Supreme Court and the Individual Mandate

[PST]

So a little of the topic, but an important question to people more informed on this subject than I am. Talking to my father yesterday, the subject of this mandate comes up and he says “We got a letter in the mail yesterday from the insurance company informing us they have changed their coverage regarding preexisting conditions”. According to the letter he received, new policy holders with preexisting conditions will be subject to a 60/40 in-network and 50/50 out-of-network payment option instead of the current 90/10 in and 80/20 out.

My question to our resident experts (no pun intended guys and I mean that to folks on both sides of the fence) on the mandate. Is this practice legal under the mandate and has anyone else heard of similar policy changes being made?

My take on it from what I have read is that it will be perfectly legal for insurance companies to do this since the mandate on prohibits companies from denying coverage, not stating that the coverage has to be the same as non-preexisting conditions. I am basing the ASSUMPTION on what I have read here and from various sources on the web from both sides of the fence. I have not read the actual mandate myself!

I believe that the practice you describe will become illegal under federal law on January 1, 2014, but is still okay now if state law allows it.

[akcpapguy]

Thanks for the response PST, could I ask what specific wording in the mandate makes you think this will be illegal once the 2014 timeline is reached.

One thing of note, the change is only applied to preexisting conditions, non-preexisting conditions would still be paid at the regular policy rates.


Thanks

[DreamStalker]

Oh well, I give up ......

Best wishes to you all with your faith-based politics, and health care reform, and all that you hold so dearly in denial ...

[NachtWürger]

According to the letter he received, new policy holders with preexisting conditions will be subject to a 60/40 in-network and 50/50 out-of-network payment option instead of the current 90/10 in and 80/20 out.

One thing of note, the change is only applied to preexisting conditions, non-preexisting conditions would still be paid at the regular policy rates.

That would be an excellent policy for me to purchase. I have my own insurance and pay a very high premium because of sleep apnea as my only preexisting condition.

With a policy like you describe I could pay a premium of a healthy person and have a great benefit (90/10). If I need a CPAP machine or a mask I would just find a good deal on the internet (like I do now). No future needs for a sleep study because I have already been diagnosed and know how to treat the condition on my own.

If Federal and State governments would butt out of regulating insurance and giving tax deductions to companies who provide employee health insurance, the market (that is the insurance companies and their willing customers for those of you from Rio Linda) would devise some great plans that would begin to fit our needs.

There is a good article in Forbes (The Startup That Is X-Raying The Doctor Bills http://www.forbes.com/sites/kerryadolan ... obamacare/) about a startup company that is going to break open transparency in medical costs and result in huge savings. This is just one example of the market starting to respond in a big way to high insurance and medical costs. The big impediment to market efficiency has been Federal and State regulation of the industry and Federal and State tax codes.

Unfortunately if Obamacare is not repealed the power of the market to serve us will be destroyed.

[PST]

Thanks for the response PST, could I ask what specific wording in the mandate makes you think this will be illegal once the 2014 timeline is reached.

One thing of note, the change is only applied to preexisting conditions, non-preexisting conditions would still be paid at the regular policy rates.

Section 1201 of the PPACA made a series of amendments to the Public Health Services Act (PHSA). One of those changes was to amend what is now numbered as subsection (a) of section 2704 of the PHSA (Prohibition of Preexisting Condition Exclusions or Other Discrimination Based on Health Status) to read as follows:

IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage.

Formerly this prohibition was narrower and only applied to certain people who were moving from one group policy to another. Subsection (a) relies on a definition that was already present in subsection (b) of section 2704 and was not changed. It reads:

The term "preexisting condition exclusion" means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date.

I added the bold italics above. You have to dig down a bit, which is unfortunately true of a lot of legislation, but the word exclusion in this context is defined to include limitation, so the insurer not only cannot exclude coverage entirely, but cannot limit it either, relative to coverage for other conditions.

The effective date of the section is January 1, 2014. This is the date everything goes into effect unless there is a different date specifically defined, and there isn't such a date for the prohibition of exclusions for pre-existing conditions as they apply to adults.

[Sloop]

Thanks for the response PST, could I ask what specific wording in the mandate makes you think this will be illegal once the 2014 timeline is reached.

One thing of note, the change is only applied to preexisting conditions, non-preexisting conditions would still be paid at the regular policy rates.

Section 1201 of the PPACA made a series of amendments to the Public Health Services Act (PHSA). One of those changes was to amend what is now numbered as subsection (a) of section 2704 of the PHSA (Prohibition of Preexisting Condition Exclusions or Other Discrimination Based on Health Status) to read as follows:

IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage.

Formerly this prohibition was narrower and only applied to certain people who were moving from one group policy to another. Subsection (a) relies on a definition that was already present in subsection (b) of section 2704 and was not changed. It reads:

The term "preexisting condition exclusion" means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date.

