Immediate Help for Pre-Existing Conditions in the Baucus Bill

by Tim Foley

categories: National Health Exchange, Obama and Congress

Published September 24, 2009 @ 11:25PM PT

If you’ve read this blog lately, you know I’ve been tough on the Baucus bill. Other bloggers have been inclined to give it a fair shake and have pointed out some excellent features (most of them paralleling features in the House and Senate Health, Education, Labor and Pensions bill). So in the interest of fairness, it’s worth point out a feature I initially was initially skeptical of but am now very encouraged by, even though it's not present in any other bill: setting up immediate high-risk pools for those currently excluded from affordable insurance on the basis of pre-existing conditions.

Denying a health insurance plan to someone because they’re likely to need medical care crosses the line between thrifty business and cruelty. Most Americans are understandably repulsed by the practice. America’s Health Insurance Plans, the industry organization for insurers, haven’t even made an attempt to deny the practice and instead have merely tried to trade it for an individual mandate requiring everyone to buy coverage. Every progressive bill on the table would add new regulation on the insurance industry to outlaw the practice. Just as good, they would also prevent insurers charging someone more because of a pre-existing condition (because the difference between denying a policy outright and pricing it so high that you can’t afford it is academic). If we get any reform bill passed, this odious practice will change once and for all.

The problem: in the Baucus bill and the House bill, the Exchange -- the “one-stop shopping” marketplace for comprehensive plans with tax credits to make them affordable to individuals and small businesses -- doesn’t open for business until 2013, and the insurance regulations don’t kick in ‘til then.

Baucus’ solution is to create high-risk pools for those intervening three years. That immediately tripped my “sucky idea” alarm. After all, we have these state-based high-risk pools for those refused insurance now. As the NY Times notes, 200,000 people are already enrolled in them with decidedly mixed results. John McCain plugged them heavily in his presidential campaign health care plan as an alternative to regulating insurers (of course). He called it “GAP” for Guaranteed Access Plan. But the trend in the states is for these types of plans to not be widely used because they’re not affordable. You just can’t get a lower deductible than $1,000, and most of those plans have monthly premiums in the range of $650-$1,300. A high-risk pool plan in Chicago, for instance, will run you over $10,000 per year for an individual. Sure, they don't turn you down, but who can afford it?

But to paraphrase Obi-wan Kenobi, “These aren’t the high-risk pools you’re looking for.” Baucus’ bill instead creates an option that’s more like a pre-cursor of what will be available in the Exchange. Although some of the details aren’t fully fleshed out, the bill calls for a high-risk pool plan that’s as comprehensive as the most affordable insurance plan in the Exchange (the so-called “Bronze plan” which covered primary care, hospitals stays, mental health, you name it). There won’t be an increased price on the basis of your health status, and the premium will be “100 percent of the standard premium rate for a Bronze plan.” There’s no mention of subsidies, which is the other element that makes plans in the Exchange affordable for those who are middle- or low-income. But still, that’s a much better option than exists today. The cost would be a mere $5 billion to create these pools in each state (or possibly supplement existing ones).

Even $5 billion dollars won't help everyone. Without subsidies, they’d presumably have to be able to afford a market-rate standard plan, which is about $5,000/year for an individual. But considering many people with pre-existing conditions have zero options today, even this would be a help to bridge the gap between now and 2013.

(Photo credit: http://www.flickr.com/photos/colorloose/ / CC BY 2.0)