One in every two Americans can be affected by a “pre-existing medical condition.” As reported in an analysis from the Department of Health and Human Services, 50 to 129 million non-elderly Americans currently have some type of pre-existing condition, which could range from the life-threatening — such as cancer and high-blood pressure — to the chronic — such as diabetes, asthma and heart disease.
As such, 129 million Americans can potentially be denied affordable health insurance without government intervention.
A “pre-existing condition” is a health condition that can be proven to exist prior to a patient’s application or enrollment for new health insurance coverage. These “conditions” are defined by the insurer as terms for the policy. Some are obvious, like heart disease, cancer, stroke or permanent disability; while others, such as asthma, high blood pressure, vision degradation and arthritis, are debatable.
The current presence of the condition is not necessary to be determined to have a pre-existing condition; current health status, a past health problem or treatment for a particular condition is enough to be flagged as having a pre-existing condition.
The Affordable Care Act made needed corrections in the coverage of Americans with pre-existing conditions. Insurers cannot exclude benefits, set a lifetime limit on benefits, charge higher premiums or deny coverage based of a person’s pre-existing condition. Tax credits will be made available to purchase insurance from state-based exchanges. Young adults up to the age of 26 can stay on their parents’ insurance plan and coverage can no longer be taken away for application or processing mistakes.
Open enrollment for individuals and small businesses to buy affordable benefit plans begins Oct. 1, 2013, but enforcement of Affordable Care Act guidelines is not scheduled until Jan. 1, 2014.
As a stopgap measure, the federal government introduced the Pre-Existing Condition Insurance Plan (PCIP), which was a $5 billion benefits pool that provided health care coverage for pre-existing conditions patients that cannot obtain coverage privately and have been unemployed for six months or longer. PCIP offered federally-ran coverage to Alabama, Arizona, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia and Wyoming.
As of Feb. 16, 2013, however, new enrollment to the plan, which have served more than 135,000 people, has been quietly stopped.
Congress failed to allocate additional funding to the program, and in an attempt to preserve funding for existing patients, Department of Health and Human Services officials opted to accept no new application to the program. “We’re glad this program was here and able to help,” said Amie Goldman, who oversees the program in Wisconsin. “I’m certainly disappointed we won’t be able to serve everyone who has a need for this coverage.”
State-run PCIP programs will have different deadlines for new enrollees. Wisconsin residents, for example, will have until March 2. Other states have pre-existing condition plans separate from — but similar to — the federal program. These programs are, therefore, unaffected, such as New York’s Bridge Plan.
Problems with the Affordable Care Act
As of Feb. 14, 2013, 18 states (California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington State) and the District of Columbia have agreed to establish state-based health insurance exchanges in compliance of the Affordable Care Act. Six states (Arkansas, Delaware. Illinois, Iowa Michigan and West Virginia) have agreed to partner with the federal government in establishing their state-based exchanges.
This leaves the majority of the states choosing not to participate in the insurance exchange program and instead defaulting to the federal exchange. This is reflected in the breakdown of the states that will be participating in the Medicaid expansion, as of February 14, 25 states and the District of Columbia have indicated their wishes to participate in the planned Medicaid expansion, which under the Affordable Care Act, will expand eligibility to those below 138 percent of the federal poverty line, between 19 and 65 and not eligible for Medicare.
The current language of the Affordable Care Act does not account for a massive defection of states. The government’s proposal assumes that the majority of states would run their own exchanges. “I have a hard time understanding how the administration expects to have exchanges up and running by Oct. 1,” Orrin Hatch, the top Republican on the Senate Finance Committee, said last Thursday.
The federal government must find a way, by Oct. 1, to integrate each of the 26 non-self-managed exchange states’ tax and immigrant databases, tax records and Medicaid rolls into a seamless system that will effectively determine the tax subsidy an individual deserves and that individual’s Medicaid eligibility. “How can you be assured that these computers in all these different agencies are speaking the same language?” Senate Finance Committee Chairman Max Baucus of Montana, who co-authored the Affordable Care Act, asked.
The federal government is moving forward toward resolving this.
In December 2012, the Obama administration announced a $63-per-person assessment to fund a $25 billion benefits pool that will assist persons with pre-existing conditions obtain adequate health insurance. The three-year temporary assessment will be paid by employers. According to the administration, the assessment “is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all.”
