Bills Seek to End Exclusions for Preexisting Conditions

Recently introduced federal legislation would bar insurers from refusing to cover people who have preexisting conditions, a protection missing from some health care reform proposals.

The timing of the proposed legislation may help raise the issue's profile in Congress during the debate on national health care reform.

Companion versions of the Preexisting Condition Patient Protection Act of 2009 (HR 1558 and S 623) were introduced in the House and Senate on March 17 to allow people with chronic and other preexisting health problems to obtain insurance in the individual and employer-based markets.

According to Senate sponsor Jay Rockefeller (D-W.Va.), the legislation is needed to protect the 133 million Americans with chronic illnesses from coverage exclusions when they are most in need of medical care and the insurance that makes it affordable. The use of preexisting-condition exclusions is, at least partially, why 25 million Americans with such conditions are underinsured, he said.

“Insurance companies should no longer be allowed to reap profits on the backs of sick Americans,” said Rockefeller, chair of the Senate Finance Health Care Subcommittee, in a Senate floor statement.

Insurers use preexisting-condition exclusions to minimize adverse selection—the enrollment of people with illnesses in a risk pool in disproportionate numbers to their percent of the overall population. Insurers maintain that such a financially unsustainable imbalance will occur if preexisting-condition exclusions are lifted.

The legislation highlights an important priority for APA, said Lizbet Boroughs, associate director of APA's Department of Government Relations. Many people with chronic psychiatric illnesses are unable to find full-time work to qualify for employer-based coverage and are then unable to find insurers that will extend individual coverage to them. The result is frequently either a financial spiral down as they attempt to pay out of pocket for medications or other treatment or deterioration of their health as they forgo care.

The removal of barriers to health insurance coverage for people with chronic health problems has not been emphasized by many congressional leaders in the health reform debate, according to Boroughs. Some plans focus instead on so-called insurable populations.

“People with preexisting conditions need to be part of the health care debate,” Boroughs said.

Coverage for people with preexisting conditions was among the points that APA Medical Director James H. Scully Jr., M.D., and other physicians raised in a March meeting with officials from the Obama administration (see APA Participates in Obama Health Reform Meeting). It's a point echoed by the bill's supporters.

“It is wrong and impractical to commit ourselves to health care reform without addressing the faulty and ill-advised preexisting-condition exclusion,” said Rep. Joe Courtney (D-Conn.), sponsor of the House version of the bill.

Advocates say the legislation would rectify a number of different problematic issues faced by individuals who have a chronic illness or a preexisting medical condition. For example, the fear of being blocked from private insurance coverage can keep people with chronic and other preexisting conditions tied to an undesirable job and prevent them from pursuing new opportunities. The legislation would bar employer-based insurance plans from the currently allowed practice of denying coverage for preexisting conditions, such as chronic psychiatric illness, for up to 12 months to new employees who have been without coverage for the preceding 63 days or more. This problem would be addressed under the legislation by eliminating preexisting-condition exclusions in all insurance markets.

The measure also would bar the practice of employers' examining medical recommendations, diagnoses, and treatments that new employees received within the most recent six months to determine when to deny health coverage for a preexisting condition for up to 12 months.

Another area of coverage addressed by the legislation would provide buyers in the individual market with protection against insurers' preexisting-condition exclusions. Because the individual insurance market is not based on a large pool of insured people, such exclusions have had their largest impact there. People with chronic health conditions seeking insurance in the individual market are likely to pay high deductibles, have large monthly premiums, and even have the specific illness for which they need coverage written out of their policies.

Although it was intended that the Health Insurance Portability and Accountability Act of 1996 (HIPAA) would restrict private insurers from using a preexisting-condition exclusion to limit health insurance coverage, it has fallen short of the patient-protection expectations of its supporters.

“HIPAA has been successful, and many individuals have come to rely on its protections,” Rockefeller said. “However, after more than a decade, certain gaps in HIPAA's protection have become apparent.”

In contrast, the proposed legislation requires federal health officials to track and report the extent to which the changes resulting from the proposed law lead to adverse selection. The legislation also would add unprecedented levels of scrutiny of the insurance industry, including mandatory collection of data on the “characteristics” of private insurers' covered populations to provide transparency on the true mix of patients and patient claims among the companies.

The Government Accountability Office would be charged with reporting on whether the measure reduces the number of uninsured and underinsured, as well as what effect it has on the affordability of health insurance coverage.

Information on the Preexisting Condition Patient Protection Act of 2009 can be accessed at<www.thomas.loc.gov> by searching on the bill numbers, HR 1558 and S 623. ▪