Sunday, August 16, 2009

Pre-existing Conditions

The health-care reform bills currently in congress are receiving a lot of national attention. This post will cover a single aspect of the discussion, preexisting conditions. I recently did some research about this for a family member and I relayed some of the information via email to one of my readers. I'll first explain what the term means, speak about the current law and then offer my opinion. As always, I'll welcome your comments.

In health terms, a preexisting condition is any medical condition that exists before you first sign up for insurance. Those big evil insurance companies don't want to pay for them. For example, suppose you are part of the 46 million people who don't have insurance and suppose further the reason is you just want to spend your money on life, liberty and the pursuit of happiness, not on insurance. You wake up one morning and find you can't stand without a severe pain in your hip. After a visit to a doctor, he suggests this might be related to back problems and sends you off for an MRI. You decide to enroll in insurance on the way.

After the MRI (which costs $1000+), you learn that you will need cortisone shots and surgery for your back. The total cost is expected to be over $50,000. That big, mean old, awful, capitalist insurance company doesn't want to pay the bill because you knew about the problem when you signed up and they want to keep their profits. (see here for my discussion on profits).

In his recent town-hall meeting in Montana, President Obama said that with the new legislation "Insurance companies will also be prohibited from denying coverage because of your medical history. A recent report found that in the past three years, more than 12 million Americans were discriminated against by insurance companies because of a preexisting condition." (see here)

I'm a little confused why the president mentioned this, it turns out that discrimination by employers based on past history isn't allowed. "One of the most important protections under HIPAA is that it helps those with preexisting conditions get health coverage." (from here) Maybe the president is talking about something else all together.

Insurers are "allowed to look back only 6 months for a condition that was present before the start of coverage in a group health plan." That means in my example above, if you waited 6 months for the MRI, cortisone shots and surgery, you would be ok. Maybe the president's idea is right, maybe you should just take a pill and delay the surgery.

Another confusing point happens when people change jobs. Suppose that in my example before you had insurance through your employer when the doctor told you you'd need the surgery. Then you decided to change jobs and look for greener pastures. Assuming your new employer provided insurance, the new insurer would have to cover you. As long as your "creditable coverage" did not lapse for longer than the new employer's preexisting coverage clause, you would be ok. I'm no lawyer, but this doesn't seem like it would really exclude anything if your previous coverage had been in effect for at least six months.

So, in summary, in many cases, preexisting conditions are not an issue at all. If you hear reports of someone complaining, they should examine this web site and see if they really have a problem (often times the reports you hear are from a friend who heard a story about someone who knew of a person whose first cousin-once-removed heard a story. Somehow, details get lost in the conversation.)

My opinion is probably tougher than most people would like. I believe insurance should be insurance, not automatic payment. Everyone needs insurance and everyone should have some. They shouldn't wait until they have an issue to buy it. If President Obama is right and 12 million Americans were discriminated against, he should use his executive powers to go after the insurance companies in question. If they broke the law, they should be prosecuted. If not, by definition, they weren't discriminating.

This topic only deals with preexisting conditions. There are a lot of other issues in the new heath care bills that warrant discussion and I may bring them into my blog in the future.


Thomas said...

Great overview, Randy. I agree that if people were discriminated against, the government should go after them. I look forward to more posts from you in regards to health and insurance issues.

Cameron said...

This is a really good thing to remember:

"I believe insurance should be insurance, not automatic payment."

I think that most of the horror stories we hear about are caused by non-employer based private insurance. The system we know have makes those plans really difficult to afford and to get.

Randy said...

Thanks Thomas.

Cameron, I agree with you. I haven't been in a situation where I didn't have insurance in a long time. Seems that insurance companies aren't real interested in selling to individuals. I think the risk/reward ratio just isn't there for them. I can only imagine it will be worse in a government option.