When I asked last time “What Do You Want to Read” many of you answered you wanted to know more about changes in insurance under the Affordable Care Act [ACA]. (Thanks so much to everyone who made this and other requests!)

“Insurance Reform” is an important element of the law, and is certainly the part we all should care most about as patients. It has many components which I will work through in this and future Fontenotes.

Let’s start with the most important change under the law: the prohibition of pre-existing condition exclusions. This was an enormous development we should all celebrate- because for the most part we all agree this was a good thing- regardless of how we feel about the ACA on the whole. But I will get back to that.

Did you know anyone who was “uninsurable” before the ACA? I certainly did. I will tell you more about my friends “X & Y” in a moment- but first we need to talk about insurance from an industry perspective.

If you are a company and you are going to insure a body of people, what is important is to distribute risk. In any population accidents will happen and scary diagnoses will be made. Fortunately, in a perfect insurance pool the cost to treat the few severely sick or injured people is compensated by all the premiums from the many, many healthy. This makes good business sense.

But what if the “pool” isn’t perfect? As the population shrinks the risk increases… so as a company you want to do everything you can do to minimize that risk. The obvious thing to do is to exclude the sick from your covered population. If you want to do even better, keep out any people who show even a hint that they might become sick in the future. It was that logical progression that gave birth to pre-existing condition exclusions.

Most of you will remember getting insurance in the very recent past- worrying as the company poured over your medical records searching for any indication of current or past illness or injury. For those of you who don’t remember, you were probably insured through a group plan, in which case you remember worrying about losing your job if you or a family member got sick- because your rating raised the insurance cost to your employer.

So that was the way we did insurance before the ACA.  Over decades what we created in this country was an insurance market where only the healthy (and preferably young) were welcome. And although that makes sense from an insurance industry perspective, it had devastating implications for the individuals excluded.

This brings me back to my friends X & Y. To this day they are a healthy, active couple in middle age and in the middle class. Both are busy, successful, self-employed professionals.  But what is not apparent looking at them is that prior to the ACA they were both “uninsurable.” X was diagnosed with MS when she was a young woman (although remaining asymptomatic for more than 20 years) and Y had low level gastrioesophageal reflux, well controlled asthma, and TMJ.

Wait! You are probably thinking that excluding someone with a diagnosis of MS makes some sense- but the guy with mild asthma was uninsurable? Yep. Because what many people did not understand back in “the good old days” was how easy it was to become uninsurable. A common practice in the industry was to exclude anyone with evidence of any three chronic conditions, regardless of how minor. By the way- it was Y’s sore jaw- his TMJ- that was the third and decisive condition! That was all it took to be locked out of the health insurance market.

Well- not entirely. Under another law (HIPAA) states established “High Risk Pools” for people who wanted insurance but were not able to buy it in the regular market. Because it was their only option X & Y jumped into the pool available to them- with monthly premiums of $693.00 for X and $650.00 for Y. Yep. $1,343.00 a month (2007 figures). Not an easy bill for X & Y- but they were the lucky ones in the pre-ACA world. Most people couldn’t even consider paying that much.

Imagine how exciting it was for X&Y- and all the thousands of people like them- when on January 1, 2014 insurance companies were prohibited from excluding people from the market regardless of their health.

Equally important, people like X&Y could not be gouged for their insurance.Everyone pays the same premium for the same plan under the ACA- the cost is determined by a person’s age and zip code- not their medical history.

If this leaves you worrying about the insurance industry- fear not. Let’s go back to where we started. If I am a company insuring everybody I have a really, really big pool. The risk is spread far and wide. And that is where the ACA insurance mandate comes into the formula. The idea behind the law is that if insurance is mandatory, the enormity of the pool including everyone offsets the costs incurred by the sick and the injured.

So if you want one thing to like in the ACA- this is it. And while many people want the law taken away in its entirety, even the mainstream GOP would want to keep the exclusion of pre-existing condition clauses moving forward.

So let’s take a deep breath and be happy for a positive change under the ACA.

And slap X&Y on the back if you see them- and anyone else you know who was uninsurable before… Welcome them in to the pool. We are all swimming together now.

What Does This Mean?

If you are reading this not sure about what I mean by “pre-existing condition exclusions” I am sure you are not alone. Here is how HealthCare.gov explains this part of the law:

Being sick won’t keep you from getting coverage

Your insurance company can’t turn you down or charge you more because of your pre-existing health or medical condition like asthma, back pain, diabetes, or cancer. Once you have insurance, they can’t refuse to cover treatment for your pre-existing condition.
This is true even if you’ve been turned down or refused coverage due to a pre-existing condition in the past.

Medicaid and the Children’s Health Insurance Program (CHIP) also can’t refuse to cover you or charge you more because of your pre-existing condition.

When you get care for a pre-existing condition, you’ll still need to pay any deductibles, copayments, and coinsurance your plan requires. It doesn’t matter whether you’re being treated for a pre-existing or new health condition.