The Wall Street Journal’s False Conclusions On Pre-existing Conditions

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In “The 8,011-Person Crisis,” The Wall Street Journal editorial board has aptly identified the problem of limited enrollment in healthcare reform’s new high risk pools for individuals with pre-existing conditions. Due to the high cost and the six month waiting period, eligibility as well as financial constraints has severely limited the population who can take advantage of this program. But instead of providing suggested improvements so more Americans with a pre-existing condition can benefit, the editorial board is using the Affordable Care Act’s flaws as leverage to dismantle the entire healthcare reform effort.

While the editorial admits that “polls show that voters are worried” about people with pre-existing conditions being denied health insurance, the Journal considers these “horror stories” to be “relatively rare.” But if the number of individuals rejected by insurance companies was “relatively rare,” then why does the data voluntarily submitted by the insurance companies to the healthcare.gov website reflect otherwise?

Go to healthcare.gov, click “Find Insurance Options,” select a state, then check “healthy individual.” From there, click “I need health insurance” and then select an age group. Then select “Health Plans for Individuals and Families.” Enter a zip code, coverage start date, birth date, and gender, and whether you are a tobacco user. (Selecting “healthy individual” and not checking any additional conditions that might apply will yield the largest amount of search results.)

Before clicking “Show me the plans,” the following message will appear on the screen:
“Keep in Mind… Until the Affordable Care Act is fully implemented, insurers may still deny you coverage based on your health status.”

When the list of plans appears on the screen, select either “Enrollment, low to high” or “Enrollment, high to low” and then click “Sort By.” The results will display the insurance company, their plan, and the percentage of individuals who applied for that plan who were turned down for coverage. Clicking “How many people were denied?” brings up a window that states: “This is the percent of people who applied for an insurance policy in the last 3 months and were denied.”

Let’s use the example of a 40 year old male living in Tallahassee Florida and refine the search results to only display plans offered by the nonprofit Blue Cross and Blue Shield of Florida.* The search results show that 66% of the applicants who applied to each of the 9 plans BCBS offered were denied a policy. Inputting the same parameters for a 40 year old female and a 29 year old male and female brought the same results.**

Whether looking up my hypothetical example or imputing your own data, the facts contradict the Journal’s assertion: “That so few have grabbed this lifeline suggests that the reality of pre-existing conditions isn’t nearly as grim as the President continues to claim. A shelf of academic research says the same thing, by the way.” Yet how could the unnamed “academic research” compare to statistics submitted to the federal government by the insurance companies themselves? Such a high rate of rejection proves the editorial board's conclusion is not justified by the facts.

The fact that 66% of applicants for individual BCBS policies in Florida are rejected exemplifies that the definition of a pre-existing condition can contain as many potential risks as actual risks. And an applicant does not actually have to have a pre-existing condition to be rejected for insurance.

Let’s examine the security of those currently covered in either the employer or individual markets. While the focus of the political discussion has been on President Obama’s declaration that “if you like your current healthcare plan you can keep it,” the real focus should be on how easy or difficult it is to change plans if you don't like your current healthcare plan.

Employees have no control over what plan(s) their employer offers. Beyond the tight job market and homes that are “underwater,” an employee (and/or their family member covered under the employer’s plan) with a pre-existing condition can impede the employee's ability to pursue a better career opportunity at another company.

According to the CDC, 1 in 10 Americans has diabetes. While some employees might be able to afford to pay for their diabetes care during the six months to one year that coverage for pre-existing conditions is typically excluded, very few employees have the financial resources to pay for cancer treatments. (Interestingly, a Journal story earlier this week reports on the rise of people ages 15 to 29 with cancer and cites their lack of health insurance as a major factor why cancer in this age group has become particularly lethal.)

Most people fail to understand that guaranteed renewability is not the same thing as guaranteed issue insurance. While many states guarantee renewability in the individual market, few if any will allow individuals with a pre-existing condition to change plans. These individuals have no recourse if their current insurer pushes through unreasonable premium and/or co-pay increases. Some insurance companies will allow an individual to reduce their coverage without jeopardizing renewability. However, there appears to be no protection for individuals to either increase their coverage with their current insurer or switch to another insurer without going through the medical underwriting process and risking rejection. The individual stuck in their current plan might lack the mobility to move to another county let alone another state.

