oversight

Private Health Insurance: Estimates of Individuals with Pre-Existing Conditions Range from 36 Million to 122 Million

Published by the Government Accountability Office on 2012-03-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Requesters




March 2012
             PRIVATE HEALTH
             INSURANCE
             Estimates of
             Individuals with
             Pre-Existing
             Conditions Range
             from 36 Million to
             122 Million




GAO-12-439
                                              March 2012

                                              PRIVATE HEALTH INSURANCE
                                              Estimates of Individuals with Pre-Existing
                                              Conditions Range from 36 Million to 122 Million
Highlights of GAO-12-439, a report to
congressional requesters




Why GAO Did This Study                        What GAO Found
Individuals who buy coverage directly         Hypertension was the most commonly reported medical condition among adults
from a health insurer are often denied        that could result in a health insurer denying coverage, requiring higher-than-
coverage due to a pre-existing                average premiums, or restricting coverage. GAO’s analysis found that about 33.2
condition during a process called             million adults age 19-64 years old, or about 18 percent, reported hypertension in
medical underwriting, which assesses          2009. Individuals with hypertension reported average annual expenditures
an applicant’s health status and other        related to treating the condition of $650, but maximum reported expenditures
risk factors. Beginning January 1,            were $61,540. Mental health disorders and diabetes were the second and third
2014, the Patient Protection and              most commonly reported conditions among adults. Cancer was the condition with
Affordable Care Act (PPACA) prohibits
                                              the highest average annual treatment expenditures—about $9,000.
health insurers in the individual market
from denying coverage, increasing             Depending on the list of conditions used to define pre-existing conditions in each
premiums, or restricting benefits             of the five estimates, GAO found that between 36 million and 122 million adults
because of a pre-existing condition.          reported medical conditions that could result in a health insurer restricting
GAO was asked to examine the effect           coverage. This represents between 20 and 66 percent of the adult population,
of this provision on adults who are 19-       with a midpoint estimate of about 32 percent. The differences among the
64 years old. GAO examined (1) the            estimates can be attributed to the number and type of conditions included in the
most common medical conditions that           different lists of pre-existing conditions. For example, estimate 1, which is the
would cause an insurance company to           lowest estimate, includes adults reporting that they had ever been told they had
restrict or deny insurance coverage for
                                              1 or more of 8 conditions. Estimate 3, the midpoint estimate, includes any
adults and the average annual costs
                                              individual reporting they had one of over 60 conditions. Estimate 5, the highest
associated with these conditions,
(2) estimates of the number of adults         estimate, includes any individual reporting a chronic condition in 2009.
with pre-existing conditions, and (3) the     Estimates of Adults (Age 19 to 64) with Pre-Existing Conditions, 2009
geographic and demographic profile of
adults with pre-existing conditions.
To address these three issues, GAO
(1) identified four recent studies that
narrowly or more broadly identified five
lists of conditions likely to result in
restricted coverage in the individual
insurance market and (2) used the
2009 Medical Expenditure Panel
Survey to generate five separate
estimates, referred to as estimates
1 through 5. There is no commonly
accepted list of pre-existing conditions
because each insurer determines the
conditions it will use for medical
underwriting. We also contacted state
insurance department officials in all
50 states and the District of Columbia        Note: The 95 percent confidence intervals for estimates in this figure are within +/- 1 percent of the estimates themselves.
to confirm information about state            The estimated number of adults with pre-existing conditions varies by state, but
insurance protections that currently          most individuals, 88-89 percent depending on the list of pre-existing conditions
limit or prohibit medical underwriting.       included, live in states that do not report having insurance protections similar to
                                              those in PPACA. Compared to others, adults with pre-existing conditions spend
                                              thousands of dollars more annually on health care, but pre-existing conditions
View GAO-12-439. For more information,        are common across all family income levels.
contact John E. Dicken at (202) 512-7114 or
DickenJ@gao.gov.                              The Department of Health and Human Services reviewed a draft of this report
                                              and had no substantive or technical comments.
                                                                                                                 United States Government Accountability Office
Contents


Letter                                                                                       1
               Background                                                                    6
               Hypertension, Mental Health Disorders, and Diabetes Were the
                 Most Commonly Reported Conditions among Adults, with
                 Average Annual Expenditures for Cancer Nearly $9,000                      10
               Between 36 and 122 Million Adults in 2009 Reported Pre-Existing
                 Conditions, Depending on the Conditions Included in the
                 Estimates                                                                 12
               Pre-Existing Conditions Are Common across States and
                 Demographic Groups, but Prevalence Is Higher for Certain
                 Populations                                                               14
               Agency Comments                                                             26

Appendix I     Scope and Methodology                                                       29



Appendix II    Number of Adults (Age 19-64) with Pre-Existing Conditions
               in States, Low, Midpoint, and High Estimate, 2009                           35



Appendix III   State Protections for Individuals with Pre-Existing Conditions,
               as of September 2011                                                        37



Appendix IV    Comments from the Department of Health and Human Services                   39



Appendix V     GAO Contact and Staff Acknowledgments                                       40



Tables
               Table 1: Information on Studies Used to Estimate the Number of
                        Adults with Pre-existing Conditions                                  5
               Table 2: Estimates of Adults (Age 19-64) Reporting Specified
                        Conditions and Average Expenditures Associated with
                        Each Condition for Those with Any Expenditures, 2009               11
               Table 3: Percent of Adults (Age 19-64) with Pre-Existing Conditions
                        across States, Low, Midpoint, or High Estimate, 2009               16


               Page i                                        GAO-12-439 Pre-Existing Conditions
          Table 4: Percent of Adults (Age 19-64) with Pre-Existing Conditions
                   within Race and Ethnicity Groups for Low, Midpoint, and
                   High Estimates, 2009                                              21
          Table 5: Distribution of All Adults (Age 19-64) and Those with Pre-
                   Existing Conditions across Total Family Income
                   Categories, Low, Midpoint, and High Estimates, 2009               25
          Table 6: Distribution of All Adults (Age 19-64) and Those with Pre-
                   Existing Conditions across Categories of Family Income as
                   Percent of Poverty Level, Low, Midpoint, and High
                   Estimates, 2009                                                   26


Figures
          Figure 1: Estimates of Adults (Age 19-64) with Pre-Existing Medical
                   Conditions, 2009                                                  13
          Figure 2: Percent of Adults (Age 19-64) with Pre-Existing
                   Conditions by Gender, for Low, Midpoint, and High
                   Estimates, 2009                                                   19
          Figure 3: Percent of Adults (Age 19-64) with Pre-Existing
                   Conditions within Age Groups for Low, Midpoint, and
                   High Estimates, 2009                                              20
          Figure 4: Percent of Adults (Age 19-64) with Pre-Existing
                   Conditions within Insurance Coverage Groups for Low,
                   Midpoint, and High Estimates, 2009                                23
          Figure 5: Average Annual Health Care Expenditures for Adults
                   (Age 19-64) and among the Low, Midpoint, and High
                   Estimates of Adults with Pre-Existing Conditions, 2009            24




          Page ii                                      GAO-12-439 Pre-Existing Conditions
Abbreviations

AHRQ              Agency for Healthcare Research and Quality
FPL               federal poverty level
HCERA             Health Care and Education Reconciliation Act of 2010
HHS               Department of Health and Human Services
HIPAA             Health Insurance Portability and Accountability Act of 1998
ICD-9-CM          International Classification of Diseases, Ninth Edition,
                    Clinical Modification
MEPS              Medical Expenditure Panel Survey
PCIP              Pre-Existing Condition Insurance Plan
PPACA             Patient Protection and Affordable Care Act



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Page iii                                               GAO-12-439 Pre-Existing Conditions
United States Government Accountability Office
Washington, DC 20548




                                   March 27, 2012

                                   Congressional Requesters

                                   Americans obtain health insurance coverage through a variety of private
                                   and public sources, but a majority—67 percent of adults as of 2010—rely
                                   on private insurance, most through employer-sponsored group coverage.
                                   Another 16 percent of adults in 2010 had coverage through public
                                   programs, such as Medicare and Medicaid, and about 22 percent were
                                   uninsured. 1, 2 While group health plans and health insurers offering group
                                   coverage may not condition eligibility based on an individual’s health
                                   status, such protections generally do not exist for individuals attempting to
                                   purchase coverage directly through the private individual market, which
                                   accounted for about 14.6 million adults aged 18-64 years old in 2010. 3 In
                                   addition, individuals are at risk of losing the protections of employer-
                                   sponsored group coverage if they become unemployed or retire before
                                   eligibility for Medicare begins at age 65 and they have a break in health
                                   coverage. With certain exceptions, such individuals and any other
                                   individual attempting to purchase coverage in the private individual
                                   market can have coverage denied, offered at a higher-than-average
                                   premium, or offered with a rider that excludes coverage of a pre-existing
                                   condition. A pre-existing condition is a health condition that exists before
                                   someone applies for or enrolls in a new health insurance policy. Each
                                   insurer develops its own list of pre-existing conditions that influences to



                                   1
                                    Medicare is a federal health care program that provides health insurance for those aged
                                   65 and older, certain disabled persons, and persons with end-stage renal disease.
                                   Medicaid is a joint federal-state program that finances health care coverage for certain
                                   low-income individuals.
                                   2
                                    Percentages do not sum to 100 because estimates of coverage types are not mutually
                                   exclusive and individuals can have more than one type of coverage during the year. Data
                                   from the Census Bureau on adults is available for 18-64 year olds. See C. DeNavas-Walt,
                                   B.D. Proctor, and J.C. Smith, U.S. Census Bureau, Current Population Reports, P60-239,
                                   Income, Poverty, and Health Insurance Coverage in the United States: 2010 (Washington,
                                   D.C.: 2011).
                                   3
                                    Individuals not eligible to purchase employer-sponsored group coverage may buy
                                   coverage in the private individual market; these include the self-employed; those whose
                                   employers do not offer health insurance coverage; individuals not in the labor force; early
                                   retirees who no longer have employment-based coverage and are not yet eligible for
                                   Medicare; and individuals who lose their jobs and are either ineligible for or have
                                   exhausted the right to continue their employer-based coverage for 18 months.




