The easiest way to understand the debate over preexisting conditions in health-care coverage — a debate fueled this week by Jimmy Kimmel’s repeated disparagement of the new Republican plan to overhaul Obamacare — is to look at the Obamacare website.
As of writing, Healthcare.gov explains what protections the Affordable Care Act provides to those with conditions that, before the bill’s passage, may have resulted in denial of coverage or sharply increased premiums.
“All Marketplace plans must cover treatment for pre-existing medical conditions,” it reads. “No insurance plan can reject you, charge you more, or refuse to pay for essential health benefits for any condition you had before your coverage started. Once you’re enrolled, the plan can’t deny you coverage or raise your rates based only on your health.”
That’s the law under the Affordable Care Act (better known as Obamacare). Not only must insurers offer those with preexisting conditions coverage, they can’t charge people more for having those conditions and can’t refuse to pay for essential health benefits — a slew of treatments and services defined elsewhere on the site.
In other words, there are three parts to the protection that exists for preexisting conditions:
- Availability of coverage
- Affordability of coverage
- Extent of coverage
The first two are particularly important: If you can’t get insurance coverage or if you can’t afford to pay for it, there’s no protection. After all, the difference between refusing to cover someone and charging them $1 million for that coverage is nonexistent for most people.
That brings us to the Cassidy-Graham bill. President Trump on Wednesday tweeted his support for the bill, arguing that it included “coverage of pre-existing conditions.”
You can probably see where this is going.
The legislation, introduced by Sens. Bill Cassidy (R-La.) and Lindsey O. Graham (R-S.C.), mirrors previous Republican attempts to overhaul Obamacare, including an effort to shift the process of managing the system from the federal government to the states. To that end, the bill allows states to apply for waivers for the blanket protections those with preexisting conditions currently enjoy.
The bill can be read here. This is what it says about what those waiver applications would need to include:
“A description of any waiver of the provisions described in subparagraph 10 (B)(i) that the State is requesting, and how the State intends to maintain access to adequate and affordable health insurance coverage for individuals with pre-existing conditions if such waiver is approved.”
The intent of the legislation is to give states the power to decide how health-care systems should be run. The effect, though, is to give states the ability to allow insurers to increase the cost of coverage for those with preexisting conditions as long as the coverage is still “adequate and affordable.” In other words, coverage will still be available for those with preexisting conditions, but insurers in states that receive a waiver from the government will be able to charge those people more.
Who might be affected by this? Earlier this year, AARP created a map showing the percentage of people ages 50 to 64 in each state who had a condition that might have resulted in declined coverage before Obamacare. Overall, the group estimated that 40 percent of people in that age group might have been denied an insurance policy.
For those in other age groups, a broad range of conditions might apply. Cancer is the most common example, but people have been declined coverage because of treatments for depression, asthma or hepatitis.
The bigger question at the moment, though, is what “affordable” means.
Bloomberg’s Steven Dennis notes that Cassidy considers the above language to be a “guarantee” that those who need coverage for a preexisting condition will be able to afford it. It isn’t a guarantee, though. The legislation asks that states say how they “intend to maintain access to adequate and affordable” coverage, but it doesn’t say how much of a person’s income would be considered affordable, for example.
It’s important to remember how Obamacare ensures affordability. People with preexisting conditions are often more expensive to cover, since they may need regular treatments or medications that healthier individuals don’t. That’s why insurers want to charge more and, before the ACA, would often deny coverage to these more-expensive individuals. (A 2010 congressional analysis found that 1 in 7 of those with preexisting conditions was denied coverage before the ACA.)
To ensure affordable coverage, Obamacare implemented an individual mandate, meaning that everyone had to have coverage or pay a tax. The intended effect of this was to introduce a number of new customers to the system whose monthly premiums could help offset the cost of the more-expensive patients who needed to be covered. (This also had the happy side effect of making sure that these healthier, often younger people had coverage in the event of a medical emergency.)
Cassidy-Graham, though, ends the individual mandate, meaning many of those healthier individuals will drop coverage and the pool of money available to insurers will decrease. The amount of money being spent by the federal government in each state will also generally decrease, with 36 states and D.C. seeing declines in how much money the federal government introduces to the marketplace.
The Kaiser Family Foundation estimates that the federal government will spend $107 billion less under Cassidy-Graham than the existing law.
The question, then, is: How do states ensure “affordability”? Can they, particularly given the decrease in funding most states will see? It’s not clear.
There’s no question that people with preexisting conditions will pay more in some states, and any increase in cost will almost certainly mean fewer people enrolling in coverage, regardless of how “affordable” the coverage is determined to be. (AARP says that the increase could be “devastating” for older Americans.) It’s not clear to experts how big the decline in coverage might be under Cassidy-Graham, but the figure is likely in the tens of millions (thanks at least in part to the repeal of the individual mandate).
Those with preexisting conditions are being asked to trust that the language in the bill will mean that the costs of their insurance — insurance that is often critical to their quality of life — will remain within reach. That’s a significant leap of faith. What many would like to see, clearly, is something more along the lines of what’s articulated at Healthcare.gov.
That is, the protections of Obamacare.