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New Rules on Pre-existing Conditions-- Critical Update

by: DrAbston

Wed Nov 21, 2012 at 06:05:02 AM CST

Edited version: Very quick, unpolished post today, because I have to leave for rounds in a few minutes and just found out about this late last night.  Will be with family on Thanksgiving and no time to get to it, but you might want to send in your comment to Health and Human Services, and it looks like there is a 30 day deadline.


HHS has issued their proposed rule for how the changes on guaranteed availability of coverage and rate variability will take place in 2014 [edit-- "guaranteed availability" I  initially had misunderstood as "pre-existing conditions" because of John Dingell's Facebook post talking about the rules that included: “Market Rules” that would prohibit health insurance companies from discriminating against individuals because of a pre-existing or chronic condition, beginning in 2014. For more information regarding this rule, visit http://www.ofr.gov/OFRUpload/OFRData/2012-28428_PI.pdf].  I  plead guilty to following his lead-- this rule is NOT about pre-existing conditions, exactly.  It is about whether insurers are required to allow individuals or groups to enroll, and which policies will be required to limit rate variations to age, tobacco use, family size and geographic area. Thanks to a LIA commenter who caught that!

A couple of terms:  “grandfathered” means a plan that was around before 2010 so doesn’t have to meet many of the new rules in the ACA.  It is now very hard to get ungrandfathered—an employer can switch insurance companies completely and as long as the new policy is similar to the old one, it is not new—it is still grandfathered.  I’ll call these plans “old.”


A non-grandfathered plan is a “new” plan that has to meet the ACA requirements all around, like preventive care without co-pays. 


So the original ACA said that in 2014, insurers had to accept people with pre-existing conditions without discrimination, except for “old” individual plans.  Here is the language that  means, to me, that “old” group plans have to play by those rules also, in Section 1251: “The provisions of section 2704 (related to pre-existing condition exclusions) of the Public Health Service Act (as added by this title) shall apply to grandfathered health plans that are group plans for plan years beginning with the first plan year to which such provisions otherwise apply.”  Clear as mud, but section 2704 is the part that says insurers can’t exclude people.    


The new proposed rule, just issued, says: “Proposed §147.104 would require issuers offering non-grandfathered health insurance
coverage to accept every individual or employer who applies for coverage in the individual or
group market, as applicable, subject to certain exceptions (for example, limits on network
capacity).” In translation, only “new” insurance plans have to offer coverage to all comers (edited).  Even though this wording does not refer to pre-existing conditions, it allows plans to remain available that can deny access for unknown reasons.

It also says that "old" plans are not subject to the new rules restricting rate variability to age, tobacco use, family size and geographic area.  So the old plans, including group plans, are still allowed to base premium rates on health status (and maybe gender? I can't tell).  This is the problem that has kept some employers from being able to afford coverage for their businesses.  


That is worrisome (word replacing "huge", when I understood it to refer to pre-existing conditions).  Old plans can turn individuals or groups down for coverage.  Could they do it, based on awareness of claims data regarding pre-existing conditions, as long as they don't get caught?  I think it may leave the door open. And that could be the case indefinitely, because HHS keeps adjusting the criteria for becoming “new” so that it is very easy to stay old, forever.  They call it “keeping the plan you have.” Old plans can also continue to charge more based on health conditions in a group.


I have re-read the requirements for insurers to participate in the coming Exchanges, and I can’t find any requirement that the plans offered must be “new”. If it is cheaper for insurers or employers to stick with "old" plans, will we see enough new ones on the Exchanges?  And will these "old" plans find ways to deny coverage? Will there be enough "new" small group plans available?


There are too many loopholes built into the ACA.  It certainly seems odd to include different guidelines for which insurances must make their product available to all willing parties, and how the rates can vary, as a separate item from prohibiting discrimination based on health status. An insurer can't have pre-existing condition exclusions, but it can close the door to you when you apply or charge you extra money. This is Obama’s appointee making the administrative rules, so if you don’t like it, better speak up now. 