                                   Page 1                                                  GAO-12-439 Pre-Existing Conditions
whom and under what terms it offers coverage. Pre-existing conditions
can be conditions that an individual is currently being treated for (such as
heart disease) or past health problems (such as cancer in remission).

With the enactment of the Patient Protection and Affordable Care Act
(PPACA) in March 2010, enrollment in private health insurance could
expand significantly, particularly for individuals and families that do not
have access to group coverage through their employer. 4 PPACA
provisions that could expand such coverage include income-based
subsidies to make coverage more affordable for certain individuals,
penalties for individuals not obtaining coverage, and new insurance
requirements to increase access to coverage, particularly for individuals
with pre-existing conditions. Specifically, beginning January 1, 2014,
health insurers in the individual market will be prohibited from denying
coverage, increasing premiums, or restricting benefits because of a pre-
existing condition. 5

To better understand the potential impact of PPACA, you asked us to
examine the demographics of adults with pre-existing conditions. In this
report, we examine: (1) the most common medical conditions that would
cause an insurance company to restrict or deny insurance coverage for
adults and the average annual costs associated with these conditions,
(2) estimates of the number of adults with pre-existing conditions, and
(3) the geographic and demographic profile of adults with pre-existing
conditions. We define adults as age 19-64 years old in this report
because a PPACA provision prohibiting insurers from denying coverage
or restricting benefits because of a pre-existing condition for individuals
under the age of 19 became effective September 23, 2010, and Medicare
covers individuals 65 and older.




4
 Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by the Health Care and
Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-152, 124 Stat. 1029
(Mar. 30, 2010). For purposes of this report, references to PPACA include the
amendments made by HCERA.
5
 Pub. L. No. 111-148, § 1201, 124 Stat. 154 (adding § 2704 to the Public Health Service
Act (PHSA)). Although a PPACA provision prohibiting denials of coverage or restrictions
on benefits because of a pre-existing condition for individuals under the age of 19 became
effective September 23, 2010, insurers can still vary premium rates based on health status
for these individuals until 2014. See Pub. L. No. 111-148 § 11253 as amended by
§ 10103(e), 124 Stat. 162, 895.




Page 2                                                GAO-12-439 Pre-Existing Conditions
To address these three issues, we identified several recent studies that
listed conditions considered likely to result in restricted coverage in the
individual insurance market and then used the 2009 Medical Expenditure
Panel Survey (MEPS) to analyze the conditions listed in each study in
order to develop estimates of (1) the number of adults reporting and costs
associated with treating specific pre-existing conditions, (2) size of the
total affected adult population with pre-existing conditions, and (3) their
geographic and demographic characteristics. MEPS is a commonly used,
nationally representative, and publicly available panel survey of
Americans; 2009 was the most recent year data were available. 6 It
includes information on medical conditions and the costs associated with
those medical conditions, both self-reported and from a review of medical
events. 7

We identified four recent studies that used different lists of pre-existing
conditions to develop five estimates of the number of affected individuals.
Each of these studies identified a set of conditions that would cause an
insurance company to deny health insurance coverage, offer coverage at
a higher-than-average premium, or offer coverage with restrictions. The
sets of conditions run the continuum from narrow (having one of eight
conditions that would qualify an individual for participation in a high-risk
pool) to broad (reporting any condition considered chronic). 8, 9 Each
insurer separately determines which conditions will result in restricted
coverage in the individual insurance market, so lists of conditions may not
be consistent from insurer to insurer.




6
 A panel survey involves multiple interviews with respondents over time.
7
 During interviews, household respondents are asked about medical events, and after
completing the interview (and obtaining permission), researchers contact a sample of
medical providers by telephone to obtain information that the respondents may not be able
to provide accurately, such as visit dates, diagnosis and procedure codes, charges, and
payments.
8
 High-risk pools are designed for individuals who cannot obtain insurance in the individual
market because of a pre-existing condition, and therefore estimates of individuals
potentially eligible for high-risk pools can serve as a proxy for individuals with pre-existing
conditions.
9
 A chronic condition is defined as one that lasts 12 months or longer and places limits on
self-care, independent living, and social interactions and/or results in the need for ongoing
intervention.




Page 3                                                    GAO-12-439 Pre-Existing Conditions
As shown in table 1, there were important differences across the four
studies, including the conditions and time frames considered, the
populations that the estimates were developed for (e.g., children and
adults under age 65, or solely the uninsured), the data sources used to
develop the estimates, and whether the study included only individuals
treated for a condition during a given year or individuals ever diagnosed
with a condition. We used the set of conditions developed for each study
to generate estimates of adults with pre-existing conditions using a
consistent data source (2009 MEPS) and population (19-64 year olds not
enrolled in Medicare). We assigned each condition list an estimate
number from 1 to 5 in order to more readily identify which set of study
conditions each estimate is based on. For example, the condition list in
the study authored by Harold Pollack is referred to as estimate 1.




Page 4                                       GAO-12-439 Pre-Existing Conditions
Table 1: Information on Studies Used to Estimate the Number of Adults with Pre-existing Conditions

                                                                           Included
                                                        Estimated          conditions           Included
                                                        number of          respondent           conditions
                                                        population         reported as          respondent
                                                        studied with       occurring            reported ever
                                      Population        pre-existing       during the           being
                 Study author         studied           conditions         survey year          diagnosed with        Data source             Data year
                                  a
Estimate 1       Harold Pollack       Uninsured of      4.1 million        No                   Yes                   National Health        2005/2006
                                      any age                                                                         and Nutrition
                                                                                                                      Examination
                                                                                                                            b
                                                                                                                      Survey
             c
Estimate 2       Department of        Age 0-64          50 million         Yes                  Yes                   Medical                       2008
                 Health and                                                                                           Expenditure
                 Human                                                                                                Panel Survey
                          c                                                                                                   d
                 Services                                                                                             (MEPS)
                              e
Estimate 3       Families USA         Age 0-64          57.2 million       Yes                  No                    MEPS                          2007
             c
Estimate 4       Department of        Age 0-64          129 million        Yes                  Yes                   MEPS                          2008
                 Health and
                 Human
                          c
                 Services
                     f
Estimate 5       GAO                  Uninsured of     4.0 million         Yes                  No                    MEPS                          2006
                                      any age in
                                      34 states with
                                      high-risk health
                                      insurance
                                      pools
                                                 Source: GAO analysis.

                                                 Note: High-risk pools are designed for individuals who cannot obtain insurance in the individual
                                                 market because of a pre-existing condition. Therefore, estimates of individuals potentially eligible for
                                                 high-risk pools should be roughly equivalent to those of individuals with pre-existing conditions.
                                                 a
                                                  H. Pollack, “High-Risk Pools for the Sick and Uninsured under Health Reform: Too Little and Thus
                                                 Too Late,” Journal of General Internal Medicine, published online Sept. 2, 2010.
                                                 b
                                                 The National Health and Nutrition Examination Survey is sponsored by the Centers for Disease
                                                 Control and Prevention, an agency within the Department of Health and Human Services (HHS).
                                                 c
                                                  Department of Health and Human Services, “At Risk: Pre-Existing Conditions Could Affect 1 in 2
                                                 Americans: 129 Million People Could Be Denied Affordable Coverage without Health Reform”
                                                 (Washington, D.C.: January 2011). This study produced two separate estimates of individuals with
                                                 pre-existing conditions based on two different condition lists.
                                                 d
                                                 The Medical Expenditure Panel Survey is sponsored by the Agency for Healthcare Research and
                                                 Quality, an agency within HHS.
                                                 e
                                                 Families USA, “Health Reform: Help for Americans with Pre-Existing Conditions” (Washington, D.C.:
                                                 May 2010).
                                                 f
                                                   GAO, Health Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk
                                                 Health Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009).




                                                 Page 5                                                          GAO-12-439 Pre-Existing Conditions
             To describe the geographic and demographic profile of adults with pre-
             existing conditions, we further analyzed data on the low, midpoint, and
             high estimates of adults with pre-existing conditions. To enable us to
             develop estimates of individuals with pre-existing conditions living in
             states reporting insurance protections similar to those that will be offered
             under PPACA in 2014, we updated information on state insurance
             protections previously reported by the Kaiser Family Foundation by
             contacting state insurance department officials in all 50 states and the
             District of Columbia. Appendix I contains a full description of our scope
             and methodology.

             To assess the reliability of the MEPS data, we reviewed the relevant
             documentation, compared our estimates to other published results, and
             interviewed an official at the Agency for Healthcare Research and Quality
             (AHRQ), the federal agency responsible for the MEPS. We determined
             the data are sufficiently reliable for the purposes of our report.

             We conducted this performance audit from July 2011 to March 2012 in
             accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             Individuals who buy coverage directly from a health insurer are often
Background   denied coverage due to a pre-existing condition. We previously reported
             that in the first quarter of 2010, 19 percent of applicants in the individual
             market were denied enrollment and a quarter of insurers had denial rates
             of 40 percent or higher. 10 Similarly, a study by America’s Health
             Insurance Plans reported that in 2008, 15 percent of individual insurance
             applications for adults age 18 through 64 that went through medical




             10
               See GAO, Private Health Insurance: Data on Application and Coverage Denials,
             GAO-11-268 (Washington, D.C.: Mar. 16, 2011). The information is based on data
             collected by Department of Health and Human Services (HHS).




