RE-UPDATED POST – What’s the Deal With Pre-Existing Conditions – AHCA Redux

Hello All, another update on the health care legislation,

This past week (5/4/2017), the House of Representatives passed the updated American Health Care Act (AHCA), a bill that is the latest in the many-part series of repealing and replacing the current health care law, the Affordable Care Act (ACA) or “Obamacare.”

the group that benefits from the bill celebrates its passage

The previous version of the AHCA back in March, which was the first effort by the new administration to repeal the current law, did not even make it to a vote due to the public pushback along with a less than favorable CBO accounting score (see this post for more on that version).

The updated version that passed is intended to win over more “fiscally conservative” Republican sponsors (who were dismayed at the amount of coverage still offered by the new bill) along with the “Freedom Caucus” members of the House who have made their primary effort to repeal the current law (ACA).  The new AHCA promises to also make sure all pre-existing conditions are still covered while pleasing the needed votes in the House.  So, all the boxes checked right?

The problem is (and this is a big problem), the bill was never introduced to the House floor for debate* (it was just debated within a committee prior to the vote). This means that most House members did not even read the full text of the bill before voting on it. The quick turn vote basically turned it into a party line vote (all democrats opposed with 20 Republicans joining the dissent, for a very narrow majority passage). In addition, because insufficient time was given for the CBO to “score” the bill, representatives and the public were not able to see what type of impact the bill would have on the Federal budget or on the overall impact of the bill on the health care market.

*”Normally, ample time is given for the submission of the reports and they are accorded serious consideration.” – https://www.congress.gov/resources/display/content/How+Our+Laws+Are+Made+-+Learn+About+the+Legislative+Process#HowOurLawsAreMade-LearnAbouttheLegislativeProcess-ConsiderationbyCommittee

Pre-Existing Conditions Protections – Subject to Elimination

Thin ice on these high risk pools

In an effort to decrease rising health costs for consumers and businesses (the biggest flaw with the ACA) the new bill copies many of the previous efforts by eliminating the expansion of Medicaid and by creating “high risk pools” to help people with health issues to be able to afford health insurance while at the same time eliminating the federal requirements for insurers for charging higher premiums for pre-existing conditions.

An amendment by Thomas McArthur seems to keep the pre-existing condition protections in place by giving states the option of mandating insurers to not charge higher premiums. This, however, would be a return to a pre-ACA health care landscape discussed in the original post by this name.

Prior to the ACA, states were free to put these requirements in place for insurers, but just as now they had little incentive to do so because the costs were not sustainable without an individual mandate or subsidies payed for by taxes on wealthier Americans. Both the mandate and subsidies would be eliminated or phased out in the coming years and the high risk pools would be insufficient to cover those in need.

High Risk Pools – Pre ACA 

The basic idea for high risk pools is to mitigate the inequitable spending of health care by the population. Most high cost enrollees are a small proportion but account for a large amount of health care costs. So all types of enrollees help pay for the larger costs of the small high cost group with help from subsidies. In the past the high risk pools insulated healthier people from high health costs which encouraged them to purchase insurance.

As mentioned earlier, prior to the ACA, insurers could exclude people with pre-existing conditions or charge them higher premiums. Beginning in 1976, states had made high risk pools available as a source of insurance for individuals who may have been excluded by insurance groups for pre-existing conditions or if they had lost group health plan coverage per the 1996 HIPAA Law.

Most pools adopted standards that limited possible enrollment, leaving some eligible enrollees from having insurance, making premiums unaffordable, or making having insurance unattractive such as:

  • Higher premiums above the market rate
  • Exclusion periods of 6 – 12 months for preexisting conditions
  • Lifetime limits on covered services
  • High deductibles

Each of these was eliminated by the ACA. Limiting enrollment was a goal for states to make the high risk pools affordable for the states to fund even with Federal grants and state tax subsidies helping to foot the bill. Federal government subsidies needed to cover the losses within the high risk pools cost $1 billion per year prior to 2010 – and this was with limited enrollment.

For the states where the high risk pool was well funded, such as in Maryland, the pools could theoretically provide a working model. If high risk pools are to adequately cover people with preexisting conditions as the newly House – passed AHCA contends, it will need a lot of funding. Unfortunately, the bill would fall short with funding*, with only $13 billion annually provided for high risk pools. As stated earlier, the new amendment would give states the option of whether to mandate to insurers whether preexisitng conditions are still covered – bringing us back to a health care landscape that replicates the pre-ACA setting.

Well said, The Onion

 

Given the changes in Medicaid, tax cuts (elimination of subsidies), inadequate funding for high risk pools, and more, the American Cancer Society, the American Heart Association, the American Lung Association, the American Diabetes Association, the American Medical Association, the American Academy of Pediatrics, the American Hospital Association, the Catholic Hospital Association, the March of Dimes, AARP, and others — all oppose the bill.

Until the next repeal and replace attempt,

Your Faithful Historian,

Eric G. Prileson

*For subsidies to cover 68 percent of enrollees’ premium costs, as ACA tax credits do now in the individual market exchanges, the government would have to put up $32.7 billion annually. And even after applying that subsidy, high-cost consumers would still owe $10,000 annually toward premiums

Sources and Further Reads:

CBO Analysis: https://assets.documentcloud.org/documents/3516452/CBO-Health-Care-Cost-Estimates.pdf

American Health Care Act Bill HR 277 text 

https://www.govtrack.us/congress/bills/statistics

http://kff.org/health-reform/issue-brief/high-risk-pools-for-uninsurable-individuals/

http://www.cbpp.org/blog/cbo-millions-would-pay-more-for-less-under-house-gop-health-plan

https://www.americanprogress.org/issues/healthcare/news/2017/05/02/431698/house-health-care-plan-not-enough-keep-high-risk-pools-afloat/

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About eprileson

I am a historian and writer who wants to bring to light current events through a historical perspective. It is difficult to understand today's current events without having a grasp of what has occurred before. This is a running thread to help keep people informed about the present and remind everyone to not forget their past. Enjoy and please comment!
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