Covering Pre-Existing Conditions in a Market-Driven Health System

July 3, 2013

The entire ObamaCare edifice rests on the deceptive assertion that the law's primary purpose is to cover persons with pre-existing conditions. That argument, misleading as it is, resonates to some degree with the public, which is why the administration keeps repeating it over and over again, says James Capretta, a visiting fellow at the American Enterprise Institute.

And why does it resonate? Because, while the problem of pre-existing conditions is far narrower than we are led to believe, it does exist. But there are cracks in today's system. The main problem is that health insurance is owned by the employers, not the workers. When an employee needs to leave job-based insurance for the individual insurance market the insurers providing coverage in that market can, under most circumstances, charge higher premiums to their potential customers who have, or had, serious health problems, even persons who have been in continuous insurance coverage for a very long time. This accepted practice in the individual market strikes a lot of people as unfair.

Those who seek to repeal ObamaCare need to coalesce around a solution to the problem that is minimally intrusive because, without a practical alternative, it will be very difficult to dislodge the existing law.

  • The way to ensure stable insurance for persons with pre-existing conditions in a reform plan that emphasizes markets, not government, is to create a new protection for people who stay continuously insured.
  • They should be allowed to move seamlessly between job-based and individually-owned insurance products without fear of being risk-rated based on their health status.
  • To prevent the market from destabilizing during the transition period, it will be necessary to subsidize the premiums for the very costliest cases.
  • That can be done with properly funded high-risk pools.

Some believe that the federal government should not involve itself in high-risk pool funding at all, ever. But the concept of "continuous coverage" protection for insurance enrollees will only work if it applies nationwide. It will thus require federal legislation to ensure these workers are protected in every state, which also means that the high-risk pool funding necessary to make it work and stabilize premiums will need to be enacted at the federal level too, in the same legislation.

Source: James Capretta, "Covering Pre-Existing Conditions in a Market-Driven Health System," Economic Policies for the 21st Century, June 24, 2013.

 

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