             Page 6                                              GAO-12-439 Pre-Existing Conditions
underwriting were denied coverage. 11 Medical underwriting is the process
conducted by insurers to assess an applicant’s health status and other
risk factors to determine whether and on what terms to offer coverage to
applicants.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)
established consumer protections on access, portability, and renewability
of health insurance coverage. 12 With respect to individuals leaving group
coverage and applying for coverage in the individual market, HIPAA
prohibited health insurers from denying coverage to or imposing any pre-
existing condition exclusion on individuals who

•     have had at least 18 months of prior creditable coverage with no
      break of more than 63 days;

•     have exhausted any available continuation coverage;

•     are uninsured and are not eligible for other group coverage, Medicare,
      or Medicaid; and

•     did not lose group coverage because of the nonpayment of premiums
      or fraud. 13

Unless the practice is prohibited by state law, individuals who do not meet
these HIPAA eligibility criteria can be denied insurance coverage in the
individual market due to a pre-existing condition. Additionally, insurers in
the individual market can accept both HIPAA-eligible and noneligible



11
  America’s Health Insurance Plans’ Center for Policy and Research, Individual Health
Insurance 2009: A Comprehensive Survey of Premiums, Availability, and Benefits
(Washington, D.C.: October 2009). America’s Health Insurance Plans is the national trade
association representing the health insurance industry. According to the study, 84 percent
of applications were medically underwritten. Just over 1 percent of applications were
denied before going through medical underwriting, but those denials were unrelated to the
applicant’s health status.
12
    See Pub. L. No. 104-191, Title I, 110 Stat. 1936, 1939 et. seq.
13
   Pub. L. No.104-191, § 111, 110 Stat. 1978 (adding 2741 to the PHSA). Creditable
coverage is defined for this purpose by §2701(c)(1) of the PHSA as coverage for an
individual under: a group health plan, health insurance, Medicare Part A or B, Medicaid,
TRICARE, the Indian Health Service or a tribal organization, a state health benefits high-
risk pool, the Federal Employees Health Benefits Program, the Peace Corps health
benefit plan, or a public health plan as defined in regulations.




Page 7                                                   GAO-12-439 Pre-Existing Conditions
applicants but offer coverage at a premium that is higher than the
standard rate based on the presence of a pre-existing condition. A
medical condition reported by an individual is considered a pre-existing
condition by the insurer if it exists at the time the individual applies for
coverage or if an individual was treated for or diagnosed with the
condition in the past.

States, which have the responsibility for regulating private insurance,
have in some instances required protections for individuals with pre-
existing conditions. State protections include the following:

•   Guaranteed issue requirements prohibit the denial of coverage to
    individuals based on pre-existing conditions. In some states, all
    products must be guaranteed issue, while in other states guaranteed
    issue requirements are only applicable to some products or to some
    individuals, for instance individuals with 12 months of continuous
    coverage, or to some standard products, such as a basic health plan.

•   An insurer of last resort law requires one insurer in the state to issue
    products to individuals regardless of pre-existing conditions.

•   Rating restrictions prohibit insurers in the individual market from
    adjusting an individual’s health insurance premiums based on an
    individual’s health status.
    •    Two types of rating restrictions are pure community rating and
         adjusted community rating. Under the former, insurers may not
         adjust premiums due to health status, age, or gender; under the
         latter, they may adjust premiums according to characteristics such
         as gender or age, depending on the state.

    •    Rate bands limit the extent to which premiums can vary based on
         an individual’s health status, for example, to a certain percentage
         of the average premium.
•   Limitations on the number of years a health insurer can look back at
    an individual’s health history when making its determination as to
    whether and at what price to offer coverage.




Page 8                                          GAO-12-439 Pre-Existing Conditions
•     High-risk health insurance pools that provide coverage to individuals
      whose health status, including the presence of pre-existing conditions,
      limits their access to coverage in the private individual health
      insurance market. 14 High-risk insurance pools—typically publicly
      subsidized, state-run nonprofit associations—often contract with a
      private health insurer to administer the pool and offer a range of
      health plan options.

Until 2014, PPACA requires that individuals who have pre-existing
conditions and have been uninsured for 6 months be offered the
opportunity to enroll in a temporary national high-risk pool program,
known as the Pre-Existing Condition Insurance Plan (PCIP). 15 PCIP will
close at the end of 2013, which is when PPACA will begin to require
insurers to accept every individual who applies for coverage, regardless
of factors related to health status. States were given the option of running
their own PCIP with federal funding, or allowing the Department of Health
and Human Services (HHS) to administer the PCIP in their state. Twenty-
seven states elected to administer a PCIP for their residents, while
23 states and the District of Columbia opted to allow HHS to administer
their PCIPs. Despite similar goals, PCIP and state high-risk pools are
separate entities and differ from one another in certain ways. 16

Beginning in 2014, PPACA prohibits insurers in the private individual
market from denying coverage, charging higher-than-average premiums,
or restricting coverage to individuals based on the individual’s health
status. PPACA will, therefore, make guaranteed issue and adjusted
community rating national requirements.




14
  Thirty-five states have state high-risk pools: Alabama, Alaska, Arkansas, California,
Colorado, Connecticut, Florida, Idaho, Indiana, Illinois, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Minnesota, Mississippi, Missouri, Montana, Nebraska, New
Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South
Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin,
and Wyoming.
15
    Pub. L. No. 111-148, § 1101, 124 Stat. 141.
16
  See GAO, Pre-Existing Condition Insurance Plans: Program Features, Early Enrollment
and Spending Trends, and Federal Oversight Activities, GAO-11-662 (Washington, D.C.:
July 27, 2011).




Page 9                                               GAO-12-439 Pre-Existing Conditions
                        Hypertension was the most commonly reported medical condition among
Hypertension, Mental    adults during 2009 that could result in a health insurer denying coverage,
Health Disorders, and   requiring higher-than-average premiums, or restricting coverage with an
                        exclusionary rider. 17 Our analysis of MEPS data found that about
Diabetes Were the       33.2 million adults age 19-64 years old, or about 18 percent, reported
Most Commonly           hypertension in 2009. Individuals with hypertension reported average
Reported Conditions     annual expenditures of $650 related to treating the condition, though the
                        maximum expenditures reported were $61,540. 18 (See table 2.) Mental
among Adults, with      health disorders and diabetes were the second and third most commonly
Average Annual          reported medical conditions by adults age 19-64 years old. 19 About
                        19.0 million adults, or 10.3 percent, reported mental health disorders, and
Expenditures for        about 11.9 million adults, or about 6.4 percent, reported diabetes.
Cancer Nearly $9,000    Average annual expenditures for these conditions were $1,757 for mental
                        health disorders and $1,782 for diabetes. Cancer was the condition with
                        the highest average annual treatment expenditures, nearly $9,000 per
                        adult. Individuals may have multiple medical conditions, which would
                        increase their total expenditures.




                        17
                         Estimates are of individuals who reported that these conditions were the cause of a
                        medical event, the reason for a disability day, or bothered a respondent during 2009.
                        18
                          Expenditure information is reported only for those with expenditures greater than $0 and
                        includes expenditures from all sources for hospital inpatient stays, emergency room visits,
                        outpatient department visits, office-based medical provider visits, and prescribed
                        medicines. Expenditure information does not include amounts for dental expenses and
                        other medical expenses, such as durable and nondurable supplies, medical equipment,
                        eyeglasses, and ambulance services because these items could not be linked to specific
                        conditions. We also did not include expenditures for home health care.
                        19
                          Mental health disorders are defined as mood and psychotic disorders, which include
                        conditions such as depression, bipolar disorder, and schizophrenia.




                        Page 10                                                GAO-12-439 Pre-Existing Conditions
Table 2: Estimates of Adults (Age 19-64) Reporting Specified Conditions and Average Expenditures Associated with Each
Condition for Those with Any Expenditures, 2009

                                                                                     Percentage                 Average annual             Maximum
                                                                                    range based                   expenditures          expenditures
                                          Range based on                           on 95 percent                     related to            related to
                       Estimate                 95 percent              Percentage   confidence                      condition             condition
                       (number)         confidence interval               estimate       interval                     (dollars)             (dollars)
Total population     184,648,891 176,372,785 – 192,924,998                    100.0%                       —                      —               —
Hypertension          33,207,272    31,145,377 – 35,269,167                        18.0          17.2 – 18.8                    $650         $61,540
Mental health
          a
disorders             18,995,244    17,516,845 – 20,473,642                        10.3           9.7 – 10.9                $1,757           $98,058
Diabetes              11,899,811    11,007,195 – 12,792,427                         6.4             6.0 – 6.9               $1,782           $66,007
Asthma                10,047,807     9,177,963 – 10,917,652                         5.4             5.0 – 5.9               $1,234           $63,003
            b
Arthritis              9,518,122     8,513,144 – 10,523,099                         5.2             4.7 – 5.7               $1,875           $78,617
Chronic
obstructive
                                                                                                                                    c
pulmonary disease      9,091,824      8,305,480 – 9,878,167                         4.9             4.5 – 5.3              $1,423           $172,583
Cancer
(excluding skin)       4,150,263      3,588,601 – 4,711,924                         2.3             2.0 – 2.5               $8,955          $294,473
Rheumatoid
arthritis              3,041,838      2,621,846 – 3,461,831                         1.7             1.4 – 1.9               $2,691           $39,228
Heart attack
(myocardial
infarction)            2,056,226      1,678,883 – 2,433,568                         1.1             0.9 – 1.3               $4,013           $53,666
                                                                                                                                    c
Stroke                 1,291,310      1,008,677 – 1,573,943                         0.7             0.6 – 0.9              $6,224           $109,324
                                        Source: GAO analysis of Medical Expenditure Panel Survey (MEPS).

                                        Notes: Adults are defined as individuals age 19-64. Adults with Medicare coverage were excluded.
                                        Estimates are of individuals who reported that these conditions were the cause of a medical event,
                                        the reason for a disability day, or bothered a respondent during 2009. Estimates were generated only
                                        for conditions with a cell size of more than 100. Expenditure information is reported only for those with
                                        expenditures greater than $0 and includes expenditures from all sources for hospital inpatient stays,
                                        emergency room visits, outpatient department visits, office-based medical provider visits, and
                                        prescribed medicines. Expenditure information does not include amounts for dental expenses and
                                        other medical expenses, such as durable and nondurable supplies, medical equipment, eyeglasses,
                                        and ambulance services because these items could not be linked to specific conditions. We also did
                                        not include expenditures for home health care.
                                        a
                                         Mental health disorders are defined as mood and psychotic disorders, which include conditions such
                                        as depression, bipolar disorder, and schizophrenia.
                                        b
                                            Arthritis includes osteoarthritis, rheumatoid arthritis, and infective arthritis.
                                        c
                                         The relative standard error is greater than or equal to 30 percent. Relative standard error is the
                                        proportion of the standard error divided by the estimate itself.