Contrary to what the Journal’s editorial states, an individual applying for the new Pre-Existing Condition Insurance Plan (PCIP), “must have been uninsured for at least the last six months” AND provide “a letter from an insurance company, dated within the past 6 months denying your application for coverage, or excluding coverage of your medical condition,” along with proof of U.S. citizenship.

The reason why Congress inserted a six month exclusion clause into the Act was to prevent states with high risk pools dumping their members onto the PCIP even though Florida is one of the 15 states that do not have a high risk pool.

Using Florida (one of the 23 states that selected HHS to administer the PCIP), the 2010 rates for the hypothetical 29 year olds would be $363 a month and the 40 year olds would pay $435 a month for the 2010 plan which has a $2,500 in-network deductible and a maximum out of pocket cost of $5,950 per year within network. Most people with pre-existing illnesses cannot afford to go without insurance for six months; nor can most people afford premiums as high as $773 per month for people in Florida age 55+.

After much criticism over the high premiums, HHS is expanding to three plan options in 2011. (In the Florida age examples, 2011 premiums for the 29 year olds would range from $294-$395 a month. Premiums for 40 year olds would range between $352-474 per month, and those 55+ would pay up to $842 per month.)

The editorial board’s assertion that “HHS plans to make its cut-rate insurance even cheaper (and thus more expensive for taxpayers) so it can avoid having to admit that the President’s claims about a nation of the indigent sick denied insurance were false” is misleading at best. The fact that HHS Secretary Kathleen Sibelius has made adjustments to the plan does not reflect negatively. Rather it demonstrates that this Administration is not as rigid and bureaucratic as the common Washington wisdom would lead you to believe.

The Journal's editorial board should understand that cause and effect cannot always be determined just because two statistics correlate. The light participation in this program has more to do with its restrictions than its need.

*BCBS of Florida and Humana (HUM) whose information is so far absent from the website, are among the dominate players in the Florida market.

**I was unable to get the links to these screens to work but with the instructions I’ve provided, readers can input the parameters in my example to see the search results for themselves.

1 comment:

Anonymous said...

I'm also a Floridian that's disappointed in the PCIP six month lockout.

I'm also disappointed in media (like the WSJ) that seem to accept the Government's claim that low enrollment is just due to the price and lack of options. It's mostly due to the six month lockout.

Where I respectfully disagree with your conclusion is that I think the six month lockout was a back room deal with private insurance companies and not crowd-out concern for state high risk pools. I would think that health insurance with exclusions for your biggest risks would be very profitable, especially when they not only exclude, but also raise your premiums compared to their "teaser rates". Big money for private insurance companies. Money they'd lobby hard to protect.

I don't know if I can put URL's in a comment, but if you scroll down this first article, you'll see a comment that seems to explain the back room maneuvering that left the six month lockout in place (although it should never have been in any initial bill).

http://www.ctmirror.org/story/7890/rell-pre-existing-condition-letter

Nancy Metcalf is a health editor for Consumer's Report.

This second reference is where a healthcare expert blames the PCIP enrollment failure on poor government salesmanship. But once he becomes aware of the six month lockout he changes his perspective.

http://bit.ly/dgFVad

I look forward to following your blog as our news media seems to have lost interest in being a watchdog

This comment by Wendell Potter captures my concern that we will lose out on healthcare reform as no one is keeping the players honest.

http://bit.ly/hUMISV

To summarize, I think that partial private health insurance due to existing health conditions is the real short term problem, and the PCIP's six month lockout may be just one of many future loopholes in healthcare reform. Even the healthcare.gov pages that try to evaluate private insurance miss this key point. As you pointed out, they rate percentage of acceptance, with some companies in Florida even claiming to accept 100 percent! But no mention is made of what percentage of policies are offered with exclusions. If you know where this statistic is conveyed please let me know!