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What you need to know about preexisting conditions in the Senate GOP health plan

Here are the Congressional Budget Office's key estimates for how the Senate health-care plan would impact Americans' health insurance coverage and costs. (Video: Jenny Starrs, Daron Taylor/The Washington Post)

“Important note for tomorrow: if GOP repeal bill ends essential benefits protection, it also ends preexisting conditions protection.”
— Sen. Chris Murphy (D-Conn.), post on Twitter, June 21, 2017 

“The bill’s defenders will say it repeals Obamacare’s taxes and reduces Medicaid spending growth. That’s true. But it also boosts spending on subsidies, and it leaves in place the pre-existing-condition rules that drive up the cost of insurance for everyone.”
— Sen. Ron Johnson (R-Wis.), op-ed in the New York Times, June 26, 2017

This week, Senate Majority Leader Mitch McConnell (R-Ky.) delayed the vote on the Senate health-care plan until after the Fourth of July holiday to give lawmakers a chance to study the bill and work out a new compromise to overhaul the 2010 Affordable Care Act.

As with the House version that passed in May, Democrats have criticized the impact that the Senate bill, the Better Care Reconciliation Act (BCRA), would have on people with preexisting medical conditions. They argue that the BCRA would no longer protect Americans with preexisting conditions, despite the bill’s explicit ban on states waiving coverage based on preexisting conditions. Yet a Republican opponent of the bill criticized it for not repealing the protection enough. What is going on?

Previously, The Fact Checker provided a guide to the preexisting conditions debate over the House bill. This time, here’s our guide to the debate over preexisting conditions in the Senate bill.

What’s the issue?

Before the ACA, insurance companies could consider a person’s health status when they decide whether and how much to charge premiums. If a person had a preexisting medical condition that would cost a lot of money, the insurance company could increase the cost of their premiums or even deny coverage.

That is not allowed under the ACA, which requires everyone to purchase insurance. It also requires insurance carriers to offer people in the individual and small group markets “essential health benefits,” such as maternity care, mental health services, prescription drugs, pediatric services and emergency services. The goal was to standardize benefits, offer comprehensive coverage and balance out the risk pool. The 10 essential health benefits are minimum coverage requirements, and don’t include services like dental, vision or hearing services for adults.

An amendment in the House version created waivers that states could seek from the health law. One possible waiver would allow states to replace a federal essential benefits package with a more narrowly tailored package of benefits, limited to the individual and small-group markets.

These changes would affect a specific group of people who meet the following criteria: lives in a state that seeks this waiver; has a lapse in health coverage for longer than 63 days; has a preexisting condition; and purchases insurance on the individual market.

What does the Senate bill say?

The Senate bill instead uses an existing structure called Section 1332 waivers. Under the ACA, states can waive certain provisions of the law but still must provide insurance to a comparable number of residents and ensure that the coverage is at least as comprehensive as the essential benefits package and that the waiver programs meet out-of-pocket spending requirements.

These requirements are like “guardrails” to make sure that even if states opt out of certain provisions of the law, coverage remains more or less consistent across states. The BCRA eliminates these three requirements.

Similar to the House bill, the BCRA allows states to use a waiver to opt out of covering the essential health benefits package. States also can waive limits for annual out-of-pocket spending and single risk pools.

But states couldn’t use the waiver to deny insurance coverage because a person has a preexisting medical condition. According to the Congressional Budget Office’s analysis of the Senate bill, “Insurers would still be required to provide coverage to any applicant, and they would not be able to vary premiums to reflect enrollees’ health status or to limit coverage of preexisting medical conditions.”

“As under current law, however, states could not use waivers to change federal regulations relating to preexisting conditions, requiring insurers to offer coverage to any applicant, or requiring that premiums in the nongroup market not be based on an individual’s health (allowing them to vary only on the basis of age, smoking status, and geographic location),” CBO added. “In addition, under the legislation, states could not use waivers to change regulations related to continuous coverage.”

If the law passed, people generally would not be affected unless they lived in a state that sought a waiver. Some states could make changes that affect only a small portion of their population. But the CBO estimated that under both the Senate and House bills, about half of the population would be in “states substantially affected by waivers to provisions of the ACA.” States would have a mechanism to help reduce cost sharing or out-of-pocket costs for people in the individual and small group markets, though it’s unclear how many states would use this method.

What’s the debate?

Even though the bill explicitly prohibits waivers for preexisting conditions, health analysts say waiving the essential health benefits package and eliminating the three guardrail requirements could weaken the types of services covered for people with preexisting conditions.

If states aren’t required to ensure that their coverage is as comprehensive as the essential health benefits package, insurers can redesign plans that do not include certain services that otherwise would have been required under the ACA. These services may be ones that people with preexisting conditions need. So even if they have the insurance, they may end up paying out-of-pocket costs for certain services that are not covered under their new plan. However, ultimately, it will be up these states to decide the services they want to cover, and how comprehensive they will be.

Insurers won’t be able to single out a person for a preexisting condition. But indirectly, insurers could design policies that could affect people with preexisting conditions.

For example, if you are a cancer survivor, an insurance company can’t deny you coverage or increase your premiums because of that preexisting medical condition. But if the state waived the essential health benefits package and insurers redesigned their plans, and the plans didn’t cover certain cancer treatments or prescription drugs, then the cost could fall on you.

Further, BCRA allows states to waive the single risk pool, which is an ACA requirement for qualified health plans to make sure that the insurer bases premiums on the expected cost of all applicants in the marketplace, not just those who might enroll in a plan. If this is waived, certain plans could become much more expensive for people with preexisting conditions.

For example, if Plan A does not cover chemotherapy but Plan B does, the insurer would assume that cancer patients would want to enroll in the latter. So the insurer could charge much more for Plan B, based on the costs of those who might enroll in it. The cancer patient could enroll in Plan A and pay for chemotherapy out of pocket, but it would still be expensive.

This is why Democrats, like Murphy, argue that the Senate bill would hurt people with preexisting conditions. But others who oppose the bill, like Johnson, say the bill doesn’t go far enough.

As the Milwaukee Journal Sentinel reported: “Johnson criticized the bill for preserving a key feature of Obamacare: rules requiring insurers to cover people with preexisting conditions. The Wisconsin Republican said such mandates drive up premiums, and the government instead should be encouraging state-based high-risk pools for those with costly preexisting conditions.”

The Bottom Line

As we always say at The Fact Checker, readers should be wary about claims that important changes in health-care coverage would hurt or protect certain people. There will always be winners and losers in a bill that aims to overhaul something as complex and wide-reaching as the U.S. health system. Ultimately, the exact impact will depend on individual decisions at state level among those who seek waivers, and what insurers do in the waiver program.

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Not the whole story
"if GOP repeal bill ends essential benefits protection, it also ends preexisting conditions protection."
in a tweet
Wednesday, June 21, 2017
Share the Facts
Washington Post rating logo Washington Post Rating:
Not the whole story
Senate health-care bill Better Care Reconciliation Act "leaves in place the pre-existing-condition rules that drive up the cost of insurance for everyone.”
in a New York Times op-ed
Monday, June 26, 2017