06pre-exstamp

With a possible repeal of Obamacare finally cresting the horizon, people are beginning agitating to keep pieces of it or taking positions more based on PR than sensible medical or legislative goals.

One of the big issues is, of course, pre-existing conditions. Some people, ostensibly on both sides, are saying “repeal and replace’’, with demands that the replacement includes the provision for covering pre-existing conditions.

What these people either don’t understand or hope we don’t understand, is that the requirement for covering pre-existing conditions is the primary poison pill killing Obamacare.

So, is there a better way? Yes.

It came to me as a product of a piece of simple snark. We should worry about Post-Existing Conditions. I sat with that for a few minutes and realized there’s an actual solution in there. Consider:

A person, let’s call them A, is working at company B which provides health care through company C. To be clear, that means that A has insurance with C, and some fraction of the cost of that insurance is paid by B (with the balance paid by the employee via payroll deductions.

Unfortunately, employee A (or a dependent) is diagnosed with nasty disease D during their employment. They retain their health coverage. But, should they ever want to change to a job at company E, they would then receive health care from F. But F would think of disease D as a pre-existing condition, and so will not cover it.

Let me put some tangible, though not realistic numbers on some of this.

A has insurance with C.
Say cost of insurance is 8000. B pays 5000 of it, and A pays the remaining 3000
If A goes to E, they will have insurance with F. That insurance might cost 6000, of which E would pay 4000 and A would pay the remaining 2000.

Now, imagine that our employee had the option to retain their insurance with C, under B’s plan, though working for E.

E is willing to pay 4000 towards insurance. Insurance with C is 8000, so now A would pay the 4000 difference, rather than the 3000 they were previously paying. However, they would be on the same plan and disease D would not be a pre-existing condition.

This creates a notion that insurance is like roulette. Whoever is covering you when you are diagnosed is perpetually on the hook after that point. While this is a bit distasteful, it is effectively the condition we find ourselves in with handcuffed clients rather than clients with choice.

Looking further down the road if such a scheme were put into place, every insurance company would have legacy patients they might be wishing to pass forward to new employers. This then presents the opportunity for insurance companies to barter their legacies back and forth, bringing employees into the plans actually provided by their current employers. This bartering could be a monetary buy-out to persuade company F to accept pre-existing condition D. Or it could take the form of swapping legacy A from C to F in exchange for swapping some other legacy G from F to C.

All in all, there’s room for this technique to grow in positive ways as insurance companies look to quantify and stabilize the effect of Post-Existing Conditions.

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