“Pre-existing condition” gets personal: the case of Kevin Drum

Go ahead, libertarians and conservatives: tell me why what ACA repeal would do to Kevin Drum is OK with you.

Kevin Drum explains what would happen to him if ACA were repealed: due to his cancer, he’d be uninsurable. If his current employer folded – not a remote eventuality, in the world of magazine and online journalism – he’d be s.o.l.

Kevin, let us recall, is neither poor nor reckless. He didn’t choose to get cancer. He did choose to have health insurance. Nothing he could have done – short of working for a government or TBTF private outfit – could have protected him from the risk he will face if a Republican is elected President in 2016 and does what he will have promised to do in order to become the Republican nominee.

So, here’s a challenge to my conservative and libertarian readers:  Tell me, if you can, why that would be OK with you.

I promise to publish any literate and coherent reply verbatim, or link to any post elsewhere that answers the challenge.

Update A reader points me to this Megan McArdle post from 2012, which explains in detail how a little-known provision of HIPPA (a law that long pre-existed ACA) would protect someone in the position Kevin would be in should Mother Jones fold. Anyone who has continuously maintained health insurance is, apparently, eligible to buy new insurance without underwriting. That’s not much help to people who, when they lose their jobs, don’t have enough in the bank to keep paying for unsubsidized health insurance. But that’s not Kevin’s situation. Unless some health care wonk tells me otherwise, I’ll count my challenge as having been fully met, and will have to fall back on the other 69,000 reasons Friends Don’t Let Friends Vote Republican.

Second update Harold Pollack says there are more twists and turns. Yes, HIPPA protects someone who has been continuously insured, and who can afford to pay for health insurance without an employer subsidy after he’s lost his job. That would include Kevin. But what that person is protected against is only explicit discrimination in premium or coverage based on his pre-existing condition.  He’s still at the mercy of the individual-insurance market, whose products are often designed with “adverse selection” in mind: since some  healthy people who are unemployed or self-employed or employed without health benefits will decide to go uncovered rather than pay the full cost of health insurance, the individual-insurance market will have a higher share of sick people, and insurers tend to tailor their individual plans accordingly.

In the absence of ACA, insurers could and did exercise many non-underwriting strategies to avoid high-cost individuals or to impose high out-of-pocket costs on these individuals. Some of the most obvious issues included stringent annual and lifetime caps on dollar coverage now abolished under ACA. There were also limitations on benefits now included in ACA’s essential health benefit structure. HIPAA left untouched many aspects of coverage important to cancer patients and others with costly conditions. 

As I noted here, groups such as the American Cancer Society’s Cancer Action Network and the National Multiple Sclerosis Society had good reason to rank among the leading supporters of universal coverage.
So while HIPPA did protect a rather narrow group of relatively well-off people against the specific suckage of “underwriting” based on pre-existing conditions, they were still fully exposed to the general suckage of the individual health insurance market.
So, with that amendment to the question, this column is still open to any ACA opponent who wants to explain why we should be willing to subject ourselves to that sort of risk.

 

 

 

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

13 thoughts on ““Pre-existing condition” gets personal: the case of Kevin Drum”

  1. I'm certain they're all furiously working on it, and any minute now you'll be overwhelmed by the response.

  2. You've biased the question by asking why we should accept a bad result, rather than asking for a libertarian policy which would give a better result. So I'll answer the question you didn't ask.

    Health insurance is really two products: a commitment to pay for medical care for the coming year, and a commitment to absorb future increases in expected costs which become evident to underwriters as a result of things that happened this past year. The appropriate policy solution is to unbundle these two products and sell them separately.

    Now long term insurance is inherently more difficult than short term insurance because it involves long term forecasting of investments (you need to reinvest premiums) and of technology. But some insurers already do that for other insurance markets. In addition, such a product would require considerable regulation to prevent the insurance company from wriggling out of commitments. But such a market would be considerably more free than the market established by the ACA.

    So why can't we already buy this kind of insurance? I have no idea!

    1. The reason that we can't buy this type of insurance is really quite simple.

      First, let's look at the types of insurance that have this sort of premium schedule: Life insurance and disability insurance. In both types of policy, the insurer's downside in dollar terms is pretty well fixed: In the case of life insurance, it's $X. In the case of disability insurance, $Y per month. Note that in the case of disability insurance, the downside of the insurer getting nicked by any loss goes up over time, but its loss exposure (that is, the number of months the insurer will have to pay $Y) goes down since, in most cases, the benefit stops at a certain age. (True story: There were disability policies that provided benefits for long periods if, for instance, the disability was incurred due to an accident rather than a general medical condition such as a heart attack or a stroke. My understanding is that these policies can't be obtained any longer.)

      Now, let's look at health insurance. There's no certain X or Y. And, to the extent that the insurers could reasonably predict an increase in the benefit, that increase, at least historically over the last 20 years or so, was greater than the increase in the value of their investments. The only way an insurance company could have structured such a product would be to have rather immense premiums on young insureds. Since young people are not as highly motivated to get health insurance in any event (they're health and, well, young, after all), this sort of policy would never sell.

      If you look at what was happening to the health insurance market prior to the ACA, it was, just like the mythical "front end, equal premium, policies" you imagine, collapsing. Simply stated, the free market doesn't work. That's not a bug, it's a feature.

  3. I think your libertarian correspondents could still enlighten us on why they'd prefer that the relevant HIPPA provision be abolished, because they surely must oppose this onerous government-imposed requirement placed on the job creators in the insurance industry.

    McArdle's answer is the one that I'd expect: This provision helps people like me, therefore there's no reason to criticize it.

