keyboard with  stethoscopeI have heard legislators and others become stumped again and again when confronted with the objection that by opposing Obamacare, they are heartlessly leaving individuals with pre-existing health problems out in the cold. Another sticky issue with regard to the topic is the “burning house scenario” which relates to individuals who may wait until they get sick before buying insurance.

Here is a way to solve the puzzle of pre-existing conditions in respect to access to the purchase of health insurance. This solution does not require Obamacare, an “individual mandate,” government spending of any kind, and it completely solves the burning house scenario.  To understand the solution, you will first need to become familiar with two insurance terms:

1). “Continuity of coverage.”  This means an individual needs to maintain or keep their coverage in force over time. Circumstances may allow for a limited gap, such as 63 days, for contingencies.  If an individual goes without coverage for more than 63 days, they are said to have “broken” continuity of coverage.

2). “A six-twelve pre-ex.”  This is a term that means, “Anything an individual was treated for in the last six months, will not be covered for the next 12 months.”

Understanding these terms, the pre-existing condition problem in America can be solved in one paragraph;

“As of ‘X’ date, everyone in America has the ability to purchase or change health insurance at any time without being turned down or limited due to a pre-existing condition.  As long as an individual maintains “continuity of coverage,” no pre-existing condition limitation will ever apply. However, should an individual go for a greater than 63 day period without coverage, he or she will be subject to a “six-twelve pre-ex” clause. Once the twelve month pre-existing condition period expires, all pre-existing limitations will then be removed.”

Under this rule, individuals would be free to choose to purchase coverage or not entirely at their own discretion – no individual mandate required.

  • If a person waits till they get sick to purchase coverage, they can still legally buy it. However, anything they have been treated for in the last six months will not be covered for the next 12 months. This effectively eliminates the burning house scenario.
  • Instituting the language above would be a simple rule change with which all insurers would need to comply. So, no federal money, no Medicaid expansion, no new taxes, and no new debt would be needed.
  • This rule would NOT bankrupt insurance companies because: (1) the claims of currently uninsured people are already largely built into our medical system (i.e. similar to the cost of defaulting customers being already built into the cost of your credit card), and (2) it would apply uniformly to all insurers and therefore spread the risk.
  • Finally, such a rule would allow more premiums into the healthcare system by opening the door anyone with a pre-existing condition who is currently shut out.  These new premiums would contribute to helping reduce and stabilize health insurance rates over time.