When does pre existing condition ban start

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President Donald Trump signed an executive order on Sept. Rather, it is that there are far better solutions available. The challenge of covering people with pre-existing conditions is a function of the way our health-insurance system has evolved over many years — and especially of the fact that it is largely employer-based, voluntary, and distorted by complex subsidies and regulations that favor some insurance purchasers over others.

Since most working Americans get health insurance as a benefit of employment, losing or changing jobs often means losing or changing insurance coverage. As a result, most people are not continuously covered by the same plan throughout their lives. If they move directly from one employer-sponsored health plan to another, the disruption is usually not a problem for reasons laid out below.

But whenever someone, by choice or necessity, leaves employer-sponsored insurance to purchase health insurance on his own, the switch in coverage can present several challenges.

In a voluntary individual insurance market, insurers must have some means of preventing large mismatches between the premiums they take in and the claims they will likely need to pay out. The classic form of such a mismatch is the case of a consumer who waits until he is sick to purchase or enroll in an individual insurance plan.

If an insurer offers coverage to such a person without pricing the expected costs of the enrollee's illness into the premium, the expense of paying out medical claims will almost certainly exceed the premiums collected. The practice will also encourage other people not to buy insurance until they need to draw on it — a problem known as "adverse selection.

It would be the equivalent of purchasing auto insurance only after you've totaled your car — and insurers would obviously go bankrupt if this were their business model. Insurers selling directly to individual consumers use two practices to prevent widespread adverse selection. First, they try to take into account the health status of prospective customers when determining their premiums a process called "underwriting," by which they consider an applicant's age and other demographic factors and, in certain cases, medical history.

Second, in some instances, they deny coverage of pre-existing conditions for a set period of time after a customer enrolls, so that if he buys insurance or changes insurers only after he has already been diagnosed with a costly condition, he cannot immediately use the new coverage to pay for medical claims associated with his existing ailment. Taken together, these two practices have led to the pre-existing condition problem: People who are sick can find themselves without health-care coverage, and without the ability to secure coverage at an affordable price, sometimes through no fault of their own.

From the rhetoric of some politicians, one might think this dilemma lies at the very core of America's health-care crisis. But in fact, the problem is relatively contained.

Senior citizens can get health-care coverage through Medicare; the poor have Medicaid; and most Americans who have employer-based coverage do not run across the "pre-existing condition problem. Pre-existing conditions are not much of an issue in the vastly larger employer-based insurance market for several reasons.

First, job-based plans are implicitly "community rated" products — meaning that everyone who is covered by the same plan is charged more or less the same price. Underwriting of individual patients is therefore minimal, as insurers sell group plans to firms based on the risk profile of the entire work force. The high costs of caring for some workers with diabetes, for instance, are balanced by the relatively low costs associated with their more healthy co-workers. Risk levels in employer plans are also somewhat contained by the plans' very nature, in that only relatively healthy people are likely to show up to work regularly, stay employed, and gain access to job-related insurance benefits.

Of course, these techniques for spreading risk do not always work perfectly. Some smaller firms may have fewer workers across whom an occasional high-cost risk might be spread; in some industries — like automobile manufacturing or coal mining — the balance between new "healthy" workers and older "unhealthy" ones may be unfavorably tipped by demographic and economic factors.

Even within larger firms, there is evidence that employers sometimes reduce cash wages to adjust for the cost of insuring some workers particularly older and more obese ones whose actual health-care expenses are likely to be much higher than average.

Still, on the whole, the sick and the healthy pay roughly the same premiums in job-based plans. And insurers see it as a sustainable business practice, because selling to a group allows for the balancing of high and low risks.

Moreover, in , Congress provided an important protection to workers by making it unlawful for employer-sponsored plans to impose exclusions on pre-existing conditions for workers in continuous group insurance coverage.

This means that if a person stays covered by job-based plans long enough usually six months , he can move from one job to another without fear of losing insurance protection, or of having to wait longer than other new hires before gaining coverage for ailments he may have developed. If a new hire maintained insurance in his old job, his new employer's plan must cover him — even if the worker has developed an expensive medical condition. In theory, this law — called the Health Insurance Portability and Accountability Act or HIPAA — also provided "portability" rights to people moving from job-based plans to individually owned coverage.

The law gave state governments a few options for meeting this mandate: They could establish high-risk pools which, as discussed below, is the approach most states have followed ; they could require that all individual-market health insurers within their states offer insurance to all eligible individuals, without any limits on coverage of pre-existing medical conditions; or they could use their regulatory powers to create a mix of rules that would have similar results.

But unfortunately, none of these approaches has worked well enough, and today many people still end up falling through the cracks. The problem starts with HIPAA's requirement that a worker first exhaust his right to temporary continuous coverage under his former employer's plan through a federal program called COBRA, which lets workers keep buying into their employers' insurance plans, generally for up to 18 months after leaving their jobs before he can enter the individual insurance market without a pre-existing condition exclusion.

