Pre-existing condition. Every cancer survivor – or parent of a cancer survivor – dreads hearing that phrase from a health insurance plan administrator. It can mean outright rejection, or it can mean being charged higher premiums for basic coverage. It means that your medical history determines, in part, what kind of rate you pay for continued coverage.
But the industry seemed to open the door to change in surprising testimony before the US Senate on March 24. In simple terms, they said they were willing to be flexible.
Karen M. Ignagni, president of America’s Health Insurance Plans, told a hearing chaired by Sen. Jeff Bingaman (D-New Mexico), that the industry is willing to give up a long-held tenet: weighing the health of an individual in setting prices. As Robert Pear of the New York Times reports, insurers have always maintained that they must base premium prices on an individual’s medical history. Insurers have argued that to do otherwise would make rates soar for younger, healthier subscribers.
This longstanding practice shackles cancer survivors who want to change jobs. It can also hamstring a family paying insurance premiums for a child who has had cancer.
As Pear reports, Ignagni uncorked a surprise for senators at the hearing. Insurers are now beginning to look at ways to prevent this type of increase, she said. They might even accept stricter regulation of premiums, benefits and underwriting practices.
In effect, insurers are willing to make this concession if Congress enacts a requirement for every American to carry health insurance – something that would presumably bring a flood of new business their way.
Ignagni said as much in a letter that she signed along with Scott Serota, president of Blue Cross-Blue Shield. If Congress requires everyone to carry insurance, they said, “we could guarantee issue of coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.”
Sen. Max Baucus, the Montana Democrat who has written a proposal for overhauling the health care system, welcomed the proposal. Pear quotes Baucus at the hearing: “It indicates that we may be able to have health care reform this year because the major players are stepping up and saying they are willing to play.”
In his “Call to Action on Health Reform,” issued in November 2008, Baucus urges just this kind of change. This is how the Baucus report puts it:
Currently, insurance companies can discriminate against older and sicker patients by charging significantly higher premiums or denying coverage altogether. Individuals with pre-existing conditions such as cancer, heart disease, and asthma are at particular risk of being denied coverage by insurance companies or being offered a policy that is unaffordable. In fact, a recent Commonwealth Fund study found that insurance companies turned down one out of every five people who applied for individual coverage due to pre-existing conditions.
While states have the authority to restrict this type of discrimination, very few have used that authority. Under the Baucus plan, insurance companies could not deny coverage to any individual nor discriminate against individuals with pre-existing conditions. Rules for rating insurance policies – which have to do with how an insurer can determine a policyholder’s premium based on various criteria such as age, tobacco use, previous illness, or factors that encourage healthy lifestyles – will be specified in statute after consultation with the National Association of Insurance Commissioners, consumer advocates, plans and others. The ability of insurance companies to rate on age would also be limited.