An Ailment Could Delay or Rule Out Healthcare Coverage
People buy health insurance for protection from financial responsibility if they fall sick. But, in what amounts to a Catch-22, being sick, whether it's something as mild as hay fever or as severe as heart disease, can be grounds for a health plan to deny coverage. The denial might apply only to the pre-existing malady and perhaps only for a specified length of time—or it might rule out health insurance altogether.
In insurance terms, pre-existing conditions can encompass any medical problem you have now or may have had years ago. If the ailment (or the history of it) makes you a high-risk patient, insurers and employers know that covering you could prove to be expensive. When people discover they're subject to a pre-existing condition exclusion, "they're completely stunned and dismayed, and they feel abandoned," says Nancy Davenport-Ennis, founder and CEO of the National Patient Advocate Foundation, which helps people access and pay for medical treatment. Her group supports a recently introduced bill that would limit the impact of these exclusions on patients.
The Health Insurance Portability and Accountability Act of 1996 set limits on what employers could consider a pre-existing condition and how long an employer could refuse to cover it. Under HIPAA, when a worker signs up for the company's group plan, the employee can often avoid a pre-existing condition exclusion if he or she was insured for the year immediately preceding the new job and had no break in coverage of more than 63 days. Otherwise, however, the employer can look back six months into the employee's medical history and refuse to cover any condition he or she had during that time for up to 12 months.
Worse, with few exceptions the rules don't apply at all to individual insurance policies. An insurance company can flatly refuse to issue applicants a policy because of their health status, or it can refuse to cover anything related to, for instance, their diabetes. Or it may offer a policy—but only one that's prohibitively expensive. In other words, for some people, health insurance can be very hard to come by. "It's a nasty game of musical chairs, and there are never enough chairs," says Karen Pollitz, a project director at Georgetown University's Health Policy Institute.
The problem isn't going away and may be getting worse. According to a study by the Commonwealth Fund, a health policy think tank, 2 million people lost their health insurance in any given month between 1996 and 1999, and 38 percent of adults under age 65 were uninsured at some point during that period. With employer-provided coverage on the decline and the number of uninsured rising, more people are likely to be without health coverage for periods of time, says study coauthor Pamela Farley Short, a professor of health policy and administration at Pennsylvania State University. The result? More people, even relatively healthy ones, may find themselves in a no-win situation, either unable to buy insurance at all or faced with a policy that covers them for everything except the very condition they most need coverage for.
The argument in favor of permitting exclusions based on pre-existing conditions is that without them, people wouldn't bother to buy insurance until they really needed it—for example, when they're being wheeled into the emergency room. "It's a penalty for waiting to get insurance," says Pollitz. "But a lot of people didn't wait. They had coverage, and they lost it."
Legislation introduced last month by Democratic Rep. Joe Courtney of Connecticut would shorten the period during which employers could withhold coverage for pre-existing conditions as well as the "look-back" period for which they could examine an employee's medical history. But health policy experts say the bill has little chance of passage, given the strong interest by insurers and employers in maintaining the status quo.
In the meantime, consumers who are concerned that they have pre-existing conditions should try to avoid gaps in coverage and, if they have a choice, think carefully before giving up their group coverage to buy an individual policy. But if you find yourself filling out an application for an individual policy, don't think for a minute that you can fudge an answer about your health and hope for the best. Covering up a pre-existing condition that way would give the insurer an opening to refuse to pay any claim you later file, but the company will be happy to accept your premium payments in the meantime. In this case, honesty really is the best policy.