What’s the deal with Trumpcare and pre-existing conditions?

Last updated on: May 7, 2017 at 5:14 pm by Jane the Actuary

What’s the deal with Trumpcare and pre-existing conditions? 2017-05-07T17:14:37-06:00 Jane the Actuary

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It’s surprisingly difficult to get a good picture of what’s going on in the new GOP healthcare bill. Here’s a summary from CNN and another from the New York Times. Here’s a breakdown of winners and losers from NPR. Here’s commentary by Megan McArdle on death spirals, and from Charles Krauthammer on the seeming inevitability of single payer.

There’s a lot going on in the bill, but the biggest question is, “what’s going on with pre-existing conditions?”

According to CNN,

The original Republican plan seeks to allow insurers to impose a 30% surcharge on the premiums of those who let their coverage lapse for at least 63 days. The plan would enable insurers to levy this surcharge for one year, but it would only apply to policies bought in the individual or small group markets.

Under the latest amendment, states that seek waivers could replace this provision with one that allows insurers to charge consumers who’ve had a gap in coverage based on their health status.

Which matches up with the Times:

States would be allowed to waive this rule and charge higher prices to sick customers who had experienced a lapse in insurance coverage of more than 63 days. States that waive this rule would be required to set up a program to help people with high health care costs buy insurance in a separate pool. The bill would establish funding to help states subsidize the high cost insurance.

But Politi-fact rates it as “mostly false” that people with pre-existing conditions are protected:

insurers would only have to provide access to coverage for people with pre-existing conditions. It says nothing about the rates of that coverage.

That means if the AHCA passes, it would allow for people with pre-existing conditions to be charged more per year for their insurance coverage – possibly to the tune of thousands or even tens of thousands of dollars more per year, some studies have found. . . .

For people with pre-existing conditions, states could allow insurers to charge more if they set up a high-risk pool or participate in a new federal invisible risk-sharing program.

Medical professionals question the quality of care those pools would provide.

So what’s going on?

It depends, so far as I can tell, on how one responds to the “continuous coverage” requirement. And it’s another one of those “depends on what the meaning is. . . ” sort of questions; in this case, what does it mean to “protect” people with pre-existing conditions?

If one judges it a perfectly reasonable requirement, in order to keep people from gaming the system and signing on to health insurance only after they have a diagnosis they need to purchase treatment for, then individuals are, indeed, protected from ruin. They can change insurance any time they wish, whether from employer-paid to individual or vice versa, or move to a plan with better customer service, or which offers a better network upon moving to a new town, etc. A young person can move from a family policy to their own policy, and someone who’s moved out of poverty can move off of Medicaid to a private insurance policy, and maintain the protection of a community rating.

If one says that people drop their health insurance for perfectly valid reasons (or up until now still haven’t bought insurance despite the Obamacare subsidies) and shouldn’t be punished for lapses in coverage, then one would agree with the Politi-fact claim that pre-existing-ers are no longer protected.

And in a perfect world, people would consider at least the cheapest possible catastrophic plan to be a necessity every bit as much as food and housing. As it is, there are, and have historically been, plenty of middle-class families, employed at small businesses or self-employed, who decide that there’s no visible benefit to health insurance, especially if it means that they wouldn’t be able to buy a middle-class, suburban home, or afford a new car, or what-have-you — but, at the same time, the reality is that there are plenty of people who, as it is, struggle to pay the rent on time, and, if health insurance were added into the mix, would be letting it lapse in the same way as they pay their rent or mortgage late, gathering up cash just barely in time to avoid eviction or foreclosure, or get past-due notices on their electric bill, build up balances on their credit cards, and so on.

If there were tax credits sufficient for some sort of particularly inexpensive policy, that’d be a different story. (Vouchercare, remember?) But there aren’t, without bumping up the value of the credits. in principle, there could be “emergency health insurance assistance” programs in the same way a there are programs to help people with short-term assistance paying other bills. But there’s not. (There isn’t really much assistance for things like emergency rent assistance, except through charities.)

So are people with pre-existing conditions protected? Yes. But for many of them, it may not matter.

[Update: is there room for compromise? What about expanding the clause on lapsed health insurance so all, for example, a lapse due to unemployment, or income low enough that no available policy could be purchased for less than X% of income, even taking available credits into account? Perhaps some attention to how far behind a customer is permitted to fall behind in premium payments before the policy is cancelled? We should at least be able to address this question before getting lost in a frenzy of “Republicans have taken away pre-exisiting condition protection!”)

Image: https://commons.wikimedia.org/wiki/File%3ADoctor_examines_patient_(1).jpg; By Unknown photographer [Public domain], via Wikimedia Commons

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