to have really expensive health conditions come up, like breast cancer, for example, looking back and just searching for a reason to cancel the policy, will no longer be allowed.
Vigeland: I wonder if there’s a potential loop hole there for insurance companies to interpret the notion of fraud.
Collins: You know, again, as I mentioned earlier on the high risk pool, I think the guidance from the federal government on these provisions in the laws will be very important, in terms of their implementation.
Vigeland: Sara Collins of the Commonwealth Fund.
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