I added the bold italics above. You have to dig down a bit, which is unfortunately true of a lot of legislation, but the word exclusion in this context is defined to include limitation, so the insurer not only cannot exclude coverage entirely, but cannot limit it either, relative to coverage for other conditions.

The effective date of the section is January 1, 2014. This is the date everything goes into effect unless there is a different date specifically defined, and there isn't such a date for the prohibition of exclusions for pre-existing conditions as they apply to adults.

Sorry, but your quotes do not address the policy rates.

[PST]

Thanks for the response PST, could I ask what specific wording in the mandate makes you think this will be illegal once the 2014 timeline is reached.

One thing of note, the change is only applied to preexisting conditions, non-preexisting conditions would still be paid at the regular policy rates.

Section 1201 of the PPACA made a series of amendments to the Public Health Services Act (PHSA). One of those changes was to amend what is now numbered as subsection (a) of section 2704 of the PHSA (Prohibition of Preexisting Condition Exclusions or Other Discrimination Based on Health Status) to read as follows:

IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage.

Formerly this prohibition was narrower and only applied to certain people who were moving from one group policy to another. Subsection (a) relies on a definition that was already present in subsection (b) of section 2704 and was not changed. It reads:

The term "preexisting condition exclusion" means, with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date.

I added the bold italics above. You have to dig down a bit, which is unfortunately true of a lot of legislation, but the word exclusion in this context is defined to include limitation, so the insurer not only cannot exclude coverage entirely, but cannot limit it either, relative to coverage for other conditions.

The effective date of the section is January 1, 2014. This is the date everything goes into effect unless there is a different date specifically defined, and there isn't such a date for the prohibition of exclusions for pre-existing conditions as they apply to adults.

Sorry, but your quotes do not address the policy rates.

I respectfully disagree. A prohibition against the exclusion of pre-existing conditions has been around since 1996, but it only applied to people moving from one group plan to another. That's plenty of time any doubt about the meaning of the quoted definition to have reached the courts. If insurers thought they could evade the prohibition by applying a low rate of reimbursement instead of excluding coverage entirely, there would be reported litigation on the subject, but there isn't. The definition extends the prohibition to any "limitation" of benefits, and cutting the rate of reimbursement is clearly a limitation. If an insurer came to me for advice and asked, "I know I can exclude pre-existing conditions entirely, but I could save a ton of money by just paying them at 50 percent. Can I get away with it?" I would have to say no way. There is a regulation that is not quite on point, but so similar as to make the principle clear. It says that an insurer cannot establish a special lifetime maximum payment for pre-existing conditions because that would be a limitation of benefits.

[Sloop]

Sorry, but your quotes do not address the policy rates.

I respectfully disagree. A prohibition against the exclusion of pre-existing conditions has been around since 1996, but it only applied to people moving from one group plan to another. That's plenty of time any doubt about the meaning of the quoted definition to have reached the courts. If insurers thought they could evade the prohibition by applying a low rate of reimbursement instead of excluding coverage entirely, there would be reported litigation on the subject, but there isn't. The definition extends the prohibition to any "limitation" of benefits, and cutting the rate of reimbursement is clearly a limitation. If an insurer came to me for advice and asked, "I know I can exclude pre-existing conditions entirely, but I could save a ton of money by just paying them at 50 percent. Can I get away with it?" I would have to say no way. There is a regulation that is not quite on point, but so similar as to make the principle clear. It says that an insurer cannot establish a special lifetime maximum payment for pre-existing conditions because that would be a limitation of benefits.

Ok, let me cut to the chase. Are you guaranteeing that two people living in the same city, the same age, etc., etc. -- all things being equal except for --- where one has no pre-existing conditions, and the second person has Leukemia ........ are you saying that their out of pocket expenses for:
A. The policy Premium, and
B. Co-pays and deductibles

will be seamless, i.e., the same?

[yarrow]

Ok, let me cut to the chase. Are you guaranteeing that two people living in the same city, the same age, etc., etc. -- all things being equal except for --- where one has no pre-existing conditions, and the second person has Leukemia ........ are you saying that their out of pocket expenses for:
A. The policy Premium, and
B. Co-pays and deductibles

will be seamless, i.e., the same?

Yes, that's the purpose of the Patient Protection and Affordable Care Act -- the insurance companies have to sell to everyone (of the same age in the same city) at the same price.

So the question arises -- won't people just wait until they get leukemia (or sleep apnea!) and only then buy insurance? That would certainly be a temptation. So we get the individual mandate -- to limit the temptation and encourage people to buy health insurance before they get sick.

Compared to something like Medicare For All, it's hugely complicated and risky. But the very similar system Governor Romney established in Massachusetts in 2006 seems to be working so far.

[-SWS]

But the very similar system Governor Romney established in Massachusetts in 2006 seems to be working so far.

So not only does Romney secretly believe in Obamacare, but it seems he did it first....

