The GOP Healthcare Plan: Act III WHAT ABOUT PRE-EXISTING CONDITIONS?
Republicans in the House of Representatives pulled the original version of their ObamaCare repeal bill in late March, having fallen well short of the needed votes from their own party. Following extensive internal negotiations, House leadership picked up a number of “Freedom Caucus” conservatives, but again fell short, and decided not to vote last week. Now the push is on again. While I don’t know what will happen, I can at least address key aspects of the latest proposal.
3 More Big Changes
I made 12 points in my first blog on the original GOP bill, and covered 10 more in my second. MOST OF THE CHANGES I DESCRIBED WOULD STILL HAPPEN IN THE LATEST VERSION. This CNN piece provides a helpful summary of the proposed changes to the original "Patient Protection and Affordable Care Act": “What’s Inside the Republican Health Care Bill?”. As per the article, the very latest proposal would include this BIG change from earlier versions: “Allow states to obtain waivers to let insurers … set premiums based on enrollees' medical backgrounds under several circumstances. Those enrollees would have to have let their coverage lapse, and the state would have to set up a risk program -- such as a high-risk pool -- that, in some cases, could provide help to those being charged higher premiums.”
Actually, as cogently described by Tim Jost in his always excellent HealthAffairs Blog, states could apply for 3 different types of waivers:
One, insurers could charge premiums for older people at much higher rates than for younger people. Under the ACA, insurers may not charge premiums for older people that are more than 3 times as much as that charged for the youngest, but the original GOP bill would have allowed a 5 to 1 ratio. Under the latest bill, states could allow insurers to charge premiums at an even higher ratio for older people.
Second, states could establish their own “essential health benefit” requirements for individual and small group insurance. For example, the states could change the ACA prohibitions on annual and lifetime maximum coverage, so that your coverage might end if the insurance company pays more than a certain amount.
Third, the states could, as per the CNN article above, allow health plans to set “premiums based on enrollees’ medical backgrounds,” meaning based on pre-existing conditions. More on that below.
States would have to seek waivers from the Department of Health and Human Services for such exceptions, but the new rule would allow for automatic approval unless DHHS disapproves within 60 days.
The Pre-Existing Condition Debate
Earlier this week, President Trump said, “pre-existing conditions are in the bill.” He may have been referring to this statement that’s included in the revised bill: “nothing in this Act shall be construed as permitting insurers to limit access to health coverage for individuals with preexisting conditions.”
“Access” is one thing, affordability is another. Letting health plans set premiums based on prior health status can make a major difference in premium costs. Recognizing this, the revised bill requires that a “waiver” state must establish a financial assistance fund to help high-risk individuals pay for coverage, which would be supported by federal dollars. The bill also limits such higher premiums to individuals who have a coverage gap of at least 63 consecutive days.
But it’s easy to see how an individual may suffer an injury or illness that results in inability to pay and a loss of coverage for several months, and therefore would wind up with a much higher premium at the very time he/she is unable to afford it. There’s no way of knowing if the assistance fund would over that cost. And if the individual is, say, in his/her 50’s or 60’s, the higher age banded premium would make the premium even more costly.
The bottom line is that while a person with a significant pre-existing condition may have the right to purchase insurance, he/she may not be able to afford it. In short, the ACA’s pre-existing condition protections would effectively be gutted in “waiver” states.
The Rationale
There’s a logical rationale for this variation in premium costs, at least from the insurers’ perspective. Just as a person with a history of auto accidents or speeding tickets may be charged more for auto insurance, a person with a history of health problems would often, pre-ACA, be charged more for health insurance. Even now, your health history is relevant to your life insurance costs in most states—healthier people pay less, less healthy people pay more.
Others argue that health insurance is different because, unlike auto insurance, everyone will incur health care costs at some point; and unlike life insurance, health care coverage is often a recurring need, not a one-time pay out. Health insurance is also likely to be more expensive than auto or life insurance, and health care costs may be much, much larger (and far more complex) than the cost of repairing or replacing a car. Health insurance benefits are also typically paid directly to the provider of the service, so it’s not only the consumer who has skin in the game.
What Will Happen?
The House of Representatives may vote tomorrow. Even if they pass the revised bill, it may fail in the Senate. So I really don’t know what will happen.
A couple of weeks ago, I suggested, perhaps naively, that maybe, just maybe, the parties could work together to address the flaws in the existing Patient Protection and Affordable Care Act. If the latest GOP effort fails, maybe that miracle will actually come to pass.
