It’s interesting to me when someone says that they hate “Obamacare” (the popular name for the Affordable Care Act-ACA). This law is complex and far reaching. Most people simply don’t understand how many areas are affected by the law.
Most recently, it was a client lamenting that they had to have insurance or they would have to pay a penalty. This idea that someone tells them they must do something is the most prevalent objection I hear. I explained that without the mandate, insurers would be unable to provide “guaranteed issue” to people in the individual market. “Why not?”, he inquired.
I explained that if there was no mandate requiring you to participate, and the insurer was required to accept you, most people would wait until they got really sick to buy insurance coverage. He looked at me rather surprised and said that thought never occurred to him! After all, if you are not using your insurance very often, the insurance premiums are much higher than what you are spending on care.
On the other hand, if you are someone with a lot of medical care, you are well aware of the costs that are incurred every time you need a prescription or medical test.
The intent of the law was to provide universal coverage, meaning that everyone would be covered. According to the Kaiser Family Foundation, “as of the end of 2015, the number of uninsured nonelderly Americans stood at 28.5 million, a decrease of nearly 13 million since 2013”. An improvement, yes, but still not universal coverage.
This conversation caused me to reflect on how the individual health insurance market world has changed. Prior to the ACA, the process was something like this:
You call to say you need individual insurance. I ask if you have prior coverage and might have an opportunity to continue that coverage. Typically, if you had prior employer sponsored coverage you tell me that the premiums under COBRA (continuation rights) are too high.
I ask about your health history previewing about 50 questions designed to uncover prior conditions. If it looks like you could be accepted, we take 45-60 minutes to complete the application. The application includes permission for the insurer to access all of your medical records.
The insurer will run an MIB (Medical information Bureau) report and write to your doctors for medical records. This process may take 30-90 days.
You might be shocked to learn that the medication you are taking disqualified you. Or maybe your doctor was trying to “help you” by putting a diagnosis on a claim so it would be covered. But you didn’t really have that disease or disorder. That diagnosis is now branding you as uninsurable or causing a rated policy. By the way, this could also affect insurability if applying for life or disability insurance.
If you are declined, we apply to MRMIP, the CA Major Risk Medical Insurance Pool. The plan premiums are much higher and benefits are limited to $75,000 annually with a $750,000 lifetime cap. There is a waiting list because the plan has limited funding and can only handle a limited number of individuals.
Under the ACA, if you need insurance it’s a whole new set of rules. They are equally complex, but in many ways feel less punitive. The issues are not related to your health history. Instead they are related continuity of coverage and “qualifying events”. We research whether your providers and Rx are covered by the plan since networks are smaller.
The complexity comes if you are trying to qualify for a subsidy or APTC (Advance Premium Tax Credit). I have to know your income information and I must be a knowledgeable about taxes to be able to assist you to obtain maximum subsidy. To earn my professional designations I had to take tax law classes. My experience includes estate tax and retirement planning for individuals and businesses, so these tax issues were not new to me.
Now rather than detailed medical underwriting, I am involved in financial underwriting. I deal not only with your insurer, but also Covered California (our state insurance Exchange) and your tax professional, if you are self-employed. The process still takes at least an hour for the initial transaction. Follow-up with all the parties involved can take many more hours since we must deal with more entities: insurer, exchange, tax professionals
I have continued to work in this market because I believe in the goal of universal coverage. Our commissions have been cut by about 75%, so it is not a profit center. As we approach 2018, I can only hope that the California market can survive the instability that has been intentionally thrust upon it by unscrupulous legislators.