    HIPPA-mandated insurance does have the libertarian benefit of being unaffordable for many, so if people exercise their God-given libertarian right to choose not to buy unaffordable insurance, any resulting catastrophe in their lives is merely an expression of Higher Libertarian Justice.

    Still, the fact that HIPPA distorts the free market in this fashion must be unacceptable, no?

  4. Not quite right. Let me review the COBRA provisions:

    Employee is terminated from employment. Employee has the right to pick up his or her group policy via COBRA. However, the policy premium after 18 months is not necessarily the same as the premium that was charged to the employer for the policy for employee while employee was a member of the group and during the 18 month COBRA period. Note, however, that the federal law only provides COBRA if the employer has 20 or more employees. There may be COBRA benefits available due to state "mini-COBRA" laws, but that availability differs from state to state.

    Alternatively, employer shuts its doors. This actually happened with respect to one of my clients when the employer declared Chapter 7 bankruptcy (a liquidation, not a reorganization). In essence, COBRA didn't kick in because there was no "employer policy" to COBRA with once the employer shut its doors. See here: http://1.usa.gov/1FMXaDO

    The basic concept of the ACA is actually quite simple: Unless you have a true group plan, the government requires that you pick up insurance under a "quasi" group plan, that is, either under the state plans or the federal program. That's why the ACA works for people, such as those like Kevin Drum may become if he loses his job, who have serious pre-existing conditions.

  5. I'm pretty sure neither Megan McArdle, nor any Republican currently in congress, would support all the provisions of the law she references in your update (nor would they support the provisions of COBRA, which have done enormous good). And so we should assume that if we had a Republican President, a Republican Congress, and a Republican Supreme Court (a current given), that that law (passed in a time when Democrats and Republicans worked together) would quickly be history. So the existence of a law that no current Republican would support (and I am guessing no libertarian or conservative would support) is not really evidence of any Republican, or conservative, or libertarian desire to address Kevin's situation.
    So as evidence that conservatives and libertarians care about fixing Kevin's position, I'm not sure Megan McArdle's post holds any weight.
    I'm not sure your challenge has been met. Your challenge was "why that would be OK with you." I guess an answer from McArdle is that there is a law that will continue to exist until Republicans control all of the government, but I was hoping for something a little more principled.

  6. I'm really surprised that you don't have more response to this one. I'm trying to summarize some arguments people I've seen in blog comments make in good faith, even though I don't agree with them.
    Kevin wasn't reckless, but he did take a calculated risk in choosing an enjoyable career in exchange for lower compensation and less security. Many people choose lower pleasure/lower risk options and would avoid Kevin's position as a result of those choices. Why should they be required to pay for Kevin's pleasurable career? Moreover, by eliminating the risk from those more pleasurable careers, you create a distortion in the economy, which will make it more difficult to fill positions which are more onerous – and more necessary to society.

    1. I hope this is intended as parody. Surely you can't mean to say that allowing those who don't choose to be mere cogs in the machine to have secure health insurance would constitute a "distortion," or that writing global-warming-denial press releases for ExxonMobil is "more necessary to society" than doing first-rate journalism.

      1. Or maybe the world would be a better place if more people could work jobs they enjoyed and large companies had to make a lot of their dreary jobs less onerous in order to compete to get employees.

      2. I'll grant you, the part about distortions in the market was, perhaps, a bit over the top. However, I find that the conservatives I know are very judgmental about my choice to go into the humanities. Over the course of my adult life, I've seen the acceptable educational/career route shrink from – get a college education (80's) to "of course you can't find a job majoring in THAT part of STEM!" (starting @ 2010). Law school has also ceased to be a safe route. The lack of compassion for those who lost or were unable to find jobs during the last recession, thereby losing access to health insurance, was really stunning to me. Remember the cheers from the audience during the Republican debate when one candidate was asked about what should happen when people without insurance fall ill? There is a growing meanness of spirit in the U.S. which I find profoundly disturbing.

  7. He could just move to NY – guaranteed issue state since '92. Of course, guaranteed issue and community rating sent our rates through the roof, but we are indeed a state that allows anyone to get insurance. Doesn't CA have some guaranteed issue provisions that would cover Kevin? I think positing the question as you have is a bit simplistic. There are some deeper, more nuanced moral arguments that you have left out. Is it fair to make other, younger, healthy individuals pay more because we have chosen to allow Kevin get health insurance at a community rate? Is it fair to make individuals with little to no health concerns pay astronomical rates because Kevin is in fact sick? Shouldn't Kevin have to pay more for insurance precisely because he is sick? Isn't that how insurance should work? Isn't that how all other insurance works?

  8. Let me throw a different question at you. If we allow everyone to buy insurance and do so at a community rate, does that mean that they should have the opportunity to receive all care at that same equal rate? What if they are Medicaid patients, and our tax dollars are paying for their care? What if they have Hepatitis C, and the cost of their treatment is in excess of 85K? What if paying for all those Hepatitis C patients limits the amount of health funding we have for other patients? what happens when the world’s first cancer cure costs 200K or 500K? Under your rational of equal opportunity insurance, shouldn't all cancer patients receive this care? Or at least won't some making this argument support this notion? What about another moral dimension, what if some of these Hep C patients are likely to use again, and in turn, get Hep C after their cure? Should we give it to them anyway?

  9. i'd be happy to clarify any of my questions if my response is "incoherent." I'm just tired of folks using the moral superiority argument without contemplating the externalities of a certain decision. Believe it or not, I believe ANYONE, regardless of condition, should be able to purchase health insurance, I just think the way that the ACA addresses this problem is wrong. And if you believe that allowing everyone to purchase insurance at a community rate doesn't have consequences, you're living in a dream world.

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