As mentioned in a previous blog, the ACA, also known as Obamacare, or as I like to call it, ObamaScare, is a huge monstrosity of legislation passed to address problems in our health care system, namely cost and access. Let’s look at just one of those.
Pre-existing conditions: This is a biggy. This is the common insurance policy of denying benefits for a certain time period (commonly one year) for ailments that the insured person already has. For example, chronic (long term) conditions such as diabetes or high blood pressure would not be covered.
This can get tricky, because say for example a person is diagnosed with cancer after being insured. The insurer could possibly argue that the cancer was present before the policy was issued and not cover it. Lots of law suits, lots of wiggle room and a general nightmare. If a person changed jobs, or otherwise loses his/her insurance he/she may have to start the year wait all over again. So, ACA outlawed the pre-existing clause. A Band-Aid. Yippee! But, of course, there are consequences.
The pre-existing clause was established for good reason. Insurers don’t just think things up just to be difficult, it just seems that way. Well, maybe some of them do, but that’s another blog. The reason is to prevent people from buying insurance only when they need it. The whole concept of insurance is that it’s a big pool of money; everybody puts in a little bit, and most don’t take much out. The few that have something major, like a heart attack, take out more, but it all balances out. Now what if people only put money in the pool when they had a heart attack? This is called adverse selection, and it wreaks havoc on insurance premiums.
So the crafters of the ACA didn’t want this to happen, so they said everybody must pay into the system. A Band-Aid. But then there’s the little problem that not everyone can afford to pay in. There will be subsidies. Another Band-Aid. Then there’s the niggly issue of freedom of choice- maybe some just don’t want insurance. Fine, they will pay a penalty instead. Band-Aid. Now what happens if someone opted out, but then has a heart attack? Hmmm, no pre-existing clause, so he/she can sign up right then and be covered. So why pay for the insurance before you need it? Houston, we have a problem. Not enough people in the pool.
This is just one example of inherent complexity of health insurance. The private insurance industry has wrestled with these issues since the 1930’s. It seems there wasn’t much consulting going on, and no cohesive strategy was formed. Rather than use this knowledge and experience, ObamaScare seems to be a beehive of bandaids.
©Tracey Enerson Wood All rights reserved.