                                        Page 11                                                                 GAO-12-439 Pre-Existing Conditions
                         The number of adults reporting specific conditions in any given year does
                         not include all adults who may have had that condition in the past. For
                         instance, there are many individuals who may have had cancer in the
                         past who would not report cancer in a given year. Therefore, the number
                         of adults who have ever had cancer is higher than the approximately
                         4.2 million reporting cancer in 2009. About 11 million adults, or
                         6.0 percent, reported ever being told by a health professional that they
                         had cancer. Health insurers commonly look at both current medical
                         conditions and conditions an individual was treated for or diagnosed with
                         in the past when making a decision whether and at what price to offer
                         health insurance coverage.


                         Depending on the list of conditions used to define pre-existing conditions
Between 36 and 122       in each of five estimates, we found that between 36 million and
Million Adults in 2009   122 million adults (age 19-64) reported having medical conditions in 2009
                         that could result in a health insurer denying coverage, requiring higher-
Reported Pre-Existing    than-average premiums, or restricting coverage with an exclusionary rider
Conditions,              (see fig. 1). This represents from 20 to 66 percent of the adult population,
Depending on the         with a midpoint estimate of 32 percent.

Conditions Included
in the Estimates




                         Page 12                                       GAO-12-439 Pre-Existing Conditions
Figure 1: Estimates of Adults (Age 19-64) with Pre-Existing Medical Conditions,
2009




Notes: Information on the conditions included in each estimate is detailed in appendix I. Estimate 1 is
based on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick and Uninsured
Under Health Reform: Too Little and Thus Too Late,” in the Journal of General Internal Medicine
(published online on September 2, 2010). Estimates 2 and 4 are based on the methodologies in the
Department of Health and Human Services report “At Risk: Pre-Existing Conditions Could Affect 1 in
2 Americans: 129 Million People Could Be Denied Affordable Coverage without Health Reform”
(Washington, D.C.: January 2011). Estimate 3 is based on the methodology in the Families USA
report “Health Reform: Help for Americans with Pre-Existing Conditions,” published in May 2010.
Estimate 5 is based on the methodology used in the GAO report Health Insurance: Enrollment,
Benefits, Funding, and Other Characteristics of State High-Risk Health Insurance Pools,
GAO-09-730R (Washington, D.C.: July 22, 2009). The 95 percent confidence intervals for estimates
in this figure are within +/- 1 percent of the estimates themselves.


The differences among the estimates can be attributed to the number and
type of conditions included in the different lists of pre-existing conditions.
For example, estimate 1, which is the lowest estimate, includes adults
reporting that they had ever been told they had 1 or more of 8 conditions.
All 8 conditions were designated as priority conditions by AHRQ because
of the conditions’ prevalence, expense, or relevance to policy. 20
Estimate 3, the midpoint estimate, includes any individual who had one of



20
 The eight conditions are: angina pectoris, cancer, congestive heart failure, diabetes,
emphysema, heart attack (myocardial infarction), other heart disease, and stroke.




Page 13                                                        GAO-12-439 Pre-Existing Conditions
                      over 60 conditions commonly used to determine eligibility in state high-
                      risk pools. Estimate 5, the highest estimate, includes any individual
                      reporting they had experienced any condition considered chronic during
                      2009. 21 The list of chronic conditions used for this estimate included 417
                      separate conditions. See appendix I for information on the list of
                      conditions included in each estimate.


                      The number of adults with pre-existing conditions varies by state, but
Pre-Existing          most individuals with pre-existing conditions live in states that report not
Conditions Are        having insurance protections similar to PPACA. Certain groups had
                      higher rates of pre-existing conditions than others, including women,
Common across         whites, and those with public insurance. Compared to others, adults with
States and            pre-existing conditions spend thousands of dollars more annually on
Demographic Groups,   health care, but pre-existing conditions are common across all family
                      income levels.
but Prevalence Is
Higher for Certain
Populations




                      21
                        A chronic condition is defined as a condition that lasts 12 months or longer and meets
                      one or both of the following tests: (a) it places limitations on self-care, independent living,
                      and social interactions; and (b) it results in the need for ongoing intervention with medical
                      products, services, and special equipment. Examples of chronic conditions include
                      malignancies, diabetes, most forms of mental illness, hypertension, many forms of heart
                      disease, and congenital anomalies. Nonchronic conditions include conditions such as
                      infections, pregnancy, many neonatal conditions, nonspecific symptoms, and injuries. We
                      determined which conditions were considered chronic by using the Healthcare Cost and
                      Utilization Project’s Chronic Care Indicator, which categorizes medical conditions as either
                      chronic or nonchronic conditions. Out of a total of 1,019 3-digit International Classification
                      of Diseases, Ninth Edition, Clinical Modification (ICD-9-CM) codes, we identified 417 as
                      chronic conditions. ICD-9-CM is a commonly used system to classify and code medical
                      conditions.




                      Page 14                                                   GAO-12-439 Pre-Existing Conditions
The Number of Adults with   We found that the percentage of adults with pre-existing conditions varies
Pre-Existing Conditions     among states. We analyzed data from the 35 states where MEPS
Varies by State, but Most   generated a reliable estimate. 22 Our low estimate (estimate 1) ranged
                            from 17 percent in New York and New Jersey to 25 percent in Ohio. For
Adults with Pre-Existing
                            the midpoint estimate (estimate 3), the range was from 27 percent in
Conditions Live in States   Florida to 47 percent in Kentucky. For the high estimate (estimate 5), the
That Report Not Having      range was from 58 percent in Georgia to 75 percent in Kentucky and
Insurance Protections       Massachusetts. (See table 3). For population estimates for the 35 states,
Similar to PPACA            see appendix II.




                            22
                             Due to insufficient sample sizes, MEPS data could not be used to provide estimates for
                            15 states and the District of Columbia. The 15 states are Alaska, Delaware, Idaho, Maine,
                            Montana, North Dakota, Nebraska, New Hampshire, New Mexico, Nevada, Rhode Island,
                            South Dakota, Vermont, Wyoming, and West Virginia.




                            Page 15                                               GAO-12-439 Pre-Existing Conditions
Table 3: Percent of Adults (Age 19-64) with Pre-Existing Conditions across States,
Low, Midpoint, or High Estimate, 2009

                                         Low:          Midpoint:              High:
State                               estimate 1        estimate 3         estimate 5
All adults                                  20                32                  66
Alabama                                     —                  —                  69
Alaska                                      —                  —                  —
Arizona                                     —                 33                  65
Arkansas                                    —                  —                  66
California                                  18                29                  60
Colorado                                    —                  —                  68
Connecticut                                 —                  —                  71
Delaware                                    —                  —                  —
District of Columbia                        —                  —                  —
Florida                                     18                27                  60
Georgia                                     21                32                  58
Hawaii                                      —                  —                  66
Idaho                                       —                  —                  —
Illinois                                    18                33                  68
Indiana                                     —                 36                  70
Iowa                                        —                  —                  74
Kansas                                      —                  —                  67
Kentucky                                    —                 47                  75
Louisiana                                   —                  —                  72
Maine                                       —                  —                  —
Maryland                                    —                  —                  63
Massachusetts                               —                 35                  75
Michigan                                    21                41                  74
Minnesota                                   —                  —                  64
Mississippi                                 —                  —                  74
Missouri                                    —                 36                  70
Montana                                     —                  —                  —
Nebraska                                    —                  —                  —
Nevada                                      —                  —                  —
New Hampshire                               —                  —                  —
New Jersey                                  17                30                  71
New Mexico                                  —                  —                  —
New York                                    17                31                  64




Page 16                                            GAO-12-439 Pre-Existing Conditions
                                                          Low:              Midpoint:              High:
 State                                               estimate 1            estimate 3         estimate 5
 North Carolina                                                  21                32                  63
 North Dakota                                                     —                 —                  —
 Ohio                                                            25                35                  69
 Oklahoma                                                         —                 —                  61
 Oregon                                                           —                 —                  66
 Pennsylvania                                                    20                34                  69
 Rhode Island                                                     —                 —                  —
 South Carolina                                                   —                 —                  60
 South Dakota                                                     —                 —                  —
 Tennessee                                                        —                30                  62
 Texas                                                           18                30                  63
 Utah                                                             —                 —                  68
 Vermont                                                          —                 —                  —
 Virginia                                                        19                30                  63
 Washington                                                       —                30                  71
 West Virginia                                                    —                 —                  —
 Wisconsin                                                        —                 —                  64
 Wyoming                                                          —                 —                  —
Source: GAO analysis of 2009 Medical Expenditure Panel Survey (MEPS).

Notes: Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for the
Sick and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of General
Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the methodology
in the Families USA report “Health Reform: Help for Americans with Pre-Existing Conditions,”
published in May 2010. Estimate 5 is based on the methodology used in the GAO report Health
Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). The 95 percent confidence
intervals for estimates in this table are within +/- 3 percent of the estimates themselves. Due to
insufficient sample sizes, MEPS data could not be used to provide any estimates for 15 states and
the District of Columbia. Dashes in the table indicate that the sample size was not sufficient to
produce an estimate.


We estimate that 88-89 percent of adults with pre-existing conditions live
in states without insurance protections similar to the PPACA provisions,
which will become effective in 2014. We classified states as having
protections similar to PPACA if the state reported having (1) a guaranteed
issue requirement for some or all products in the individual insurance
market and (2) pure or adjusted community rating. 23 The only five states


23
  Guaranteed issue, pure community rating, and adjusted community rating are defined
on pages 6-7.




Page 17                                                                 GAO-12-439 Pre-Existing Conditions
                           reporting such protections are Maine, Massachusetts, New Jersey, New
                           York, and Vermont.

                           While the majority of states do not offer protections similar to what will be
                           required nationally in 2014, many states do offer some protection to
                           individuals with pre-existing conditions. Insurance department officials in
                           12 states reported having a guaranteed issue requirement for some or all
                           products in the individual insurance market. Eight states reported either
                           pure or adjusted community rating requirements. Appendix III shows the
                           various state protections for individuals with pre-existing conditions in the
                           50 states and the District of Columbia.


