Before he’d even graduated from college, Arthur Holst knew he was destined to work for a big organization. Not because the corporate culture called to him or because he had an undying love for cubicles, but because at age 19 he had a kidney transplant.
He had to work somewhere that offered good health benefits because that was the only way he was going to get the insurance he needed to survive. Starting his own company and running the risk of being denied insurance because of his health condition was not an option.
“You’re not thinking in terms of taking risks, you’re thinking in terms of the security the job offered through health insurance,” Arthur said.
Many years later, the Pennsylvanian is happy working for the city of Philadelphia, but he would have preferred to have the option of striking out on his own and starting a business — something he could have done if the Pre-Existing Condition Insurance Plan (PCIP) program enacted under federal healthcare reform had been in place.
These plans allow individuals with a preexisting condition to obtain health insurance if they’re denied coverage. On Tuesday, the Department of Health and Human Services beefed up the program to make it more affordable and easier to participate in. And although it’s too little too late for Arthur, there are many people out there just like him who will now have the option to see where their entrepreneurial spirit takes them.
The PCIP program is run by the Department of Health and Human Services in 17 states and by state governments in the rest. Thanks to the regulations issued on Tuesday, premiums in the states where the federal government administers the plans will drop, some by as much as 40 percent, and eligibility requirements will become less stringent. Instead of requiring applicants to submit rejection letters from insurance companies to prove their eligibility, they can now use a doctor’s note to verify their status.
America prides itself on being the land of entrepreneurialism, yet the act of denying people coverage for a preexisting condition discourages that tradition. When someone has a great idea or invention and wants to start a new business, but is forced to stay in their current job to keep health benefits, the potential for a new business flies out the window. This scenario, often referred to as “job lock,” costs our economy startup opportunities and job growth.
Small business owners Marsha and Russell Geist, owners of Metropolitan Landscape Management in Dayton, MD, would have found themselves in exactly this situation if Maryland hadn’t been ahead of the curve when it comes to preexisting condition bans. Both Marsha and Russell worked for the federal government while they were starting their landscape business, but were able to quit their government jobs and focus full-time on their start-up. However, Russell had medical issues, including a benign brain tumor, which landed him in the preexisting condition group. If Maryland hadn’t banned denying coverage based on preexisting conditions in the 1990s, Marsha would have had no choice but to continue working for the government to maintain their insurance instead of joining her husband.
“It would have directly affected the growth of our business,” Marsha said. “Maryland was very proactive in making that change.”
Small business employees are also the frequent victims of coverage denial based on preexisting conditions. Small business owner Rick Poore, proprietor of Shirts 101 in Lincoln, NE, spent a tremendous amount of time trying to get one of his 29 employees who suffered from pancreatitis onto his company’s group plan. If Rick had put the employee on the group plan, the costs would have skyrocketed, and it was likely the carrier would drop them altogether. Eventually, Rick was able to get his worker on the company plan without breaking the bank, but it was time and money that Rick could have spent running his business instead of jumping through one insurance hoop after another.
The Department of Health and Human Services made the right decision to lower premium costs and make it easier for people to join these much-needed programs. These new regulations will make it easier for employees like Rick’s and would-be entrepreneurs like Arthur to get the coverage they need while working in the jobs they love.