Individuals that make more than $200,000 and couples that make more than $250,000 per year will face an additional 3.8 percent tax on investment income. The assessment — barring extension by Congress — phases out in 2017.
If the Affordable Care Act fails to be fully operable by Jan. 1, millions may be left with no or inadequate coverage. According to government statistics, among all that have pre-existing conditions, as much as 46 percent — or up to 25 million — have no insurance. With more than 16 percent of the population in poverty, a failure to establish insurance exchanges promptly will leave as many as five million Americans without the capability to obtain health insurance.
The cost of health care in America
PCIP did not have the effect the administration expected for multiple reasons. First, many potential enrollees could not afford the premiums. PCIP offered a subsidy to lower the cost of pre-existing conditions policies, but the applicant still was responsible for meeting the lower premium rate, which is keyed to the average rate for the applicant’s state. For many states, this average rate reached $300 per month or more. As those who could benefit from PCIP were among the long-term unemployed, the prospect of another bill — even for health insurance — were unpalatable.
In addition, individual medical claims were more than expected, amounting — as of Dec. 31, 2012 — about $2.4 billion of the $5 billion Congress offered. “From the beginning (the administration) has been committed to monitoring PCIP enrollment and spending closely and making necessary adjustments in the program to ensure responsible management of the $5 billion provided by Congress,” PCIP director Richard Popper wrote in a memo. “To this end, we are implementing a nationwide suspension of enrollment.”
In the United States, health care expenses have became a major concern. Regularly increasing annually, medical costs are the leading cost of bankruptcy and financial insolvency in this country. In 2012, the average American spent $8,953 in health spending.
As presented in Forbes, the cost of health care has grown exponentially and at an unsustainable rate. In 1958, per capita health expenditures were $134, or the equivalent of the 118 hours of work needed to cover that expense. 2012’s $8,953 per-capita charge represents, however, 467 hours of work to cover it.
Plainly stated, the cost of health care has more than quadrupled from 1958 to 2012, adjusted for inflation. This is in contrast to other consumer markers, such as appliances, television and automobiles, which became more affordable from 1958 to 2012 — some by a factor of eight.
It is argued that the cost of health care grew because of the market could bear the increase. As other consumer markers decrease, health care saw an opportunity to ask more for services in what is generally considered a competition-free industry. As the average American had more and more disposable income, the medical costs rose.
According to the Social Security Advisory Board’s 2009’s The Unsustainable Cost of Health Care, “Rising personal income leads to higher spending on health care because medical care is a desired service. As individuals become better off, spending on extending life and improving health and well-being may be more attractive than spending on other goods. Just how responsive changes in health care spending are to change in income is debatable. A recent CBO study surveying the empirical literature suggests a 10 percent increase in income may increase health care spending by roughly 2 to 4 percent, and so they estimate that growth in the average income per capita in the United States may account for about 5 to 20 percent of long-term spending growth.”
Hospital care (31 percent) and physician’s services (20 percent) account for just 51 percent of the $2.3 trillion spent on health care in America in 2010. Retail prescription drugs (10 percent), nursing home care (5 percent), net cost for health insurance (providers’ charges — 6 percent) and investment (6 percent) are among the major factors contributing to the remaining 49 percent.
It is also argued that relevant to the amount of services delivered, the unit cost of health care has went up. Per the 2011 Millman Medical Index, “Even though number of in-hospital days was nearly the same from 2009 to 2010, the cost of those days went up more than 10 percent.”
As presented by Regence, a Northwestern U.S. Blue Cross/Blue Shield provider, there are multiple other reasons for the cost increase other than the prices. These include waste — the Institute of Medicine suggest that — in 2009 — $765 billion (more than one third of the nation’s health care expenditures) were wasted in defensive medicine, unnecessary use of high-cost services, duplicative costs, inefficient operations and other medical errors, prices above competitive levels and excessive variations in service prices, fraud and missed prevention opportunities.
Where you live can also affect prices and availability of services. For example, annual average health care costs per region can shift radically — from $5,200 a person to more than $17,000. In Burlington, Vt., there is 86.5 percent adherence to diabetes management. In Albuquerque, N.M., the rate drops to 66.6 percent.