DrAbston :: New Rules on Pre-existing Conditions-- Critical Update
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Can't say I'm shocked... (0.00 / 0)
...nor should anyone be who paid attention while the Heritage Foundation-inspired ACA was drawn up behind doors. Those of us who lamented the lack of true negotiation, the absence of the words "single payer" or "public option" from the process, feared this would be the result. I'm afraid the American citizenry has been delivered gift-wrapped to the door of those predators who have too long profited mightily from their misery and desperation. 

I'm not exactly shocked (0.00 / 0)

except that I thought it would be more subtle. Where I posted this on FB, I still have people trying to defend the ACA, who are saying it will still work out and we can just get new plans on the Exchange.  I don't know which aggravates me more, the people who came up with this scheme or the ones who are defending it...

I have thought though, since posting, that I may have completely misunderstood the whole pre-existing conditions issue.  There really may be no protection in the ACA for excluding coverage of those conditions within a plan-- it just says they can't deny issuing a policy or use different rates.  It might not mean they can't continue to have waiting periods for pre-existing. But this same rule says the grandfathered/ old plans also won't come under the limits for rate variation based on prior claims status, for group plans.  Which would keep rates high for small employers with expensive illnesses in the mix-- those employers already have "guaranteed issue" here.

The large employer plans, from what I can tell, don't have guaranteed issue in Alabama (51 employees or more).  So this would mean an insurer could deny coverage to a large group for a grandfathered plan, based on pre-existing conditions within the group, I think (but am not certain).

[ Parent ]
Here's the story of my own fight with health care... (0.00 / 0)

...and a system that seems to be the problem. 



(Sorry, but it apparently won't let me insert the links. You'll have to copy and paste.) 

[ Parent ]
just getting to this (0.00 / 0)
was out of town for holidays.  Wow. This is why we can't stop, no matter what. Human beings, not statistics. Every single one matters.  Thank you.

[ Parent ]
might actually be implementing a different section of the ACA (0.00 / 0)

I could be wrong (it would not be surprising, given the thicket of statutes/regs in play here), but it appears to me that § 147.104 is not attempting to implement the preexisting coverage provision of the ACA, but rather a different portion. Proposed reg 147.104, entitled "guaranteed availability of coverage", states, "Subject to paragraphs (b) through (d) of this section, a health insurance issuer that offers health insurance coverage in the individual or group market in a state must offer to any individual or employer in the state all products that are approved for sale in the applicable market, and must accept any individual or employer that applies for any of those products."  This seems very similar to the language of Sec 2702 of the ACA, also entitled "guaranteed availability of coverage", which says, "Subject to subsections (b) through (e), each health insurance issuer that offers health insurance coverage in the individual or group market in a State must accept every employer and individual in the State that applies for such coverage."  Section 2702 is not the place where the preexisting language comes from; that's Section 2704.

The proposed reg states, "Section 1251(a)(2) of the Affordable Care Act specifies that grandfathered health insurance coverage is not subject to sections 2701, 2702, and 2703 of the PHS Act."  HHS does not include 2704 in that list (which is specifically exempted from the grandfathering by virtue of 1251(a)(4)(B)(i) of the ACA), but they do include 2702.

What's really confusing is how the language of 2702 and 2704 overlap: both deal with not refusing people, and so it's easy to read the new reg as grandfathering preexisting conditions. But I don't think it does since 2704 is still out there.

I'd be interested to hear if other folks read it the way I do.

Ah, ok (0.00 / 0)

I see what you are saying. The grandfathered plans don't have to guarantee that individuals or groups can access them, so folks can be shut out. They can't be shut out for health reasons if anyone can prove that was why they were excluded.  Well, that's better than I thought it was, but it still leaves some wiggle room that seems possibly concerning.

I am going to edit above!  Thanks!

[ Parent ]
More bizarreness (0.00 / 0)
I got on the pre-existing conditions tangent because I saw Dingell's post on FB.  But the official HHS press release says the same thing, that this is progress on pre-existing conditions.  If that is really what they mean to be doing, they have excluded grandfathered plans from the requirements somehow. 

[ Parent ]
Huh? (0.00 / 0)
I am confused as to why, but I think I am getting pissed, but I am not sure.

Because I got it wrong? (4.00 / 1)
or because the law is so screwy?

[ Parent ]
humor attempt (0.00 / 0)
Frustrating because the law is so messed up, but I just made an attempt -weak one I know - at a little humor.

[ Parent ]



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