Can You Provide Pre-existing Condition Protections Without the ACA? It’s Not So Easy

With a lawsuit seeking the repeal of the Affordable Care Act (ACA, or “Obamacare) on the docket before a reconstituted U.S. Supreme Court, a lingering recession that has ended job-based health coverage for millions, and the deadly coronavirus resuming its destructive path throughout the nation, the protection of consumers with pre-existing conditions has surged to the fore as an important issue in national and local elections. 

Some candidates have lined up to defend and strengthen the ACA. Others continue to back its repeal, but counter with general statements of support for pre-existing condition protections; some have cited a largely symbolic executive order issued recently by President Trump, despite the administration’s failure to come up with its own comprehensive plan. At this important juncture—and given that New York’s market reforms from the early 1990s are still used as a textbook example of the hazards of enacting standalone pre-existing condition protections—it is worth highlighting the numerous ways ACA provisions protect consumers with pre-existing conditions.

Affordability.  Under the ACA, insurers can’t deny coverage to people with pre-existing conditions, but they also can’t charge higher premiums to people with high blood pressure, diabetes, asthma, cancer, or other medical conditions. These are important protections, but what good are they if consumers still can’t afford coverage? The ACA provided about $60 billion in tax credits in 2020 to make coverage more affordable for Americans, and in 2019, New York enrollees received about $640 million in affordability credits. New York also took advantage of the ACA Basic Health Program option, repurposing about $5 billion in federal tax credits for the Essential Plan, which provides free or $20-per-month coverage to nearly 900,000 New Yorkers at last count. Finally, ACA provisions requiring free preventive care remove financial barriers to accessing vital primary care services, such as vaccinations and tests.

A Stable Risk Pool.  If only people who are sick buy health coverage, it won’t take long for premiums to go through the roof, which was the case in New York. The ACA’s premium subsidies help ensure that both the healthy and the sick are able to afford coverage, which helps keep premiums down for everyone.

Medicaid Expansion.  Even with ACA subsidies, some low-income adults wouldn’t be able to afford coverage on the marketplace. The ACA tackled this problem by expanding the Medicaid program to cover previously ineligible adults earning up to about $17,600 annually (as of 2020). Even though some states chose not to expand Medicaid, over 12 million Americans gained Medicaid coverage under the ACA. For New York, which already had a strong Medicaid program in place, the ACA expansion provisions increased federal financial support for about 1.9 million Medicaid members, including over 300,000 who became newly eligible for the program.

Comprehensive Benefits.  Even if insurers are required to cover everyone, it is relatively easy to avoid sicker enrollees through the benefit package design. For example, if you don’t want to cover too many sick people, don’t cover prescriptions drugs. If you don’t want to cover prenatal care and births—especially costly premature births—only issue policies without maternity benefits. If you don’t want to cover people suffering from depression or addiction, exclude mental and substance abuse services benefits from coverage. Although New York required strong benefit packages, the ACA shut down this kind of gaming by requiring that all insurers cover a comprehensive list of essential health benefits, including services like pediatric dental and vision, to help kids get a healthy start.

Provider Networks.  Network design is another way insurers can discourage enrollment by higher-risk individuals. For example, if an insurer set up a network with limited access to cardiologists, endocrinologists, and oncologists, or institutions that specialize in these services, it’s highly unlikely that people with heart disease, diabetes, or cancer would pick this plan. The ACA closes this loophole as well by requiring insurers to establish provider networks with a sufficient number of primary care doctors, OB/GYNs, and other specialists to meet all of their enrollees’ medical needs without unduly long waits.

Risk Adjustment.  Like other businesses, insurers are more comfortable with regulation when everyone plays by the same set of rules. Benefit and network requirements helped level the playing field, and as a final measure to prevent insurers from discriminating against people with pre-existing conditions, the ACA requires insurers to submit detailed reports each year on the medical expenses they covered for their enrollees. Health plans that paid out a lower amount for treating designated serious conditions compared to other plans have to transfer premiums to those plans that covered above-average amounts of claims for this type of care. This risk adjustment mechanism eliminates an insurer’s financial incentive for enrolling lower-risk individuals, either by accident or design.

The ACA has its shortcomings and is not the only way to ensure meaningful pre-existing condition protections, but it has provided New York with important tools that have helped stabilize the individual market and dramatically improve access to coverage for people with pre-existing conditions and the uninsured. Election time is a good opportunity for voters to require candidates to go beyond empty promises or a slick TV ad, and instead demonstrate knowledge of what is actually required to protect constituents with pre-existing conditions, and a plan on how to do it.

Peter Newell is the director of UHF’s Health Insurance Project. 

United Hospital Fund has a long history of bringing together diverse perspectives to address critical challenges in health care in New York. In the current crisis, it’s more important than ever to hear from all parts of the health care system. Today’s commentary from UHF’s Peter Newell looks at how the Affordable Care Act offers protections for those with pre-existing conditions. – UHF President Tony Shih

Oct. 29, 2020
Focus Area
Coverage and Access
Health Insurance Project