Pre-Existing Conditions    Regardless of the list of conditions used to generate the estimates, we
Are More Common Among      found that more women reported a pre-existing condition than men.
Women, Whites, and Those   Based on the different definitions of pre-existing conditions we used, from
                           21 to 72 percent of women reported a pre-existing condition in 2009. 24
with Public Insurance
                           From 18 to 59 percent of men reported a pre-existing condition. The
                           midpoint estimate for women and men was 37 percent and 28 percent,
                           respectively. (See fig. 2.)




                           24
                             Pregnancy was not considered a pre-existing condition in any of the studies we
                           reviewed.




                           Page 18                                               GAO-12-439 Pre-Existing Conditions
Figure 2: Percent of Adults (Age 19-64) with Pre-Existing Conditions by Gender, for
Low, Midpoint, and High Estimates, 2009




Note: Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick
and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of General
Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the methodology
in the Families USA report “Health Reform: Help for Americans with Pre-Existing Conditions,”
published in May 2010. Estimate 5 is based on the methodology used in the GAO report Health
Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Information on the conditions
included in each estimate is detailed in appendix I. The 95 percent confidence intervals for estimates
in this figure are within +/- 1 percent of the estimates themselves.


We found that the prevalence of pre-existing conditions among adults
increases with age (see fig. 3). In the 55- to 64-year-old age group, from
43 (low estimate) to 84 percent (high estimate) of adults reported a pre-
existing condition that would cause an insurance company to deny
coverage, offer coverage at a higher-than-average rate, or restrict
coverage. In contrast, from 6 percent (low estimate) to 45 percent (high
estimate) of 19-24 year olds (the youngest age group) reported a pre-
existing condition. The midpoint estimate for 55-64 year olds was
48 percent, as compared to a midpoint estimate of 19 percent for
19-24 year olds.



Page 19                                                       GAO-12-439 Pre-Existing Conditions
Figure 3: Percent of Adults (Age 19-64) with Pre-Existing Conditions within Age
Groups for Low, Midpoint, and High Estimates, 2009




Note: Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick
and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of General
Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the methodology
in the Families USA report “Health Reform: Help for Americans with Pre-Existing Conditions,”
published in May 2010. Estimate 5 is based on the methodology used in the GAO report Health
Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Information on the conditions
included in each estimate is detailed in appendix I. The 95 percent confidence intervals for estimates
in this figure are within +/- 3 percent of the estimates themselves.


Asian and Pacific Islanders and Hispanics have the lowest reported rates
of pre-existing conditions in each estimate, significantly lower than the
rate seen across all adults. For example, for the midpoint estimate,
15 percent of Asian and Pacific Islanders reported a pre-existing
condition, compared to 32 percent of all adults. In two of three estimates
(the low and high estimates), white adults are slightly more likely to report
a pre-existing condition than the adult population as a whole. This
difference was statistically significant, but the difference was not
statistically significant for the midpoint estimate. (See table 4.)




Page 20                                                       GAO-12-439 Pre-Existing Conditions
Table 4: Percent of Adults (Age 19-64) with Pre-Existing Conditions within Race and
Ethnicity Groups for Low, Midpoint, and High Estimates, 2009

                                                             Low:               Midpoint:        High:
                                                        estimate 1             estimate 3   estimate 5
                                                      (percentage)           (percentage) (percentage)
    All adults                                                     20                   32             66
    Asian/Pacific Islander, non-Hispanic                           11                   15             52
    Hispanic                                                       13                   26             51
    Black, non-Hispanic                                            19                   34             59
    White, non-Hispanic                                            22                   35             72
                             a                                      b
    Other, non-Hispanic                                                                 42             67
Source: GAO analysis of Medical Expenditure Panel Survey (MEPS).

Notes: Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for the
Sick and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of General
Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the methodology
in the Families USA report “Health Reform: Help for Americans with Pre-Existing Conditions,”
published in May 2010. Estimate 5 is based on the methodology used in the GAO report Health
Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Information on the conditions
included in each estimate is detailed in appendix I. The 95 percent confidence intervals for estimates
in this table are within +/- 6 percent of the estimates themselves.
a
Other, non-Hispanic includes American Indians, Alaskan Natives, and individuals identifying with
multiple, non-Hispanic races.
b
Sample size was insufficient to generate a reliable estimate.


Compared to individuals with other types of insurance coverage,
uninsured adults and those with private individual insurance have the
lowest reported rates of pre-existing conditions (see fig. 4). The lower
reporting of pre-existing conditions among the uninsured, in part, may
reflect the fact that they are less likely than the insured to receive timely
preventive care and some common health problems such as
hypertension and diabetes often go undetected without routine checkups.
In addition, the uninsured are also less likely to have regular preventive
care, including cancer screenings. The lower reporting of pre-existing
conditions among those with private individual insurance may be a
reflection of the fact that insurers try to limit the number of people with
pre-existing conditions that they accept into their plan. 25 The greatest
protections for individuals with pre-existing conditions exist in employer-


25
  Due to insufficient sample sizes, we were only able to generate an estimate of
individuals in the private individual market reporting pre-existing conditions for the high
estimate (estimate 5).




Page 21                                                                 GAO-12-439 Pre-Existing Conditions
sponsored group insurance and public insurance programs, which are the
groups that reported the highest rates of pre-existing conditions. 26 As
noted previously, group insurance plans are not allowed to deny
insurance coverage or increase an individual’s premiums based on health
status. Such protections may encourage individuals in employer group
coverage or government insurance to maintain their coverage should they
be diagnosed with certain medical conditions. We recently reported that
research has consistently found that after a health diagnosis, workers
with employer-sponsored coverage were less likely to leave a job or
reduce their hours compared to workers who did not rely on their
employer for health coverage. 27




26
  Public insurance programs include Medicaid and military health coverage. For the
purposes of our report, we excluded individuals with Medicare from our analysis.
27
  GAO, Health Care Coverage: Job Lock and the Potential Impact of the Patient
Protection and Affordable Care Act, GAO-12-166R (Washington, D.C.: Dec. 15, 2011).




Page 22                                               GAO-12-439 Pre-Existing Conditions
Figure 4: Percent of Adults (Age 19-64) with Pre-Existing Conditions within
Insurance Coverage Groups for Low, Midpoint, and High Estimates, 2009




Note: Public insurance category includes Medicaid and military health coverage. Estimate 1 is based
on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick and Uninsured Under
Health Reform: Too Little and Thus Too Late,” in the Journal of General Internal Medicine (published
online on September 2, 2010). Estimate 3 is based on the methodology in the Families USA report
“Health Reform: Help for Americans with Pre-Existing Conditions,” published in May 2010. Estimate 5
is based on the methodology used in the GAO report Health Insurance: Enrollment, Benefits,
Funding, and Other Characteristics of State High-Risk Health Insurance Pools, GAO-09-730R
(Washington, D.C.: July 22, 2009). Estimates are provided only where there was sufficient sample
size to generate a reliable estimate. The 95 percent confidence intervals for estimates in this figure
are within +/- 7 percent of the estimates themselves.
a
 Only the high estimate for individuals with private, individual insurance had sufficient sample size to
generate a reliable estimate.




Page 23                                                         GAO-12-439 Pre-Existing Conditions
Adults with Pre-Existing                Adults with pre-existing conditions, on average, spend thousands of
Conditions Spend                        dollars more for all health care—between $1,504 and $4,844 more per
Thousands of Dollars More               year—than other adults. Based on the set of conditions included in
                                        estimate 1, which included the smallest number of individuals with pre-
Per Year on Health Care                 existing conditions, average annual health care expenditures were $8,535
Than Other Adults, but                  in 2009, compared to $3,691 for all adults (see fig. 5). 28 The average
Pre-Existing Conditions                 expenditures for the midpoint estimate (estimate 3) were $7,296 and the
Are Common across All                   average expenditures for the high estimate (estimate 5) were $5,195.
Family Income Levels                    Average medical expenditures among those with pre-existing conditions
                                        decreased as the number of people in the estimate reporting a pre-
                                        existing condition increased. As more individuals are included in the
                                        estimate, it is likely that the average severity of the medical conditions
                                        decreases, thus decreasing the average expenditure estimate.

Figure 5: Average Annual Health Care Expenditures for Adults (Age 19-64) and among the Low, Midpoint, and High Estimates
of Adults with Pre-Existing Conditions, 2009




                                        Note: Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick
                                        and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of General
                                        Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the methodology
                                        in the Families USA report “Health Reform: Help for Americans with Pre-Existing Conditions,”
                                        published in May 2010. Estimate 5 is based on the methodology used in the GAO report Health
                                        Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
                                        Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Information on the conditions
                                        included in each estimate is detailed in appendix I. The 95 percent confidence intervals for estimates
                                        in this figure are within +/- 8 percent of the estimates themselves.




                                        28
                                          Annual expenditures on health care included expenditures on any medical condition
                                        during the year. Individuals with pre-existing conditions can have multiple medical
                                        conditions.




                                        Page 24                                                       GAO-12-439 Pre-Existing Conditions
The distribution of adults across income groups, whether measured by
total family income or income as a share of the federal poverty level, is
similar, regardless of pre-existing condition status (see tables 5 and 6).
We found that the average annual family income for adults with pre-
existing conditions was between $64,000 and $71,000, as compared to
the average family income of all adults, which is about $69,000.

Table 5: Distribution of All Adults (Age 19-64) and Those with Pre-Existing
Conditions across Total Family Income Categories, Low, Midpoint, and High
Estimates, 2009

                                                                   Adults with pre-existing conditions
                                                                              (percentage)
                                       All adults                         Low:      Midpoint:      High:
                                    (percentage)                     estimate 1    estimate 3 estimate 5
 Under $25,000                                     21                        25            25             21
 $25,000-$49,999                                   24                        23            24             23
 $50,000-$74,999                                   19                        18            18             19
 $75,000-$99,999                                   14                        14            14             14
 $100,000 and above                                22                        21            19             23
 Total                                            100                      100            100            100
Source: GAO analysis of Medical Expenditure Panel Survey (MEPS).

