Sunday, January 31, 2010

Trying to Understand the Pre-existing Conditions Issue

One of the bigger talking points for health care reform was the idea that greedy insurance companies turn away people with pre-existing conditions.

The confusion over these kind of claims is amazing. As I dig into issues like this even a little bit, I get more and more worried that we were being sold a pig in a poke and/or that many legislators and advocates did not really understand what our current health care system really is like. If they don't understand the true nature of what we have, how can we trust them to design something new?

(I have already pointed out in this blog two other major areas of confusion, one being that most folks who get insurance through their employer are actually part of a self-insurance program; and the other being the large extent of miscounting in the percent-of-GDP calculations for health care.)

So a friend and I were wondering why Dartmouth College had dropped its pre-existing conditions clauses several years ago. I remember having to deal with such issues when hiring faculty, but we no longer have such clauses for new employees. The most likely explanation (I wish I could say enlightenment on the College's part but I don't think I can) was a new Federal law: HIPAA, or Health Insurance Portability and Accountability Act of 1996. I recommend this site to get an overview. Here is a brief description:

HIPAA is a federal law that:

Limits the ability of a new employer plan to exclude coverage for preexisting conditions;

Provides additional opportunities to enroll in a group health plan if you lose other coverage or experience certain life events;

Prohibits discrimination against employees and their dependent family members based on any health factors they may have, including prior medical conditions, previous claims experience, and genetic information;


Guarantees that certain individuals will have access to, and can renew, individual health insurance policies.

Now this law does not solve perfectly a key issue involving health insurance, that being the ability of individuals who have not had group-based health insurance to continue with individual insurance (at reasonable prices). But, I note that it did solve many problems that could have affected the vast majority of people with health insurance, that being the difficulty in even switching jobs if you have health issues. (I think that many people still think that they can be denied coverage by a new employer for pre-existing conditions. Probably many of those folks support health care reform on the basis of that faulty assumption!) I also think that HIPAA points the way to MODEST reforms that could be made to the individual insurance market that would help alleviate the issues that remain in that market (even short of the policy change that would really help that market, that being severing of the tie between one's employer and one's health insurance).


TraumaHound said...

Isn't the key word here "limits" (re: first bullet point from the FAQ you quoted)? HIPPA doesn't prohibit denial of coverage based on pre-existing conditions. Unless I'm mistaken, isn't the intent behind the latest popular push (which seems bi-partisan in the makeup of its support) to "prohibit" rather than "limit"?

Robert G. Hansen said...

I don't think the current popular push -- "bipartisan" as you say -- is aimed at the group plans. I actually think HIPAA took care of those. I think folks who understand are after the individual market, but as I said, most people think that even group plans suffer now from strong pre-existing conditions clauses.

I will stand corrected if someone has more info on this.

TraumaHound said...

My mistake. I understand the distinction that you are pointing out, in your original article even.