Opinion - Advisor Insight

Op-ed: Lack of pre-existing condition protection could financially cripple many Americans

Key Points
  • In this election year, Republicans and Democrats are making competing claims about whether and how they'll protect Americans with pre-existing medical conditions.
  • Neither side of the aisle has presented an ideal solution.
  • The best route may very well be to try to fix the systems we already have in place, as this is an issue that will affect more Americans as they age.
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Health-care coverage and costs are top of mind in this election year, and one of the loudest arguments between Republicans and Democrats is the claim they will protect people with pre-existing medical conditions.

What does this really mean and why is it so important for your personal finances?

According to a 2019 study from Kaiser Family Foundation, an estimated 27% of U.S. adults ages 18-64 have some kind of pre-existing condition. What's more, about 133 million Americans who are not eligible for Medicare have health conditions that could make them uninsurable if there is no protection for pre-existing medical conditions. That is more than a third of the population.

In reality, very few people stay totally healthy to age 65, so at some point, you will likely develop a health condition that would be considered pre-existing and could cause health insurance issues.

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The majority of people under age 65 have employer-based coverage with pre-existing condition protection, so they may not think blanket protections concern them. But as we have seen throughout the pandemic, job loss is unpredictable.

Even if you have the financial resources to opt for expensive Consolidated Omnibus Budget Reconciliation Act, or COBRA, insurance after a job loss, that coverage only lasts for 18 months. You would then need to purchase insurance on an individual basis. This is when protections for health coverage becomes very important.

Additionally, many people are self-employed or work for small employers — these groups do not have the same protections as people who work for large companies. The lack of protection will significantly increase the cost of health insurance for small businesses that employ people with health issues. This would lead to job discrimination for unhealthy people, making it even more difficult for them to get affordable coverage.

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With the cost of health-care skyrocketing, common chronic illness such as diabetes and asthma can be financially crippling for individuals.

If you are in the unfortunate camp of people who develop heart disease, cancer or an autoimmune disease such as rheumatoid arthritis, you can lose your job with good coverage and end up in medical bankruptcy. The ability to purchase affordable health insurance without regards to illness could be vital for your financial well-being even if you are employed by a large company.

Lately, it seems that every politician says they will fight to protect people with pre-existing health conditions. To help guide you to which ones are telling the truth, it is important to ask if their proposal would meet all the conditions needed to guarantee coverage at an affordable price to everyone, including healthy people and those with medical illness.

The 3 key coverage requirements

What is required to protect pre-existing conditions? There are three requirements:

  1. Insurance companies would be required to issue insurance to any applicant regardless of health or factors related to health;
  2. They can't base the cost of the insurance on health or other factors related to health, and;
  3. They can't deny payment for essential health benefits.

What are the proposals from various politicians and where do they fall on meeting these conditions?

The 2017 American Health Care Act put forth by Republicans met the requirement of issuing insurance to anyone, but allowed policies to be priced based on health. According to the Center for American Progress, a person with metastatic cancer would pay about $140,000 more per year than a healthy individual. Even uncomplicated diabetes would raise the premiums an extra $5,500 per year.

The bill included high-risk pools to cover people with extremely high premiums, but funding was not adequate to cover the need. Before the Affordable Care Act, high-risk pools were used in many states. High-risk pool insurance was expensive, had substandard benefits and funding depended on the whims of elected leaders. This is the main reason high-risk pools don't work.

Current bills presented by Republicans in Congress would require coverage but would allow pricing based on health or factors that serve as proxies for health, or they would not force insurance companies to cover essential care. What good is a policy if you develop cancer and the policy limits cancer care?

The ACA meets all of the requirements for covering pre-existing conditions.

One problem with the ACA is that the cost of premiums rose for everyone, even those not on ACA coverage, making coverage unaffordable for many. The reason is that many of the provisions of the ACA intended to reduce costs were not effectively implemented, such as fee-for-service payment reform and rebuilding of primary care.

So where do we go from here to get the health-care system we need and to protect people with pre-existing health conditions?

Instead of starting over with new legislation, the best path is to repair what we have — this is what Congress has historically done for any major legislation. Ideally, politicians need to work together to fix the health-care system. And that means finding ways to lower costs for American families.

Meanwhile, we need to hold politicians accountable and make sure that pre-existing condition protection stays in place for all of us.

— By Carolyn McClanahan, M.D., director of financial planning at Life Planning Partners