[PST]

Ok, let me cut to the chase. Are you guaranteeing that two people living in the same city, the same age, etc., etc. -- all things being equal except for --- where one has no pre-existing conditions, and the second person has Leukemia ........ are you saying that their out of pocket expenses for:
A. The policy Premium, and
B. Co-pays and deductibles

will be seamless, i.e., the same?

The question was about B, the benefit level. It will not be legal for a policy to require different co-pays or deductibles for a condition acquired before getting insurance and a condition acquired afterwards. A person with leukemia would of course have more out-of-pocket expenses than someone who wasn't sick at all, but it wouldn't matter whether the leukemia was diagnosed before or after buying insurance. Co-pays and deductibles have to be the same for treating pre-existing leukemia as for new leukemia.

I believe that A is true as well, but I want to be precise. In the market for individual policies, the system is supposed to create choice for consumers by attracting competition among companies and getting them to offer different levels of coverage. So one person might choose a high-deductible (bronze) policy from Aetna and another might choose a low-deductible (gold) policy from Wellpoint. They wouldn't necessarily have the same premium or benefits. But all of the policies must be equally available to those with pre-existing conditions, and for the same policy, the hypothetical person with leukemia would pay the same as a similarly situated person without it.

[akcpapguy]

First off thanks to everyone who responded to my question. PST I value your opinion highly this forum, however after reading your responses to my question I’m just not convinced by your assessment of the mandate regarding this matter. However I know that you do your research, so I am comfortable to just sit back and wait to see how things unfold. Many of us don’t have the resources or the education (I have a Master’s and I get confused reading legal documents), to evaluate all of the legal wording and referencing relating to the Mandate. This is my largest complaint about this Mandate; every time I read a debate about it both sides are always trying to fit the proverbial “round peg” in the square hole.

Why can’t they just come out and say what they want?

Everybody gets Health Insurance at the SAME price with the SAME reimbursement, the SAME deductible and the SAME treatment?

There I just rewrote the whole Mandate in one short concise sentence! LOL

[ChicagoGranny]

Everybody gets Health Insurance at the SAME price with the SAME reimbursement, the SAME deductible and the SAME treatment?

Freedom is messy and some people just aren't suited for it. My advice to them is to marry a strong woman who will run the household and make all the decisions. (These kinds usually look pretty good and like frequent sex. You can't lose.)

[lazer]

... marry a strong woman who will not run the household and will not make all the decisions. (These kinds usually look pretty good and like frequent sex. You can't lose.)

Sign me up!

edit: Crap! I justed bumped this topic;...

[PST]

Why can’t they just come out and say what they want?

Everybody gets Health Insurance at the SAME price with the SAME reimbursement, the SAME deductible and the SAME treatment?

There I just rewrote the whole Mandate in one short concise sentence! LOL

Shhh! Lawyers need to make a living too!

Seriously, though, I don't agree with the rewriting. I mostly disagree with the same treatment part. The PPACA has almost nothing to say about treatment. It makes big, important changes in health insurance, but it doesn't tell doctors or patients what treatment they should get. That is one of the myths that circulates: that the bill lets the government take control of your healthcare, but there is nothing like that in the bill. Please, anyone who contends otherwise, cite the section so we can talk about it. It does nudge patients in the direction of getting preventive care by requiring that insurance policies cover checkups and certain screening tests with no co-pay or deductible, but different doctors and patients may still make different decisions. Three patients with prostate cancer could end up with surgery, radiation, or watchful waiting, all depending on the decision of doctor and patient. That just isn't what the PPACA is about.

The other disagreement is something I touched on in that last post. People are still going to end up with different premiums and different policy terms. First, most not on Medicare or Medicaid will still be covered by employer-sponsored health insurance plans, not policies they buy themselves. The PPACA sets some minimum standards, but employers will still differ on how much they offer and how much employees have to pay, and employees will still have choices to make like PPO vs. HMO. There can be no discrimination for pre-existing conditions, but that doesn't mean everyone will get or pay the same. Second, even in the individual market, people don't have to buy a one-size-fits-all policy. The act aims to make comparison shopping easier by defining standards for different tiers of coverage. For example (I'm trusting on memory for this) a "gold" policy is one for which independent actuaries calculate that on average the policy will pay 80 percent of all health expenses, leaving 20 percent to co-pays, deductibles, etc. But people will choose different companies and different tiers, so we won't all end up with the same thing.

One last minor item. The term "mandate" is mostly used just for the requirement that people with sufficient income get insurance. I think the three buzzwords most important for understanding the individual insurance market under the PPACA are:

Guaranteed issue: if you apply, the company must enroll you. It can't pick and choose.
Community rating: Premiums for any policy must be the same for everyone of the same age in the same location regardless of health.
Individual mandate: If you earn more than a particular amount (which varies by family size) you must get insurance or pay what Congress calls a penalty and the Chief Justice calls a tax.