NCPA - National Center for Policy Analysis

Curing the Pre-Existing Conditions of ObamaCare

September 13, 2012

One justification the Obama administration used in its defense to overhaul the health care system was that 65 million people suffered pre-existing conditions that put their health care at risk. But as of June 30, only 77,877 people had signed up for the subsidized Pre-Existing Condition Insurance Plan, say Tom Miller, a resident fellow, and James C. Capretta, a visiting fellow, at the American Enterprise Institute.

As it stands, the Obama administration used its figures to justify a trillion-dollar entitlement expansion and tax-hike on Americans. However, a sensible approach to health care would yield another alternative that insures Americans without the harsh penalties associated with Obama's health care law.

The root of the problem lies in the lack of portable health insurance.

  • For more than 60 years, U.S. tax law has favored employer-sponsored insurance (ESI).
  • This has put people that don't have ESI at a disadvantage because there isn't affordable insurance in the market.
  • Because of the 1996 Health Insurance Portability and Accountability Act, workers who move from one employer's health plan to another to another are protected from restrictions or higher premiums.
  • However, people that have to purchase insurance outside of the workplace are not protected under the act, and are thus at risk for being denied coverage or face higher premiums.

The federal government can take simple steps to guarantee that Americans are insured without creating onerous regulations.

  • First, apply the 1996 Health Insurance Portability and Accountability Act to people with individual market plans.
  • Second, add more federal funds to existing state high-risk pools, or help create high-risk pools in states that do not have them. This would act as a safety net for people that haven't maintained continuous coverage.
  • Moreover, the increased funds in high-risk pools can be used to subsidize people that want to leave their ESI in favor of individual market plans without facing increased cost.
  • Finally, it is necessary to move away from open-ended federal subsidies for insurance in Medicare and Medicaid. This would allow those subsidies to be retargeted based on an individual's income and health status.

The goal of providing portable coverage for all Americans is attainable with some start-up help from the government and then allowing the market to find an equilibrium for people to purchase individual market plans for reasonable prices.

Source: Tom Miller and James C. Capretta, "Curing the Pre-Existing Conditions of ObamaCare," The American, September 10, 2012.


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