Private Health Insurance: Estimates of Individuals with Pre-Existing Conditions Range from 36 Million to 122 Million
Published: 2012-03-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Individuals who buy coverage directly from a health insurer are often denied coverage due to a pre-existing condition during a process called medical underwriting, which assesses an applicants health status and other risk factors. Beginning January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) prohibits health insurers in the individual market from denying coverage, increasing premiums, or restricting benefits because of a pre-existing condition. GAO was asked to examine the effect of this provision on adults who are 19-64 years old. GAO examined (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.
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 to confirm information about state insurance protections that currently limit or prohibit medical underwriting.
section_title: What GAO Found
paragraphs: Hypertension was the most commonly reported medical condition among adults that could result in a health insurer denying coverage, requiring higher-than-average premiums, or restricting coverage. GAOs analysis found that about 33.2 million adults age 19-64 years old, or about 18 percent, reported hypertension in 2009. Individuals with hypertension reported average annual expenditures related to treating the condition of $650, but maximum reported expenditures were $61,540. Mental health disorders and diabetes were the second and third most commonly reported conditions among adults. Cancer was the condition with the highest average annual treatment expendituresabout $9,000.
Depending on the list of conditions used to define pre-existing conditions in each of the five estimates, GAO found that between 36 million and 122 million adults reported medical conditions that could result in a health insurer restricting coverage. This represents between 20 and 66 percent of the adult population, with a midpoint estimate of about 32 percent. 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. Estimate 3, the midpoint estimate, includes any individual reporting they had one of over 60 conditions. Estimate 5, the highest estimate, includes any individual reporting a chronic condition in 2009.
The estimated number of adults with pre-existing conditions varies by state, but most individuals, 88-89 percent depending on the list of pre-existing conditions 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 are common across all family income levels.
The Department of Health and Human Services reviewed a draft of this report and had no substantive or technical comments.

section_title: Letter
paragraphs: 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. 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. 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  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. 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.
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.
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. It  includes information on medical conditions and the costs associated with  those medical conditions, both self-reported and from a review of medical  events.
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). 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.
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.
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.
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.
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.
subsections: section_title: Background
paragraphs: Individuals who buy coverage directly from a health insurer are often  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. 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  underwriting were denied coverage.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.
Medical underwriting is the process  The Health Insurance Portability and Accountability Act of 1996 (HIPAA)  established consumer protections on access, portability, and renewability   With respect to individuals leaving group  of health insurance coverage. 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, did not lose group coverage because of the nonpayment of premiums  or fraud.
See Pub. L. No. 104-191, Title I, 110 Stat. 1936, 1939 et. seq. 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.
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. 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). 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.
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.
section_title: Hypertension, Mental Health Disorders, and Diabetes Were the Most Commonly Reported Conditions among Adults, with Average Annual Expenditures for Cancer Nearly $9,000
paragraphs: Hypertension was the most commonly reported medical condition among  adults during 2009 that could result in a health insurer denying coverage,  requiring higher-than-average premiums, or restricting coverage with an  exclusionary rider. Our analysis of MEPS data found that about   33.2 million adults age 19-64 years old, or about 18 percent, reported  hypertension in 2009. Individuals with hypertension reported average  annual expenditures of $650 related to treating the condition, though the  maximum expenditures reported were $61,540. (See table 2.) Mental  health disorders and diabetes were the second and third most commonly  reported medical conditions by adults age 19-64 years old. About   19.0 million adults, or 10.3 percent, reported mental health disorders, and  about 11.9 million adults, or about 6.4 percent, reported diabetes.  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.
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.
section_title: Between 36 and 122 Million Adults in 2009 Reported Pre-Existing Conditions, Depending on the Conditions Included in the Estimates
paragraphs: Depending on the list of conditions used to define pre-existing conditions  in each of five estimates, we found that between 36 million and   122 million adults (age 19-64) reported having medical conditions in 2009  that could result in a health insurer denying coverage, requiring higher- than-average premiums, or restricting coverage with an exclusionary rider  (see fig. 1). This represents from 20 to 66 percent of the adult population,  with a midpoint estimate of 32 percent.
