Did I Just Create a Pre-Existing Condition?

BY GUEST BLOGGER KEVIN O’DOHERTY

Laurie: Hi Kevin, thanks for letting me interview you about health insurance as it relates to organ donors. A lot of donors out there are worried that having 1 kidney will be considered a “pre-existing condition,” with the new healthcare changes.

Kevin: No problem Laurie. I want to start by saying that I have not read through the entire bill that was passed, but I have had some conversations with my General Agent concerning the individual markets and what may be in store. Let’s start with a few things that MIGHT happen.

First, the penalty for not having insurance will be removed. No longer will individuals be “forced” to purchase insurance. However, if you are uninsured for more than 63 days, insurance carriers may charge a 30% late enrollment fee AND, depending on the state, the applicant may be underwritten based on health status.

Laurie: What does underwritten based on health status mean exactly? I don’t speak insurance…

Kevin: underwritten based on health status mean that the insurance carriers may take into account your past medical history to determine the rate at which you will pay for the insurance. Currently, carriers are not allowed to use your past medical history in determining rates. States may petition to increase the age ration on pricing from the current 3:1 ratio to 5:1. Currently, someone 64 years of age cannot be charged more than 3X the cost of someone who is 26 in the same area.

Laurie: Can you give an example of that?

Kevin: Yes… say the monthly rate for someone 26 years of age living in zip code 60622 is $350/month for a particular policy. Under the current laws, that same plan for someone 64 years of age could not cost more than $1050. Under the new law, carriers may charge up to $1750 if the ratio moves to 5:1.

They may also Petition to use a health status factor instead of the late enrollment penalty.

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Laurie: what is health status factor?

Kevin: This means that the insurance carriers can take into account your past medical history when determining rates. If they deem you “uninsurable”, you would be forced into the states “high-risk” pool. They may also enact their own state sanctioned essential health benefits, eliminating the 10 essential health benefits currently set up under the Affordable Care Act.

Waivers would require the state to set up a separate high-risk pool for those with pre-existing conditions and this state based pool would receive federal funding. Similar to the old I-CHIPS system Illinois had in place before the ACA.

Laurie: Okay, so this is the big one everyone is really worried about right? Being put in the pool of individuals with pre-existing constitutions and having high insurance rates?

Kevin: Exactly!! Prior to the Affordable Care Act, states had these high risk pools where individuals previously denied coverage could apply for insurance. However, rates were extremely high and many people with pre-existing conditions could not afford the pricing of these plans. I see similar issues if we were to go back to this system. The high risk pools were inefficient, extremely burdensome to enroll in coverage, expensive, and sometimes individuals were placed on waiting lists.

Subsidies are important too. Cost-sharing reductions and subsidies to help lower income families would no longer exist. Under the new law, individuals would be given a fixed dollar amount to purchase coverage. The tax credits would start to phase out for those earning over $75,000, $150,000 for families. The credit would NOT be available to individuals who have access to employer based plans.

Laurie: So what about this is problematic? Low income families who have pre-existing conditions are screwed? And if your employer offers a plan, you are forced to use it pretty much?

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Kevin: Correct- the individuals and families with pre-existing conditions and who have benefited the most since the Affordable Care Act was passed would be penalized. I’m not saying that the ACA has been good for everyone, because it has not. It penalizes families who are in good health, forced maternity coverage on everyone, and forced carriers to charge much higher premiums while limiting access to certain providers.

Before the ACA was passed, individual insurance was always much cheaper than company sponsored plans, especially those with 50 or fewer employees. Groups over 50 employees are already rated based on the health of the company. For groups under 50, employer based plans were guaranteed issue-meaning anyone with a pre-existing condition was covered. However, the carriers were allowed to rate the group according to the health of its employees. Groups with a lot of pre-existing conditions were greatly affected by this because everyone was guaranteed coverage. The ACA stopped this practice of underwriting groups under 50 and everyone was age-rated based on where the company was located. If the ACA is repealed, carriers may again start to underwrite for groups under 50, greatly increasing the price to insure employees.

In summary, if passed, the individual insurance market will be changing once again. Concerns about pre-existing conditions are real, and based on our knowledge of the insurance industry, we expect premiums to continue to soar, especially for those with pre-existing conditions. Another major concern among clients is the lack of access to quality providers. Over the last three years, insurance carriers have been dramatically reducing their network of providers, thereby limiting an individual’s ability to seek quality care. It remains to be seen how this will change under the new law, if at all. My early assessment is that the news is not good for individuals with pre-existing conditions, middle income earners who will no longer qualify for cost-sharing, and individuals over 50.

Laurie: So how will this effect me- I am in good health, don’t have a lot of risk factors, but have 1 kidney. Having 1 kidney has not made me less healthy, there is nothing wrong with me. Will organ donation be considered a “pre-existing condition?”

Kevin: Here are the most common “pre-existing” conditions that insurance carriers used to look at. Please note that this is not a comprehensive list and each carrier was allowed to pick and choose what they consider pre-existing. In my opinion, I believe the insurance carriers would look at having 1 kidney as a pre-existing condition. This would make it much more difficult for those to get insurance. Over the course of the next few months, I will have a much firmer grasp on the new law and how it is going to affect our clients. In my opinion, it will be very hard for insurance carriers to change their model for 2018 even if this bill is passed. I believe 2019 is the earliest we could see major changes. How are you feeling about this?

Well, I know I want to pay attention to what is going on, and do what I can to be part of a solution. This isn’t just about organ donors, it’s about a lot more than just this particular group of people- I mean RAPE is actually listed as a pre-existing condition, that’s just messed up. There is a potential long term financial expense that I have to think about now which is inconvenient. I think the worst part is that this will detract people from wanting to be an organ donor. It changes the act of organ donation from a short term commitment to a long term commitment with unknown financial risks.

All things considered, I would donate again. It’s just interesting that when I made the choice I felt much more protected than I do now with these pending healthcare changes. NM makes it clear that these things CAN change, I knew the risk. I just didn’t think I would have to worry about it.

Readers, I invite you to comment if you have more information on this topic!

Thanks again Kevin!

ABOUT KEVIN:

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Kevin attended Illinois State University. Kevin was a commodities trader on the floor of the CME for 15 years before entering the insurance industry in 2012. Chris Felix, owner of Gizmo Health Insurance, was his old trading partner and started Gizmo in 2007. Kevin came on board in June of 2012 and they have been a two man shop since. They specialize in helping individuals and small business owners navigate the confusing world of health insurance.

Check out a summary of this interview in the Huffington Post Blog!

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