Notes: Income includes annual earnings from wages salaries and other sources including: bonuses,
tips, child support payments, Social Security, worker’s compensation, veterans’ payments, and
welfare payments from public assistance and related programs. It does not include tax refunds and
capital gains. Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for
the Sick and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of
General Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the
methodology in the Families USA report “Health Reform: Help for Americans with Pre-Existing
Conditions,” published in May 2010. Estimate 5 is based on the methodology used in the GAO report
Health Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Total may be greater than
100 percent because of rounding. The 95 percent confidence intervals for estimates in this table are
within +/- 2 percent of the estimates themselves.




Page 25                                                                  GAO-12-439 Pre-Existing Conditions
                  Table 6: Distribution of All Adults (Age 19-64) and Those with Pre-Existing
                  Conditions across Categories of Family Income as Percent of Poverty Level, Low,
                  Midpoint, and High Estimates, 2009

                                                                                     Adults with pre-existing conditions
                                                                                                (percentage)
                   Income as a percentage                          All Adults             Low:     Midpoint:        High:
                   of FPL                                       (percentage)         estimate 1   estimate 3   estimate 5
                   Less than100%                                               13            15          15            12
                   100 to 199%                                                 16            16          17            15
                   200 to 399%                                                 30            28          30            29
                   Greater than or equal to 400%                               41            42          38            44
                   Total                                                     100           100          100          100
                  Source: GAO analysis of Medical Expenditure Panel Survey (MEPS).

                  Notes: Income includes annual earnings from wages salaries and other sources including: bonuses,
                  tips, child support payments, Social Security, worker’s compensation, veterans’ payments, and
                  welfare payments from public assistance and related programs. It does not include tax refunds and
                  capital gains. Estimate 1 is based on the methodology in Harold Pollack’s article “High-Risk Pools for
                  the Sick and Uninsured Under Health Reform: Too Little and Thus Too Late,” in the Journal of
                  General Internal Medicine (published online on September 2, 2010). Estimate 3 is based on the
                  methodology in the Families USA report “Health Reform: Help for Americans with Pre-Existing
                  Conditions,” published in May 2010. Estimate 5 is based on the methodology used in the GAO report
                  Health Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health
                  Insurance Pools, GAO-09-730R (Washington, D.C.: July 22, 2009). Total may be greater than
                  100 percent because of rounding. The 95 percent confidence intervals for estimates in this table are
                  within +/- 2 percent of the estimates themselves.


                  We provided a draft of this report to HHS for comment, but in its written
Agency Comments   response HHS said that it had no substantive or technical comments.
                  HHS noted that PPACA provided individuals with pre-existing conditions
                  new protections, including the opportunity to enroll in the Pre-existing
                  Condition Insurance Plan and the prohibition on insurers limiting or
                  denying insurance coverage because of a pre-existing condition
                  beginning in 2014. HHS’s letter is included as appendix IV.


                  As agreed with your offices, unless you publicly announce the contents of
                  this report earlier, we plan no further distribution until 30 days from the
                  report date. At that time, we will send copies to the Secretary of Health
                  and Human Services, the Administrator of the Centers for Medicare &
                  Medicaid Services, and other interested parties. In addition, the report will
                  be available at no charge on the GAO website at http://www.gao.gov.




                  Page 26                                                               GAO-12-439 Pre-Existing Conditions
If you or your staff have any questions about this report, please contact
me at (202) 512-7114 or dickenj@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this report
are listed in appendix V.




John E. Dicken
Director, Health Care




Page 27                                      GAO-12-439 Pre-Existing Conditions
List of Requesters

The Honorable Harry Reid
Majority Leader
United States Senate

The Honorable Max Baucus
Chairman
Committee on Finance
United States Senate

The Honorable Tom Harkin
Chairman
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable John D. Rockefeller IV
Chairman
Subcommittee on Health Care
Committee on Finance
United States Senate




Page 28                                   GAO-12-439 Pre-Existing Conditions
Appendix I: Scope and Methodology
                           Appendix I: Scope and Methodology




                           To answer all of our research objectives, we (1) identified different sets of
                           medical conditions that researchers have used to define the conditions
                           that would cause an insurance company to deny health insurance
                           coverage, offer coverage at higher-than-average premiums, or restrict
                           health insurance coverage; and (2) analyzed data from the 2009 Medical
                           Expenditure Panel Survey (MEPS). We chose the MEPS because it is
                           nationally representative of the civilian, noninstitutionalized population,
                           provides information on medical conditions, medical expenditures, and
                           demographics, and has been used by other researchers to answer similar
                           research objectives. 1 We limited our analysis to adults, defined as
                           individuals age 19 to 64, and we excluded approximately 2.7 million
                           adults continuously enrolled in Medicare in all 12 months of 2009. Based
                           on Medicare eligibility rules, all of these individuals would have a medical
                           condition.


Identifying Pre-Existing   We identified four previous studies that used different lists of pre-existing
Conditions                 conditions to develop five estimates of the number of individuals with pre-
                           existing conditions or the number of individuals potentially eligible for
                           high-risk pools. Because high-risk pools are designed for individuals who
                           cannot obtain insurance in the private individual market because of a pre-
                           existing condition, estimates of individuals potentially eligible for high-risk
                           pools can serve as a proxy for individuals with pre-existing conditions.
                           Each of the previous studies looked at different populations, used
                           different years of data, and, in one case, a different source of data. We
                           assigned each condition list an estimate number from 1 to 5 in order to
                           more readily identify which set of conditions was associated with each
                           estimate. 2 For example, the condition list in the study authored by Harold
                           Pollack is referred to as estimate 1.

                           Estimate 1 is based on the condition list in Harold Pollack’s article “High-
                           Risk Pools for the Sick and Uninsured Under Health Reform: Too Little
                           and Thus Too Late,” in the Journal of General Internal Medicine
                           (published online on September 2, 2010). Pollack considered individuals


                           1
                            During interviews, household respondents are asked about medical events, and after
                           completing the interview (and obtaining permission), researchers contact a sample of
                           medical providers by telephone to obtain information that the respondents may not be able
                           to provide accurately, such as visit dates, diagnosis and procedure codes, charges, and
                           payments.
                           2
                           One study made both a low and high estimate.




                           Page 29                                               GAO-12-439 Pre-Existing Conditions
Appendix I: Scope and Methodology




to be plausible high-risk pool participants if they had ever been told they
had emphysema, diabetes, stroke, cancer, congestive heart failure, heart
disease, angina, or heart attack.

Estimate 2 is described below with the information on estimate 4
because both estimates came from the same study. Additionally,
estimate 2 is based on the methodology used in estimate 3.

Estimate 3 is based on the condition list in the Families USA report
“Health Reform: Help for Americans with Pre-Existing Conditions,”
published in May 2010. According to a methodology developed by
researchers from The Lewin Group, individuals were identified as having
a pre-existing condition if they reported, in the previous year, one of 67
conditions most commonly included in lists for determining high-risk pool
eligibility across all the states with high-risk pools. The conditions were:
acquired immune deficiency syndrome (AIDS), alcohol/drug
abuse/chemical dependency, Alzheimer’s disease, angina pectoris,
anorexia nervosa, aplastic anemia, aortic aneurysm, arteriosclerosis
obliterans, artificial heart valve/heart valve replacement, ascites, brain
tumor, cancer (except skin), cancer (metastatic), cardiomyopathy/primary
cardiomyopathy, cerebral palsy/palsy, chronic obstructive pulmonary
disease (COPD), chronic pancreatitis, cirrhosis of the liver, congestive
heart failure, coronary artery disease, coronary insufficiency, coronary
occlusion, Crohn’s disease, cystic fibrosis, dermatomyositis, diabetes,
emphysema/pulmonary emphysema, Friedreich’s disease/ataxia,
hemophilia, hepatitis, HIV positive, Hodgkin’s disease, Huntington’s
chorea/disease, hydrocephalus, intermittent claudication, kidney
failure/kidney disease with dialysis/renal failure, lead poisoning with
cerebral involvement, leukemia, Lou Gehrig’s disease/amytrophic lateral
sclerosis/ALS, lupus erythematosus disseminate/lupus, major organ
transplant, malignant tumor, mood and psychotic disorders (including
depression, schizophrenia, and bipolar disorder), motor or sensory
aphasia, multiple or disseminated sclerosis, muscular atrophy or
dystrophy, myasthenia gravis, myocardial infarction (heart attack),
myotonia, obesity, paraplegia or quadriplegia, Parkinson’s disease,
peripheral arteriosclerosis, polyarteritis, polycystic kidney, postero-lateral
sclerosis, rheumatoid arthritis, sickle cell anemia/sickle cell disease,
silicosis, splenic anemia/True Banti’s Syndrome/Banti’s disease, Still’s
disease, stroke, syringomyelia (spina bifida or myelomeningocele), tabes
dorsalis, thalassemia (Cooley’s or Mediterranean anemia), ulcerative
colitis, and Wilson’s disease.




Page 30                                         GAO-12-439 Pre-Existing Conditions
Appendix I: Scope and Methodology




Estimates 2 and 4 were based on the two condition lists in the
Department of Health and Human Services’ (HHS) report “At Risk: Pre-
Existing Conditions Could Affect 1 in 2 Americans: 129 Million People
Could Be Denied Affordable Coverage Without Health Reform”
(Washington, D.C.: January 2011). This report included two estimates of
individuals with pre-existing conditions. Estimate 2 replicated the
methodology developed by The Lewin Group for the Families USA study
with two exceptions. First, obesity was not included in the list of
conditions that would cause a denial because HHS researchers did not
find obesity on the condition lists used by state high-risk pools. Second,
HHS included individuals who reported that they had ever been
diagnosed with the following conditions: coronary heart disease,
myocardial infarction, other heart disease, angina pectoris, stroke,
emphysema, cancer, and diabetes. HHS’s second estimate, estimate 4,
included the same conditions as its first estimate with additional
conditions added based on a review of the underwriting guidelines of
seven health insurers. In addition to the conditions included in estimate 2,
estimate 4 included individuals reporting arthritis, asthma, high
cholesterol, hypertension, or obesity, as well as those who had ever been
diagnosed with arthritis, asthma, high cholesterol, or hypertension.
Estimate 4 also includes individuals reporting neurotic and related
disorders, stress and adjustment disorders, conduct disorders, and
emotional disturbances.

