Medical Underwriting, Pre-Existing Conditions, and Healthcare

With open enrollment now on the doorstep for 2020, it is reasonable to assume health insurance companies have pretty much solidified their 2021 offerings. They do not wait until the last minute to determine plans for the coming year. Likewise, brokers are looking at all the possible options they can offer employers.

Meanwhile, politicians and consumers are worried about how much coverage one should expect. That is a matter of medical underwriting, pre-existing conditions, and a number of other factors – all of which add up to define how healthcare is delivered in this country.

Medical underwriting and pre-existing conditions are hot topics right now due to the possibility of Obamacare being upended by the Supreme Court. Whether you are an average consumer or a health insurance broker, how much do you know about these two topics? They could very well be the two most important factors determining how much people pay for health insurance.

The Pre-Existing Condition Question

In the debate over whether or not health insurance is a universal right, it’s hard to avoid the question of pre-existing conditions. Prior to the implementation of the Affordable Care Act (ACA), private health insurance companies were allowed by law to deny coverage to consumers with pre-existing conditions. The rationale was pretty simple.

Covering pre-existing conditions would encourage people to avoid buying health insurance until they got seriously ill. If their illnesses were serious enough, they could spend significantly more on healthcare than they would ever pay in premiums. This would most certainly bankrupt insurance companies.

The argument against pre-existing conditions is not just an insurance company ploy to avoid making payments. The danger is real, which is why the federal government subsidizes insurance companies under the ACA. Without government subsidies, the health insurance industry would not survive having to cover pre-existing conditions.

Medical Underwriting and Pre-Existing Conditions

Dallas-based Benefit Mall says that medical underwriting and pre-existing conditions go hand-in-hand. Medical underwriting is the process of researching a consumer’s medical history before determining what kind of health insurance coverage to offer.

A potential customer may claim no pre-existing conditions. However, the medical underwriting process may reveal a history of heart disease or diabetes, for example. Those pre-existing conditions now affect any coverage the customer might be offered, as well as the premiums he or she might have to pay.

As you can see, the combination of medical underwriting and pre-existing conditions creates problems for everyone involved. But they are problems that cannot be solved as long as we continue to treat health insurance as a system that robs Peter to pay Paul. The only way to solve the problem is to completely overhaul how health insurance works.

A Step in That Direction

A step in that direction is a piece of legislation passed by the House this past September (2020). The legislation, known as the Competitive Health Insurance Reform Act modifies the McCarron-Ferguson Act of 1945 to end an anti-monopoly exemption given to health insurance companies.

McCarron-Ferguson carved out a special exemption for the health insurance industry when it was passed some 75 years ago. This exemption has allowed health insurance companies to work together to set rates. As such, the exemption also eliminates competition from the market. This is a guaranteed recipe for sending prices sky high.

We do not have a healthcare issue in America. We have a health insurance issue. It is an issue exacerbated by McCarron-Ferguson and fueled by medical underwriting and resistance to pre-existing conditions. Like it or not, the only solution is to force the health insurance industry to scrap the current system and start over.