Pre-Existing Conditions and Healthcare

Pre-Existing Conditions and Healthcare.jpg

When Senate Majority Leader Mitch McConnell hinted at attempting to repeal the Affordable Care Act just before the 2018 midterms, the palpable rise in voter anxiety forced many conservatives into voicing support for the most popular of the ACA’s protections – coverage for Pre-Existing Conditions (PECs). It should have been no surprise that research firm Morning Consult concluded that 81% of voters believe it should be illegal for insurers to deny health insurance coverage based on health status or pre-existing condition exclusions. The Affordable Care Act of 2010 eliminated most exclusions, hence the popularity of this particular provision. In 2016, an analysis by the Kaiser Family Foundation found that 52 million adults under 65 would likely have been uninsurable using the medical underwriting practices which excluded pre-existing conditions before the ACA.

U.S. Healthcare – A Roadmap of Complexity

What would it mean to the average American currently covered under individual or small group health plans if coverage for pre-existing conditions was seriously eroded? As with anything related to healthcare in the United States, the answer is complex. Access to and cost of health care has always been at the center of the wellness equation. Limited access with low cost, or high access with prohibitive costs, will drive outcomes and affordability. Factors determining your access and cost include your age, treatment, illness/injury and its progression, your doctor, where you live, current and past coverage, and whether or not you currently have coverage.

The best way to get a sense of the impact may be to look at PEC exclusions before ACA protections.

Regulating pre-existing conditions for individual and small group health plans was left up to the insurance companies and individual states as a result of the McCarran-Ferguson Act of 1945. The insurance companies used exclusion periods and elimination riders so they could avoid paying health costs for people with pre-existing conditions, which often included cancer, diabetes, hepatitis, mental disorders, and pregnancy among many others. Individuals with PECs were charged higher premiums, even though their coverage usually excluded their condition.

If their pre-existing condition leads to other health complications for which they were currently covered, their insurer often denied payment for those costs as well. On top of these safeguards, insurers were allowed to utilize annual and lifetime payment caps to avoid additional costs. During the healthcare debate leading up to the passing of the Affordable Care Act, a Congressional investigation found more than 400 conditions or diagnosis were used to justify a denial of medical coverage. At the very moment when imposed health issues added stress and threats to an individual’s lifestyle, they were often confronted with a complex health care system that could be anything but caring.

The costs are potentially enormous.

A study by Kaiser Family Foundation in 2017 found that more than a quarter of U.S. adults struggle to pay their medical bills. That includes folks who have insurance independently, or through an employer. Kaiser concluded that in 2014, almost 40% of Americans racked up debt resulting from a medical issue and that it was the leading cause of personal bankruptcy.

A nonpartisan Congressional Budget Office analysis of the 2017 House bill to repeal the ACA found that without requirements for pre-existing conditions benefits, the few plans left that would cover these services through expensive riders could increase premiums by as much as $1,000 each month.

If you want an idea of the current costs for health care without PEC coverage, go straight to the health insurance marketplace, and look at the top selling policies currently allowed that do not follow the ACA guidelines. As always, read the fine print. That said, you will find that most current non-ACA compliant policies will exclude the following:

  • Exclusion of treatment for injuries from sports

  • Exclusions for orthopedic treatment

  • No treatment for any congenital condition

  • Treatment waits of more than six months for certain procedures

  • No treatment for diagnosis for allergies

  • No organ or tissue transplants (even if considered transformative or life-saving)

  • Outpatient prescription drugs

Of note in this list is the exclusion of prescription drugs, which can add a hefty burden to overall costs. How much of a burden? One group that has tried to shed light on the complexities of rising drug costs can be found online at Truth in RX, which highlights the experiences of actual people. Anna M. in Missouri shares an all too common scenario. She writes:

“I worked hard and lived within my means. Then, I was diagnosed with liver disease. My prescriptions were $1,900 a month, not counting doctor’s visits. Eventually, I had to stop treatments to make ends meet. My family watched as I grew sicker. It wasn’t until I qualified for assistance that things started to turn around, but my body went through irreversible damage from the lapse in treatment.”

Sadly, qualifying for assistance often means spending thousands of dollars of personal savings. The choice is stark for most people – live in poverty with a reduced quality of wellness, or suffer with virtually no quality of life.

