The news coverage about pre-existing conditions leave out a lot. Popular media outlets focus on government operated public plans such as the Affordable Care Act (ACA) health insurance exchange options, or Medicare, or Medicaid. Often neglected are the employer-provided health benefit plans and short-term health insurance plans.
Many health care benefit plans are available for companies with 2 or more employees. These employers usually decide how much to contribute, then the rest of the plan cost is paid by the employees. The plan cost is lowest when beneficiaries use in-network doctors and facilities. Usually in these plans, beneficiaries incur a copay at the time of service, and out of pocket costs are capped annually. Preventive care may be available without charge, and a separate drug plan may be available. Larger employers may offer a wider range of choices.
Family coverage in a 2018 employer plan costs, on average $19,616, of which employees pay $5,547. Just over a quarter of all covered employee families are enrolled in policies with a deductible of at least $2,000. The average deductible for singles is $1,573.
Among employers who self-fund the company’s plan, 72% buy stop-loss insurance to insulate the plan from excessively high losses. These tactics enable some employers to offer financially sound plans without exclusions for pre-existing conditions.
Medicare Parts A, B, C and D
U.S. citizens who have reached age 65 or who have specific chronic illnesses can enroll in Medicare Part A hospital coverage and Part B outpatient services coverage. Medicare enrollees can obtain services from any physician or hospital that complies with Medicare prices and accepts the usual 80% Medicare payment.
Those enrolled in Medicare can purchase prescription coverage (Medicare part D) that covers some of the enrollee’s prescription costs. Each of the many part D insurers offers its peculiar formulary, drug pricing and out of pocket cost for the enrollee.
Alternatively, those eligible for Medicare can chose a Medicare Advantage Plan (Medicare part C) which includes Medicare Parts A, B, and D, and some preventive services. Each of the part C insurers offers its own formulary and drug pricing.
Medicare Advantage plan providers sometimes limit service coverage to physicians and to pharmacies within their own network. That Health Maintenance Organization (HMO)-style limit on providers is relaxed when the enrollee needs emergency services.
The monthly premium for Medicare Advantage plans can run from $0 to several hundreds of dollars. Enrollee cost sharing per physician visit can run from $0 to $50. Lab tests and imaging have a reasonable fee-schedule.
Medicare Advantage prescription cost sharing runs from $11 for a low-cost generic in Tier I to several hundred dollars for Tier III drugs that are in the insurer’s formulary.
Pre-existing Condition Exemption
Some health insurance providers avoid the high cost that enrollees with certain pre-existing conditions will incur. They do that usually by refusing coverage for certain pre-existing conditions or by refusing to enroll the consumer. For example, patients with end-stage renal failure are often treated by dialysis or a kidney transplant. Dialysis costs about $72,000 per year. End state renal failure is a common pre-existing condition that insurers will refuse to cover. Some insurers handle a pre-existing condition by refusing coverage for the first 90 days, but they will cover the condition after that.
The exclusion of pre-existing conditions is not a new practice, especially for insurance plans sold in the individual buyer health insurance market (where ACA non-compliant plans are available). The buying-power of employer subsidized insurance plans enables them to limit the number of pre-existing exclusions that apply to their beneficiaries, but that is not so for individuals fending for themselves.
Today’s Affordable Care Act (ACA) exchanges offer ACA broad-coverage plans without pre-existing condition exclusions. (See 50 examples that might be called pre-existing conditions). For those who find that the ACA compliant plans are too costly or that offer coverages the buyer never expects to need, the short term insurance marketplace offers health plans at about half the premium of ACA-compliant plans.
When you first enroll in Medicare (typically at age 65), eligibility for Medigap (Medicare Supplemental coverage) coverage is guaranteed for the first 6 months. Medigap pays some or all of the 20% that Medicare does not cover. After those 6 months, enrolling in a Medigap plan may mean you are put through medical underwriting, where pre-existing conditions can become an impediment to quick enrollment, or the insurer may charge you more for health coverage. There are a few exceptions to facing enrollment underwriting – such as when your Medigap provider ceases to operate in the market, or when your Advantage plan is no longer available.
Pre-existing conditions will remain a political hot potato. It was a major factor tilting the 2018 mid-term election in favor of Democrats. Unfortunately, finding a way to orchestrate affordable coverage for pre-existing conditions will again face participation problems similar to those that plagued ACA.
Forming high-risk pools with mandatory insurer participation could help spread the risk of pre-existing conditions. However, unless most people participate in the plan that covers pre-existing conditions, all the high costs will (unfairly) become a burden on those who participate. The cost burden is important because cost is the main deterrent to carrying health insurance. If we raise the costs for low-risk consumers, it will dissuade some from participating. On the other hand, a resumption of mandatory health insurance is a non-starter.
Many people now regard insurance without pre-condition exclusions as an entitlement. Some pretend the solution is “single payer,” but that encourages consumption of a service without cost constraints and without contribution to defray costs. Until the sense of entitlement is disciplined and health care costs are constrained, there is no good solution for insurance plans, just varying grades of discomfort for consumers.