Pre-existing condition limits bring hardship
Charlie Finley was the unloved owner of the Oakland A’s back in the days when, toward the end of his ownership of the team, a crowd on a sunny Saturday afternoon might number about 3,500 fans. Mr. Finley had accumulated the wherewithal to buy a major league baseball team by selling health insurance policies that covered specific diseases only — like cancer. They were cheap to buy, but a terrible deal when insurance companies armed with known odds could unload “protection” on a gullible, frightened public.
These policies may be coming back if people get to buy just what they want.
For all of its faults, the Affordable Care Act offers specified essential benefits so that coverage is comprehensive and not subject to pre-existing condition limitations. Once people determine a premium and deductible they can live with, the coverage is a known quantity.
Admittedly, a glaring fault of ACA is the cliff income level at which subsidies abruptly end. A graduated schedule would have created a softer landing with lower subsidies offset by higher incomes.
A retired coach once told me that there are two kinds of coaches: “Those who have been fired and those who are going to get fired.”
In today’s corporate America, employees in their 50s and 60s have a reason to feel as vulnerable as a coach. When I think about health care, it is this demographic I am most concerned about.
Many needing to buy private insurance who have not yet reached the sanctuary of Medicare are out of luck if pre-existing conditions are once again introduced to the purchase of insurance — because most of these folks are no longer in perfect health. The rationale that they will still be covered — just at a higher premium — re-introduces the process of having to consider their health situation at all.
Justin Ordonez, in the New York Times, wrote the op-ed piece titled, “I Am the Man Who Denied Your Claims.” He talks about the agony of how, with just a high school education, he had the responsibility of determining who got covered, and if so, at what price, based on phone conversations that took place in an insurance company’s call center. No one should have to lose a home in bankruptcy because we’ve reverted back to a time when someone reading from a manual determines that we either have no coverage or, as is proposed, coverage offered at an unaffordable price. Introducing any consideration of pre-existing conditions sets us up for a rerun of the dysfunctional, dehumanizing system of which
Mr. Ordonez was ashamed to be a part.
As for the reviled “mandate” of having to pay a penalty for not buying insurance, there’s a reason for it that even Mitt Romney was convinced of when he established Affordable Care for Massachusetts. It’s called “adverse selection” in the insurance business, which means that when people can buy insurance only when they have bad luck with health, the premiums have to reflect a huge cost that is no longer subsidized by the lucky folks who paid premiums and made it through the year with few claims. The mandate was just a cost that someone was asked to pay who otherwise was hoping to “work the system” and wait until they needed insurance.
If the mandate goes away, we’re back to the boiler room people using their formula to determine how much the uninsured opportunist is going to have to pay to cover that burst appendix (it will be too late in this case). And when the uninsured hospital bill arrives for $30,000, there is another new call center of people cranked up to collect the horrendous charges that hospitals bill those who are uninsured. And those collection companies are unrelenting.
The “patchy morning fog” hovering over all of these moving parts is the $800 billion that will be cut from Medicaid over the next 10 years, which impacts citizens such as children and people in convalescent homes. This introduces “medical tourism” across the country as “states’ rights” advocates set the stage for different states to provide different levels of benefits. Get ready for people moving to wherever they can receive coverage for a sixfigure chronic illness — if anywhere.
We’re going through all of this to accomplish a proposed $900 billion in tax savings for the nation’s wealthiest taxpayers (average annual savings of $50,000 each with Warren Buffett, for example, saving $650,000 per year). I would argue that the $900 billion is chump change for these folks compared to the value of having a country that compares more favorably with other industrialized nations offering universal coverage.
As strange as it may seem, I think I speak for a lot of folks who are happy to pay that average additional tax. After taxes, they still have a lot left over to spend and invest, and they’re tired of a battle that is more about ideology than anything that actually makes sense.
Steve Butler is the CEO and founder of Pension Dynamics Company LLC. To read past columns and learn more about his book, go to www. pensiondynamics.com and click on resources. Steve can be reached at 925-956-0505, ext. 228, or email: sbutler@pensiondynamics.com.