Before the Obamacare days, the pre-existing condition dilemma generally occurred when a high-risk individual transitioned off an employer sponsored health insurance plan and was unable to gain coverage in the individual market. Even though 1996 HIPAA (Health Insurance Portability and Accountability Act) regulations incorporated guaranteed renewability — where an employee could switch from his previous employer plan to a new employer plan or individual plan without denial due to health status — this protection did come up short in some cases. Plans could still be unaffordable for those transitioning from group coverage to an individual policy since carriers could risk-adjust premiums based on one’s health status.
Denial of coverage also occurred prior to Obamacare’s passage, but it happened infrequently. The Obama Administration embellished the the severity of the matter, which added substantial leverage to the push for the law’s passage four years ago.
Let me be clear that it certainly creates very real hardships when those with pre-existing conditions have trouble gaining or keeping coverage in the individual marketplace, worrying at the end of each policy period whether their insurers will renew their policies, or if further medical underwriting will trigger skyrocketing premiums.
Private carriers realize this and have capitalized on it, creating ways to mitigate this issue over time by offering variations of guaranteed renewable policies — and they did it well before government intervention.
My newsletter this week discusses how these already tested practices along with other ideas are just a few ways in which a free market can supplant Obamcare’s precarious attempt to resolve this specific issue by using government price controls.