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.Estimate 3, the midpoint estimate, includes any individual who had one of  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. 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.
section_title: Pre-Existing Conditions Are Common across States and Demographic Groups, but Prevalence Is Higher for Certain Populations
paragraphs: The number of adults with pre-existing conditions varies by state, but  most individuals with pre-existing conditions live in states that report not  having insurance protections similar to PPACA. Certain groups had  higher rates of pre-existing conditions than others, including women,  whites, and those with public insurance. Compared to others, adults with  pre-existing conditions spend thousands of dollars more annually on  health care, but pre-existing conditions are common across all family  income levels.
subsections: section_title: The Number of Adults with Pre-Existing Conditions Varies by State, but Most Adults with Pre-Existing Conditions Live in States That Report Not Having Insurance Protections Similar to PPACA
paragraphs: We found that the percentage of adults with pre-existing conditions varies  among states. We analyzed data from the 35 states where MEPS  generated a reliable estimate. Our low estimate (estimate 1) ranged  from 17 percent in New York and New Jersey to 25 percent in Ohio. For  the midpoint estimate (estimate 3), the range was from 27 percent in  Florida to 47 percent in Kentucky. For the high estimate (estimate 5), the  range was from 58 percent in Georgia to 75 percent in Kentucky and  Massachusetts. (See table 3). For population estimates for the 35 states,  see appendix II.
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. The only five states  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.
section_title: Pre-Existing Conditions Are More Common Among Women, Whites, and Those with Public Insurance
paragraphs: Regardless of the list of conditions used to generate the estimates, we  found that more women reported a pre-existing condition than men.  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.  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.)
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.
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.)
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.protections for individuals with pre-existing conditions exist in employer-  The greatest  sponsored group insurance and public insurance programs, which are the  groups that reported the highest rates of pre-existing conditions. 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.
Adults with pre-existing conditions, on average, spend thousands of  dollars more for all health care—between $1,504 and $4,844 more per  year—than other adults. Based on the set of conditions included in  estimate 1, which included the smallest number of individuals with pre- existing conditions, average annual health care expenditures were $8,535  in 2009, compared to $3,691 for all adults (see fig. 5). The average  expenditures for the midpoint estimate (estimate 3) were $7,296 and the  average expenditures for the high estimate (estimate 5) were $5,195.  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.
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.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for comment, but in its written  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.
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.
section_title: Appendix I: Scope and Methodology
paragraphs: 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. 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.
subsections: section_title: Identifying Pre-Existing Conditions
paragraphs: We identified four previous studies that used different lists of pre-existing  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.Pollack is referred to as estimate 1.
For example, the condition list in the study authored by Harold  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  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.
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. 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.  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.
section_title: Identifying the Most Common Medical Conditions and Estimating Treatment Costs
paragraphs: To estimate the number of adults (age 19 to 64) with medical conditions  that would cause an insurance company to restrict or deny insurance  coverage and the average expenditures related to these conditions, we  analyzed MEPS data on medical conditions and expenditures. We  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). 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  of prescribed medications. 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.
section_title: Demographic and Geographic Profile of Adults with Pre-Existing Conditions
paragraphs: To describe the demographic and geographic profile of adults with pre- existing conditions we focused on the low, midpoint, and high estimates  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  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.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   We asked the state officials to  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.
section_title: Study Limitations and Data Reliability
paragraphs: There are limitations to our analysis. First, each insurance company  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.
section_title: Appendix II: Number of Adults (Age 19-64) with Pre-Existing Conditions in States, Low, Midpoint, and High Estimate, 2009
subsections: section_title: Low: estimate 1
section_title: Low: estimate 1
section_title: Appendix III: State Protections for Individuals with Pre-Existing Conditions, as of September 2011
subsections: section_title: Guaranteed issue No
section_title: State Ohio
section_title: Appendix IV: Comments from the Department of Health and Human Services
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments:
paragraphs: In addition to the contact named above, Walter Ochinko, Assistant  Director; Lori Achman; George Bogart; Sean DeBlieck; Giselle Hicks; and  Laurie Pachter made key contributions to this report.