Estimate 5 was based on the methodology used in the GAO report
Health Insurance: Enrollment, Benefits, Funding, and Other
Characteristics of State High-Risk Health Insurance Pools, GAO-09-730R
(Washington, D.C.: July 22, 2009). This report used the Healthcare Cost
and Utilization Project’s Chronic Condition Indicator to identify chronic
conditions in the 2006 MEPS, which were assumed to make a person
medically uninsurable and therefore potentially eligible for a state high-
risk pool. The Chronic Condition Indicator categorizes all International
Classification of Diseases, Ninth Edition, Clinical Modification (ICD-9-CM)
codes as chronic or not chronic. 3 A chronic condition is defined as a
condition that lasts 12 months or longer and meets one or both of the
following tests: (a) it places limitations on self-care, independent living,


3
 ICD-9-CM is a commonly used system to classify and code medical conditions. The
Chronic Condition Indicator is one in a family of databases and software tools developed
as part of the Healthcare Cost and Utilization Project, a federal-state-industry partnership
sponsored by the Agency for Healthcare Research and Quality.




Page 31                                                 GAO-12-439 Pre-Existing Conditions
                            Appendix I: Scope and Methodology




                            and social interactions; and (b) it results in the need for ongoing
                            intervention with medical products, services, and special equipment.
                            Individuals reporting any condition considered chronic were included in
                            this estimate. We used the three-digit ICD-9-CM codes for medical
                            conditions. Of 1,019 three-digit ICD-9-CM codes, the Chronic Condition
                            Indicator categorized 417 as chronic.

                            To standardize the estimates from the different sources, we applied the
                            conditions identified by each study to the same population (19 to 64 year
                            olds not enrolled in Medicare) and the same year and source of data (the
                            2009 MEPS) to construct estimates 1 through 5.


Identifying the Most        To estimate the number of adults (age 19 to 64) with medical conditions
Common Medical              that would cause an insurance company to restrict or deny insurance
Conditions and Estimating   coverage and the average expenditures related to these conditions, we
                            analyzed MEPS data on medical conditions and expenditures. We
Treatment Costs             reported data only for those medical conditions included in at least one of
                            the condition lists used for estimates 1 through 5. MEPS respondents
                            report medical conditions identified as the reason for a medical event, the
                            reason for a disability day, or as something that is “bothering” the
                            respondent during the reference year (in this case, 2009). 4 To protect
                            respondent privacy, we only reported estimates based on sample sizes of
                            100 or more.

                            We defined expenditures as payments from all sources for hospital
                            inpatient care, ambulatory care provided in offices and hospital outpatient
                            departments, care provided in emergency departments, and the purchase




                            4
                             For MEPS, medical conditions were recorded by an interviewer as verbatim text, which
                            was then coded by professional coders to five-digit International Statistical Classification
                            of Diseases, Ninth Revision codes (ICD-9). ICD-9 codes are a commonly used set of
                            codes used to classify medical conditions. The five-digit ICD-9 codes were then
                            aggregated into clinically meaningful categories that group similar conditions, known as
                            Clinical Classification codes. In addition, MEPS includes the ICD-9 code, but truncates it
                            to three-digits to protect the confidentiality of survey participants. When possible, we used
                            the Clinical Classification codes in our analysis. When a medical condition did not align
                            with the conditions noted with the Clinical Classification codes, we used the three-digit
                            ICD-9 code to identify individuals with the condition.




                            Page 32                                                  GAO-12-439 Pre-Existing Conditions
                           Appendix I: Scope and Methodology




                           of prescribed medications. 5 We did not include expenditures for dental
                           expenses or other medical expenses, such as durable and nondurable
                           supplies, medical equipment, eyeglasses, and ambulance services
                           because these items could not be linked to specific conditions. We also
                           excluded expenses for home health care. We classified expenditures with
                           a condition if a visit, stay, or medication purchase was cited as being
                           related to the specific condition.


Demographic and            To describe the demographic and geographic profile of adults with pre-
Geographic Profile of      existing conditions we focused on the low, midpoint, and high estimates
Adults with Pre-Existing   of adults with pre-existing conditions, which we call estimates 1, 3, and 5,
                           respectively. We provided state estimates for the 35 states with sufficient
Conditions                 sample size in the MEPS data to reliably report an estimate. We did not
                           have large enough sample sizes to generate state-level estimates of the
                           number of adults with pre-existing conditions in Alaska, Delaware, Idaho,
                           Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North
                           Dakota, Rhode Island, South Dakota, Vermont, West Virginia, Wyoming,
                           and the District of Columbia.

                           To estimate the number of individuals living in states with insurance
                           protections similar to those that will be offered under PPACA in 2014, we
                           surveyed state insurance department officials in September 2011, asking
                           them to confirm or correct information on guaranteed issue requirements
                           and rating restrictions previously reported by the Kaiser Family
                           Foundation’s statehealthfacts.org website. 6 We asked the state officials to
                           confirm information on guaranteed issue requirements and rating
                           restrictions in place as of September 2011. We received responses from
                           all states and the District of Columbia. Based on those responses, we
                           used MEPS’s state-based estimates of adults age 19 to 64 with pre-
                           existing conditions to identify the number of individuals living in states
                           reporting a guaranteed issue requirement for at least some policies and
                           either pure community rating or adjusted community rating—insurance


                           5
                            Sources of payment include direct payments from individuals, private insurance,
                           Medicare, Medicaid, Workers’ Compensation, and miscellaneous other sources.
                           Payments for over-the-counter drugs are not included in MEPS total expenditures. Indirect
                           payments not related to specific medical events are also excluded.
                           6
                            The Kaiser Family Foundation indicated that the information on this website was
                           collected by the Center for Health Insurance Studies, Georgetown University Health Policy
                           Institute and was current as of January 2011.




                           Page 33                                               GAO-12-439 Pre-Existing Conditions
                             Appendix I: Scope and Methodology




                             protections similar to those that will be offered under PPACA in 2014.
                             Guaranteed issue requirements prohibit the denial of coverage to
                             individuals based on pre-existing conditions. In some states, all products
                             must be guaranteed issue, while in other states guaranteed issue
                             requirements are only applicable to some individuals, for instance those
                             with 12 months of continuous coverage, or some standard product, such
                             as a basic health plan. Under pure community rating, insurers may not
                             adjust premiums based on health status, age, or gender. Under adjusted
                             community rating, insurers may not adjust premiums based on health
                             status, but may adjust premiums based on characteristics such as gender
                             or age, depending on the state.


Study Limitations and Data   There are limitations to our analysis. First, each insurance company
Reliability                  separately determines which medical conditions will result in a denial,
                             limitation in coverage, or an increase in premiums. An individual who may
                             be denied by one insurer could obtain coverage from another. Therefore,
                             the population of individuals who would be denied by an insurer, offered
                             restricted coverage, or offered coverage at higher-than-average
                             premiums actually varies by each health insurer. Second, our estimates
                             could overstate the adult population with pre-existing conditions because
                             of the way in which conditions are aggregated in the MEPS database. To
                             protect survey participant confidentiality, five-digit ICD-9-CM codes are
                             truncated into a three-digit code, which means that individuals reporting
                             other related conditions may also be captured.

                             To determine the reliability of the MEPS data, we reviewed related
                             documentation, compared our estimates to other published results, and
                             spoke with an official from the Agency for Healthcare Research and
                             Quality, which is the federal agency responsible for MEPS. We
                             determined that the MEPS data were sufficiently reliable for the purposes
                             of our engagement. The 2009 data are the most recently available for
                             MEPS. We conducted this performance audit in accordance with
                             generally accepted government auditing standards from July 2011
                             through March 2012. Those standards require that we plan and perform
                             the audit to obtain sufficient, appropriate evidence to provide a
                             reasonable basis for our findings and conclusions based on our audit
                             objectives. We believe that the evidence obtained provides a reasonable
                             basis for our findings based on our audit objectives.




                             Page 34                                      GAO-12-439 Pre-Existing Conditions
Appendix II: Number of Adults (Age 19-64)
                                    Appendix II: Number of Adults (Age 19-64) with
                                    Pre-Existing Conditions in States, Low,
                                    Midpoint, and High Estimate, 2009


with Pre-Existing Conditions in States, Low,
Midpoint, and High Estimate, 2009

                            Low: estimate 1                   Midpoint: estimate 3                      High: estimate 5
State                    Number     Standard error           Number       Standard error             Number        Standard error
All adults             36,116,647         1,056,380       59,978,301            1,734,242        121,560,174            2,950,667
                                                                                                               a
Alabama                       —                    —               —                      —        1,936,170             692,379
Alaska                        —                    —               —                      —                —                  —
Arizona                       —                    —       1,136,752                 304,102        2,216,186            501,837
                                                                                                               a
Arkansas                      —                    —               —                      —        1,480,153             755,180
California              4,004,774             511,259      6,606,715                 857,916      13,651,336            1,435,726
                                                                                                               a
Colorado                      —                    —               —                      —        1,893,776             590,540
                                                                                                               a
Connecticut                   —                    —               —                      —        1,211,605             618,166
Delaware                      —                    —               —                      —                —                  —
District of Columbia          —                    —               —                      —                —                  —
Florida                 1,670,935             255,058      2,612,694                 384,664        5,689,120            906,300
Georgia                 1,215,469             136,640      1,898,146                 211,029        3,461,859            301,183
                                                                                                               a
Hawaii                        —                    —               —                      —          683,798             348,877
Idaho                         —                    —               —                      —                —                  —
Illinois                1,179,171             159,490      2,181,909                 343,397        4,488,169            575,415
Indiana                       —                    —       1,358,572                 233,200        2,623,593            408,833
Iowa                          —                    —               —                      —         1,597,729            349,209
                                                                                                               a
Kansas                        —                    —               —                      —        1,047,433             534,405
                                                                     a                                         a
Kentucky                      —                    —      2,186,644             1,058,849          3,527,324            1,699,657
                                                                                                               a
Louisiana                     —                    —               —                      —        1,436,715             590,999
Maine                         —                    —               —                      —                —                  —
Maryland                      —                    —               —                      —         2,161,840            370,581
Massachusetts                 —                    —       1,097,055                 271,483        2,311,677            550,103
Michigan                1,226,779             221,142      2,453,149                 495,322        4,390,757            888,570
Minnesota                     —                    —               —                      —         2,333,096            347,476
                                                                                                               a
Mississippi                   —                    —               —                      —        1,432,693             730,966
Missouri                      —                    —       1,407,053                 210,782        2,736,950            444,142
Montana                       —                    —               —                      —                —                  —
Nebraska                      —                    —               —                      —                —                  —
Nevada                        —                    —               —                      —                —                  —
New Hampshire                 —                    —               —                      —                —                  —
New Jersey              1,055,825             142,155      1,914,939                 293,777        4,474,967            690,321
New Mexico                    —                    —               —                      —                —                  —
New York                1,952,701             524,780      3,580,631                 876,213        7,308,236           1,725,171




