Romney’s Pre-Existing Condition Problem

Here is how Mitt Romney introduced his health care replacement bill during Wednesday night’s GOP Presidential debate in Michigan:

Health care in 30 seconds is a little tough. But let me try. Number one, you return to the states the responsibility for caring for their own uninsured. And you send the Medicaid money back to the states so they can craft their own programs. That’s number one.

Number two, you let individuals purchase their own insurance. Not just getting it through their company. But buy it on their own if they want to, and no longer discriminate against individuals who want to buy their insurance.

You can read my thoughts on solution number one here. Number two is even more interesting because it’s so nonspecific that one can read it as an apt description of the Affordable Care Act Romney wants to repeal or the Massachusetts health care law he championed. Under those programs, individuals and families purchase coverage through exchanges that are not tied to employment and the insurers that participate are prohibited from discriminating against individuals with pre-existing conditions.

But that’s not what Romney has in mind. As he explained in his May health care speech in Ann Arbor, Michigan, he would permit companies to sell policies across state lines and allow residents in say New York to purchase insurance from Nebraska. Since companies will no longer be bound by the market regulations in their home states and could sell insurance to applicants in any other state, they’ll be encouraged to plant themselves in places that have very few requirements and from which the could sell bare-bone subprime policies to the healthiest (and most profitable) beneficiaries. Companies would have little incentive to do business in states that require coverage for such things as cancer screenings or have guaranteed issue protections and sell plans across the country that deny coverage altogether to high-cost cases.

That doesn’t sound like a very good deal for the 129 million Americans with pre-existing conditions. They will have a hard time finding affordable insurance that offers the comprehensive coverage they need. But wait — Romney is offering a safety valve: insurers could “no longer discriminate against individuals who want to buy their insurance,” he explained last night. It’s not entirely clear how this concept could work without a policy that incentivizes younger and healthier applicants to purchase coverage — after all, if beneficiaries are guaranteed insurance, they’ll simply wait to fall ill before purchasing it, increasing costs for responsible applicants who had been paying into the pool their entire lives — but Romney’s Ann Arbor speech may offer a clue: He promises to “Ensure that individuals with preexisting conditions who are continuously covered for a specified period may not be denied coverage.” That sounds a lot different than how Romney described his plan during the debate since his definition of “continuously” and “specified period” could leave many Americans without access to health care insurance.