11/16/2016
I have had several clients ask me my opinion how the ACA can be fixed (or modified). This is one of several steps I feel need to be corrected in order to make the ACA truly affordable:
Pre-Existing Condition Clause. Currently the ACA does not allow an insurance company to impose a Pre-Ex clause on their policy. This rule has prevented insurance companies from insulating themselves from an immediate risk in which they can not collect enough premium to cover. As the law is currently written, anyone can join an insurance plan during open enrollment and have coverage available to them within days. I have personally witnessed individuals, who chose NOT to purchase insurance during the 2015 open enrollment, become very ill in 2015 and then purchase insurance for the 2016 plan year. Because the law prohibits the pre-existing condition clause, their medical bills were covered by the insurance company. The insurance company has no way of preventing this abuse when the pre-ex clause is completely removed. Here is another example that might make more sense. Assume you live on the gulf coast. You have chosen not to insure your home against hurricane damage. 8 months later a hurricane is forming in the Gulf and headed directly toward your home with landfall expected in a matter of hours. You begin to get nervous so you call the insurance company and request hurricane coverage. Should the coverage be granted and the insurance company pay to rebuild your home after it is destroyed? Doing so will cause premiums to rise for all insureds.
Sound actuarial practice says an insurance company must be able to assess risk properly and charge premiums accordingly to maintain a competitive advantage in the market.
A simple solution is to allow insurance companies the ability to invoke the pre-ex clause of 12 months for anyone who has not maintained prior creditable coverage. Here is what that means. If you chose NOT to purchase insurance this past year (2016) but decide you want coverage for 2017, the insurance company can exclude coverage for any claims on illnesses diagnosed and/or treated in 2016. If you maintain coverage for all of 2017, the pre-ex clause is removed and full benefits begin in 2018. Pre-ex can NOT apply to accidents or illnesses first diagnosed in the plan year (2017). If you have maintained creditable coverage, without a gap of more than 63 days, and moving to a new insurance company, the pre-ex can NOT apply. This is basically rewarding you for maintaining coverage and not allowing someone to "game" the system by purchasing coverage if and only when it is desperately needed.