                                    Page 35                                                    GAO-12-439 Pre-Existing Conditions
                             Appendix II: Number of Adults (Age 19-64) with
                             Pre-Existing Conditions in States, Low,
                             Midpoint, and High Estimate, 2009




                     Low: estimate 1                            Midpoint: estimate 3                           High: estimate 5
State              Number    Standard error                    Number            Standard error             Number      Standard error
                         a                                               a                                          a
North Carolina   1,131,189              553,188            1,746,407                        891,024       3,426,132          1,748,027
North Dakota            —                       —                      —                         —                —                  —
Ohio             1,758,412              358,372              2,523,454                      540,527        4,945,135           837,152
                                                                                                                    a
Oklahoma                —                       —                      —                         —        1,230,321            627,715
                                                                                                                    a
Oregon                  —                       —                      —                         —        2,008,453            867,185
Pennsylvania     1,628,060              139,301              2,777,003                      271,756        5,546,111           583,727
Rhode Island            —                       —                      —                         —                —                  —
                                                                                                                    a
South Carolina          —                       —                      —                         —        1,324,442            675,736
South Dakota            —                       —                      —                         —                —                  —
                                                                         a                                          a
Tennessee               —                       —             772,781                       394,276       1,625,348            829,259
Texas            2,673,379              378,510              4,366,855                      619,441        9,045,432         1,483,132
                                                                                                                    a
Utah                    —                       —                      —                         —        1,736,201            885,817
Vermont                 —                       —                      —                         —                —                  —
                         a
Virginia         1,160,804              380,094              1,895,256                      541,223        3,968,986         1,137,964
Washington              —                       —            1,509,783                      328,015        3,542,050           736,548
West Virginia           —                       —                      —                         —                —                  —
                                                                                                                    a
Wisconsin               —                       —                      —                         —        2,319,211            834,253
Wyoming                 —                       —                      —                         —                —                  —
                             Source: GAO analysis of Medical Expenditure Panel Survey (MEPS).

                             Notes: Information on the conditions included in each estimate is detailed in appendix I. Estimate 1 is
                             based on the methodology in Harold Pollack’s article “High-Risk Pools for the Sick and Uninsured
                             Under Health Reform: Too Little and Thus Too Late,” in the Journal of General Internal Medicine
                             (published online on September 2, 2010). Estimate 3 is based on the methodology in the Families
                             USA report “Health Reform: Help for Americans with Pre-Existing Conditions,” published in May 2010.
                             Estimate 5 is based on the methodology used in the GAO report Health Insurance: Enrollment,
                             Benefits, Funding, and Other Characteristics of State High-Risk Health Insurance Pools,
                             GAO-09-730R (Washington, D.C.: July 22, 2009). The standard error is a measure of variation
                             around the estimate, in this case, the estimated number of individuals in the state with pre-existing
                             conditions. The 95 percent confidence intervals for estimates in this table are within +/- 3 percent of
                             the estimates themselves. Due to insufficient sample sizes, MEPS data could not be used to provide
                             any estimates for 15 states and Washington, D.C. Dashes in the table indicate that the sample size
                             was not sufficient to produce an estimate.
                             a
                              The relative standard error is greater than or equal to 30 percent. Relative standard error is the
                             proportion of the standard error divided by the estimate itself.




                             Page 36                                                                  GAO-12-439 Pre-Existing Conditions
Appendix III: State Protections for
                                    Appendix III: State Protections for Individuals
                                    with Pre-Existing Conditions, as of September
                                    2011


Individuals with Pre-Existing Conditions, as
of September 2011

                       Guaranteed         Insurer of last       Pure community        Adjusted
                             a                  b                      c                               d                     e
State                  issue              resort                rating                community rating          Rate bands
Alabama                No                 No                    No                    No                        No
Alaska                 No                 No                    No                    No                        No
Arizona                Yes - Some         No                    No                    No                        No
Arkansas               No                 No                    No                    No                        No
California             No                 No                    No                    No                        No
Colorado               No                 No                    No                    No                        No
Connecticut            No                 No                    No                    No                        No
Delaware               No                 No                    No                    No                        No
District of Columbia   No                 No                    No                    No                        No
Florida                No                 No                    No                    No                        No
Georgia                No                 No                    No                    No                        No
Hawaii                 No                 No                    No                    No                        No
Idaho                  Yes - Some         No                    No                    No                        Yes
Illinois               No                 No                    No                    No                        No
Indiana                No                 No                    No                    No                        No
Iowa                   No                 No                    No                    No                        Yes
Kansas                 No                 No                    No                    No                        No
Kentucky               No                 No                    No                    No                        Yes
                                                                                           f
Louisiana              No                 No                    No                    No                        Yes
Maine                  Yes - All          No                    No                    Yes                       No
Maryland               No                 No                    No                    No                        Yes
Massachusetts          Yes – All          No                    No                    Yes                       No
Michigan               Yes – Some         No                    No                    No                        No
Minnesota              No                 No                    No                    No                        Yes
Mississippi            No                 No                    No                    No                        No
Missouri               No                 No                    No                    No                        No
Montana                No                 No                    No                    No                        No
Nebraska               No                 No                    No                    No                        No
Nevada                 No                 No                    No                    No                        Yes
New Hampshire          No                 No                    No                    No                        Yes
                                               g
New Jersey             Yes – All          No                    No                    Yes                       No
New Mexico             No                 No                    No                    No                        Yes
New York               Yes – All          No                    Yes                   No                        No
North Carolina         No                 No                    No                    No                        No
North Dakota           No                 No                    No                    No                        No



                                    Page 37                                                    GAO-12-439 Pre-Existing Conditions
                              Appendix III: State Protections for Individuals
                              with Pre-Existing Conditions, as of September
                              2011




                 Guaranteed            Insurer of last                Pure community                    Adjusted
                       a                     b                               c                                           d                                    e
State            issue                 resort                         rating                            community rating                    Rate bands
                                                                                                                                                 h
Ohio             Yes – Some            No                             No                                No                                  No
Oklahoma         No                    No                             No                                No                                  No
Oregon           No                    No                             No                                Yes                                 No
Pennsylvania     No                    Yes                            No                                Yes                                 No
Rhode Island     Yes – Some            Yes                            No                                No                                  No
South Carolina   No                    No                             No                                No                                  No
South Dakota     No                    No                             No                                No                                  Yes
Tennessee        No                    No                             No                                No                                  Yes
Texas            No                    No                             No                                No                                  No
Utah             Yes – Some            No                             No                                No                                  Yes
Vermont          Yes – All             No                             No                                Yes                                 No
Virginia         No                    Yes                            No                                No                                  No
Washington       No                    No                             No                                Yes                                 No
West Virginia    Yes – Some            No                             No                                No                                  No
Wisconsin        No                    No                             No                                No                                  No
Wyoming          No                    No                             No                                No                                  No
                              Source: GAO survey of state officials pertaining to categories of protection previously reported on by the Kaiser Family Foundation.

                              Note: We did not attempt to independently identify categories of protection or to validate the accuracy
                              of the state responses.
                              a
                               Guaranteed issue requirements prohibit the denial of coverage to individuals based on pre-existing
                              conditions. In some states, all products must be guaranteed issue, while in other states guaranteed
                              issue requirements are only applicable to some individuals, for instance those with 12 months of
                              creditable coverage, or some standard product, such as a basic health plan.
                              b
                               An insurer of last resort law requires one insurer in the state to issue products to individuals
                              regardless of pre-existing conditions.
                              c
                               Under pure community rating, insurers may not adjust premiums due to health status, age, or
                              gender.
                              d
                               Under adjusted community rating, insurers may not adjust premiums due to health status, but may
                              adjust premiums according to characteristics such as gender or age, depending on the state.
                              e
                               Rate bands limit the extent to which premium can vary based on an individual’s health status, for
                              example, to a certain percentage of the average premium.
                              f
                               Louisiana reported that its community modified rating law allows for limited rate variation
                              between member participants for health status, tier rating, and durational rating. It also allows rating
                              for age, gender, industry, geographic area, family composition, group size, tobacco usage, plan of
                              benefits, or other factors approved by the Louisiana Department of Insurance.
                              g
                               While New Jersey reported that it has an insurer of last resort by law, it does not function as such in
                              practice because of the guaranteed issue requirement.
                              h
                               Rating bands only apply in parts of the individual market where a small group plan is being converted
                              to an individual plan.




                              Page 38                                                                            GAO-12-439 Pre-Existing Conditions
Appendix IV: Comments from the
             Appendix IV: Comments from the Department
             of Health and Human Services



Department of Health and Human Services




             Page 39                                     GAO-12-439 Pre-Existing Conditions
Appendix V: GAO Contact and Staff
                   Appendix V: GAO Contact and Staff
                   Acknowledgments



Acknowledgments

                   John E. Dicken, (202) 512-7114 or DickenJ@gao.gov
GAO Contact
                   In addition to the contact named above, Walter Ochinko, Assistant
Staff              Director; Lori Achman; George Bogart; Sean DeBlieck; Giselle Hicks; and
Acknowledgments:   Laurie Pachter made key contributions to this report.




(290958)
                   Page 40                                    GAO-12-439 Pre-Existing Conditions
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