A recent analysis from Avalere finds that 102 million people not enrolled in Medicaid or Medicare have a pre-existing medical condition and could face higher premiums or significant out-of-pocket costs if lawmakers repeal the Affordable Care Act’s (ACA) pre-existing condition protections. Kevin Mowll, executive director of RISE, weighs in on the findings.
More than 50 percent of Americans who are enrolled in coverage outside of Medicaid or Medicare could face medical underwriting or be denied access to coverage or care without the ACA’s protections for people with pre-existing conditions, according to a report by Avalere.
The analysis shows that a substantial portion of the population has some form of pre-existing condition. Many of the most common health conditions, including cardiovascular disease, mental health disorders, obesity, and diabetes, affect more than 10 million Americans.
“Protections for pre-existing conditions are the only reason some Americans are able to afford health insurance,” said Chris Sloan, director at Avalere, in an announcement about the findings. “Many of the most common health conditions in the country could lead to individuals being denied access to health insurance if pre-existing condition protections are eliminated.”
Avalere analyzed data from the 2015 Medical Expenditures Panel Survey (MEPS), which includes information about health conditions, coverage sources, and health costs for a nationally representative sample of the US population. Individuals who received either Medicare or Medicaid at any point in 2015 were excluded. Avalere selected certain conditions to represent a range of different common conditions.
To determine the population with a pre-existing condition, Avalere identified the individuals using a combination of clinical classification codes and 3-digit ICD-9 codes. The list of conditions included, but was not limited to: HIV/AIDS; hepatitis; cancer (except skin cancer); leukemia; diabetes; cystic fibrosis; sickle cell anemia/disease; Parkinson’s disease; multiple sclerosis; cardiomyopathy; myocardial infarction; congestive heart failure; stroke; COPD; kidney failure; rheumatoid arthritis; substance use disorders; pregnancy and related conditions; and Alzheimer’s disease.
The GOP has submitted several proposals to repeal the ACA, including the elimination of the pre-existing condition protections. If lawmakers followed through on one of those proposals, consumers in the individual market could see a return to medical underwriting, which is the use of health information to vary premiums or exclude them from coverage, Avalere noted. Americans who receive their coverage through employers would also face these challenges while looking for health insurance between jobs.
Prior to the ACA, employers could refuse to cover pre-existing conditions for up to a year “waiting period” if employees failed to maintain continuous coverage. The Avalere report notes the practice could return if the ACA’s protections are repealed.
Kevin Mowll, executive director of RISE, said the analysis reveals that a staggering proportion of the total population has a pre-existing condition. “At the heart of this conversation, there lies the whole concept of insurance: pooling risk and spreading the cost across a larger population to dilute the impact on any one individual. If cherry-picking risk is allowed, the whole mechanism comes tumbling down,” he said.
To illustrate the point, Mowll cites an extreme example. Assume that vision care is offered to all individuals, whether or not they buy the coverage out of their own pocket. Only those who need vision services would buy it. The coverage would be limited to one annual visit to the eye doctor plus an allowance toward reimbursement for eye glasses. These prices would be known and dialed into the price of the premiums. Therefore, the expected utilization would be 100%, and the premiums would be priced accordingly. Of course, there would be a mark-up to cover the insurance company administration costs plus a profit. In the end, this would amount to a transfer of payment to the optometrist for the exact amount of the office visit plus the allowance for glasses.
“Is that where we are headed if we allow insurance companies to select risk and the individuals to opt out if the prices are too high compared with their expected out of pocket exposure? Once we arrive at this point, we realize that we no longer recognize this whole arrangement as an insurance mechanism. Both the insurance company and the individual have defeated the whole concept of pooling and spreading risk,” he said.
As a result, there would no longer be any incentive on the part of the insurance company to manage population health, Mowll said.
“There is very little social value remaining in what is left over in the end. The people who most need the insurance would be excluded from coverage for the expected costs of their exact health conditions requiring insurance coverage. The people without health conditions would only be covered for the unexpected events. Therefore, we end up with no coverage for anyone with expected needs, and no way to spread those costs,” he said.