Many workers are not aware of this requirement though employers must advise them of it in a written notice ; even if they are, the premiums required to stay in an employer's plan through COBRA are often too high for them to pay.

This is because COBRA premiums must cover both the employer and employee share of costs, and generally provide more expensive comprehensive benefits than individual-market alternatives. And unlike premiums paid in employer-based plans, these COBRA premiums do not receive any tax advantage — making them more expensive still.

As a result, many workers facing this fully loaded "sticker shock" price choose not to pay the premiums, simply hoping for the best until they can find new jobs and new coverage. In so doing, they inadvertently waive their HIPAA rights — leaving themselves vulnerable to exclusions and high costs for pre-existing conditions when they try to buy insurance on their own. But even if a sick person abides by HIPAA's requirements and remains continuously insured — thereby protecting himself from pre-existing condition exclusions in the individual market — nothing in current federal law prevents insurers from charging him more than they charge healthy people.

Insurers are prohibited only from denying coverage for a pre-existing condition altogether; it is quite permissible, however, for insurance providers to charge unaffordable premiums unless an individual state's laws happen to prevent or restrict the practice , thus achieving essentially the same outcome. Likewise, current law and regulations provide no premium protections for persons moving between individual insurance policies. A healthy worker who leaves an employer plan for the individual market might find an affordable plan at first — but if he ever wanted to switch insurers or was forced to by, say, moving to a new state , he would fac e the risk of having his premium recalculated based on a new assessment of his health.

Of course, the fact that the problem of pre-existing condition coverage is limited almost entirely to the individual market does not mean that it pervades that market.

In , at the request of the U. Department of Health and Human Services, health economists Mark Pauly and Bradley Herring examined how people with chronic health conditions, and thus high anticipated health-care expenses, actually fared when seeking insurance in the individual market.

Pauly and Herring found little, if any, evidence that enrollees in poor health generally paid higher premiums for individual insurance. Nor did they find that the onset of chronic conditions is necessarily associated with increased premiums in subsequent years. Existing "guaranteed renewability" requirements in federal and state law already prevent insurers from continuously reclassifying people and the premiums they pay based on health risks.

And most private insurers already provided such protection as standard business practice before they were legally required to do so. But even if the exclusions and prohibitive premiums caused by pre-existing conditions are not a universal problem in the individual insurance market, they clearly affect many Americans. Estimates range from 2 to 4 million, out of a total population of about million people under the age of More important than the sheer number, however, is the fact that many Americans know someone who has faced this situation directly, and fear that they could find themselves in the same boat — which explains the strong public support for changing the way insurance companies treat pre-existing conditions.

Most people find it unacceptable that responsible fellow citizens who have tried to stay insured throughout their lives can suddenly find themselves sick and unable to get adequate coverage. On the other hand, insurers clearly need some way of aligning premiums and risks in order to stay financially solvent. And because the smaller individual market now often operates as a last resort for those lacking better insurance options through employers, insurers must plan for the risk that people seeking individual coverage are doing so because they believe they will need substantial medical attention.

Of course, insurers have incentives to avoid excessive underwriting. For one thing, screening is expensive. For another, if insurers screen too aggressively, they will lose customers whose care would not in fact have been very costly.

Insurance companies balance the benefits of screening against these costs in the individual market no less than in others: Indeed, the most extensive research in this area, by Pauly and Herring, has demonstrated that there is already a great deal of pooling of health risks in the individual market.

But some people clearly still cannot get covered. The question is what should be done for them. The most effective solution would be not heavy-handed regulation, but rather a new insurance marketplace built around truly portable, individually owned insurance. If households, not firms, chose and controlled their own insurance plans, people would no longer face the risks that come with changing coverage based on new employment arrangements.

By carrying the same insurance plan from one job to the next or even through periods with no job at all , individuals would keep their coverage even as their health status changed. Moreover, insurers would have strong incentives to do what they could to keep their enrollees healthy, knowing full well that some of them could be enrolled for many years.

That is how health insurance is supposed to work. But moving to true insurance portability will not be easy. It will require fundamental reform of the tax treatment of health insurance in order to level the playing field between plans owned by employers and those owned by individuals, as well as a reworking of some current insurance regulations.

For now, both reforms face long political odds. They cannot limit benefits for that condition either. Once you have insurance, they can't refuse to cover treatment for your pre-existing condition. A grandfathered individual health insurance policy is a policy that you bought for yourself or your family on or before March 23, that has not been changed in certain specific ways that reduce benefits or increase costs to consumers. The PCIP program provided health coverage options to individuals who were uninsured for at least six months, had a pre-existing condition, and had been denied coverage or offered insurance without coverage of the pre-existing condition by a private insurance company.

Now, thanks to the Affordable Care Act, health insurance plans can no longer deny anyone coverage for their pre-existing condition, and so PCIP enrollees can transition to a new plan outside of the PCIP program.