The rising cost of prescription drugs has drawn greater scrutiny over the last few years, especially with headline horror stories such as the story of Martin Shkreli and Turing Pharmaceuticals. In 2015, Shkreli, CEO of Turing, bought the rights to a cheap, off-patent drug and quickly raised its price from $13.50 a pill to $750 a pill. Shkreli claimed that Turing would rake in hundreds of millions of dollars from the price hike and use the money to fund the development of newer, better drugs. More recently, U.S.-based Marathon Pharmaceuticals purchased a drug that was available in Europe and Canada for approximately $1,000 – $2,000 per year. They raised the price to $89,000 – a 6,000% increase in price. The Center for Medicare and Medicaid Services projects that drug spending will continue to represent a larger portion of overall health spending over time.

Pharmaceutical companies must go through an extensive and expensive process to gain FDA approval and bring new drugs to the market. Even medications that have been in clinical use for decades in other developed countries, with extensive data and testing, often must go through the arduous FDA process.

Just as U.S. pharmaceutical companies have gone overseas looking to purchase cheaper brands with profit potential, many consumers have sought to minimize their costs by purchasing cheaper foreign drugs (mainly from Canada and Europe) through online services. Unless you can afford to go directly overseas and purchase, there are FDA requirements for importing drugs into the USA:

  • The drug cannot yet be approved in the U.S. but is prescribed for a serious condition for which there is no equivalent

  • The amount imported is no more than a three-month supply

  • The drug is declared at U.S. Customs with appropriate prescription documentation

You will also need to have a prescription from a U.S. doctor in most instances, which in most cases means a costly personal visit. The steps to importing a drug can be complex and might require a lawyer and legal expenses. According to the American Bar Association, the illegal import of a drug can be prosecuted as a misdemeanor, punishable with a year in prison and a $100,000 fine. Even if you are successful in finding an overseas distributor that meets the legal requirements, don’t be surprised if the selection of drugs is very limited. You would also need to be careful with sharing the history of your prescription usage with your medical insurer, who may enforce exclusions for anyone who used foreign drugs.

Unfortunately, there is little transparency in the pharmaceutical industry regarding how prices are set with PBMs (Pharmaceutical Benefit Managers), so don’t expect to see any price relief soon. Profitability is sought at every level of the pharmaceutical supply chain, and the health insurers ultimately hold the key to how much patients will pay.

What about Medicaid and Medicare as it relates to PECs?

Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. It is administered by states, according to federal guidelines. PECs have been covered since 1965. While that sounds great, recent attempts to appeal the ACA have contained provisions to place a cap on federal Medicaid payments to the states. Costs would inevitably increase as a result, with consumers bearing a greater share.

Medicare is the federal health insurance program for people who are 65 years of age or older and certain younger people with disabilities. If you have Original Medicare or Medicare Advantage, you are generally covered for all Medicare benefits, even if you have a PEC or disability. That sounds great, but the complexity of gaining access to drugs and treatment can be formidable.

Did Someone Say Universal Health?

Universal healthcare purports to grant medical services to all citizens. Many tout “Medicare for all,” but it is not necessarily the same thing as universal healthcare. Most universal health care is funded by general income taxes or payroll taxes but may require other funding methods as well. In countries like Australia, Canada, France, Germany, Singapore, and Switzerland, the government pays for healthcare provided by private companies. However, this is not socialized medicine. In socialized medicine, the government not only pays for services but provides them as well.

Let’s look at some advantages and disadvantages of universal healthcare based on what we know to date through studies of countries with similar economic systems as our own.

Advantages

  • Lowers healthcare costs for economies

  • Eliminates administrative costs of dealing with different health insurers

  • Forces hospitals and doctors to provide the same standard of service at lower costs

  • Creates a healthier workforce

  • Allows the government to guide the population toward healthier choices

Disadvantages

  • Forces healthy people to pay for others’ medical care

  • People may not be as careful with their health

  • Most systems report longer waiting periods for elective procedures

  • Governments may limit payment amounts to keep costs low

  • Costs can overwhelm government budgets

Conclusion

As long as the present system of healthcare stays in place, you can expect costs to continue to rise, especially with an aging population. Improvements in access, quality, and cost will depend on technology, transparency between insurers, pharmaceutical companies and providers, and political courage.