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House bill to repeal and replace Obamacare strengthens pre-existing condition protections

Several moderate Republicans remain opposed to the American Health Care Act (AHCA) because, as they see it, the bill weakens Obamacare’s protections for people with pre-existing conditions.

These Republicans must not understand the crisis unfolding in individual health insurance markets across the country and the risk this poses to people with pre-existing conditions.  The fact is, the AHCA will strengthen protections to people with pre-existing conditions by giving states the flexibility they need to stabilize insurance markets and the funding they need to develop new programs to guarantee robust coverage to people with high risks.

Premium increases threaten coverage for people with pre-existing conditions
Premium comparisons for a benchmark plan
in each state’s largest market shows there are eighteen states (AZ, CO, DE, HI, ID, KS, LA, MN, MT, NE, NC, OK, OR, SC, SD, TN, UT, and WV) in the country that experienced double-digit premium increases in each of the past two years.  Between 2014 and today, fifteen states (AL, AK, AZ, HI, ID, KS, MN, MT, NC, OK, OR, SC, SD, TN, and WV) experienced a 50 percent or higher increase in premiums, with five states (AK, AZ, MN, OK, and TN) posting an increase exceeding 100 percent.

As premiums rise—and premiums are projected to rise by another 10 to 20 percent in 2018—each increase in premium chips away at the number of people willing or able to pay the premium, whether healthy or sick.  If premiums rise much higher, healthy people will stay away and leave the market to only those with high risks.  At that point, many people with pre-existing conditions either won’t be able to afford coverage or they will be slotted into whatever new one-size-fits-all government program established to fix the problem.

Moderates opposed to the AHCA do not live in states with tanking insurance markets
The moderates who remain opposed to the AHCA maybe fail to see this future because they don’t live in a state with a tanking insurance market.  Based on a running list of no votes drawn together by multiple news outlets, not one moderate “no” vote hails from one of the twenty states experiencing substantial premium increases listed above.  The only “no” votes from these states come from Rep. Andy Biggs (AZ), a member of the Freedom Caucus, and Rep. Walter Jones (NC), a member of the Liberty Caucus.

How the AHCA better protects people with pre-existing conditions
The AHCA charts a much different future in which states will be given the flexibility they need to maintain stable and affordable health insurance markets, while at the same time guaranteeing good coverage to people with pre-existing conditions.  The promise of a stable insurance market is a key part how the AHCA better protects those with pre-existing conditions.

The AHCA further protects people with pre-existing conditions by providing federal funding to states to develop new high risk programs to guarantee coverage for pre-existing conditions.  Some moderates might be concerned that these new programs will be a step backwards to the old high risk pools many states used to administer.  That will not be the case.

The main knock against old high risk pools was that they didn’t have enough funding to deliver adequate coverage.  This was indeed true.  The AHCA does not make this mistake.  Comparing the federal funding available to states in 2018 for high risk programs against the amount states spent on high risk pools in 2011 shows a dramatic increase in funding.  In 2011, high risk pools in 35 states received just $1.2 billion in support.  Those same states, according to estimates by Oliver Wyman and Avelere, will receive $10 to $11 billion in federal funding in 2018.

The appended table compares the old high risk pool experience as of 2011 in each state with the estimated funding available to these states to develop new high risk programs in 2018.  This table reveals only a handful of states operated high-risk pools that afforded strong protections to people with pre-existing conditions.  Generally, the better funded and more successful programs are the states with the higher rate of high-risk pool enrollment.  Importantly, with the exception of New Mexico, the table reveals every state will receive substantially more funding than they had used for their previous high risk pools, including states with more robust programs like Maryland and Minnesota.  New Mexico will also receive adequate funding. The reason that state appears to receive less is because their high-risk pool, in addition to covering excess risk, provided generous subsidies to lower-income households and covered illegal immigrants.

The substantial bump in funding guarantees that future state high-risk programs will look nothing like the old high risk pools.  Moreover, the flexibility offered to states will let them experiment with innovative ways to cover high risks.  For instance, a state can set up an invisible high risk pool in which a person with a high risk shops for coverage just like everybody else and their risk is managed invisibly behind the scenes.  A state might also establish a new market just for high risks where insurers compete to provide coverage in contrast to the current market where insurers design products to avoid high risks.

By giving states the tools they need to stabilize insurance market and the funding necessary to establish robust high-risk programs, the AHCA promises to deliver stronger protections to people with pre-existing conditions.  Hopefully, the moderates who remain a no can look beyond their own state, see the crisis unfolding elsewhere, and get to a yes.

 

State High risk pool enrollment as a percent of individual market enrollment 2011 High Risk Pool Revenue Per Enrollee* 2011 High Risk Pool Assessments and Other Revenue (millions of dollars)* Oliver Wyman 2018 Stability Fund Allocation Estimate (millions of dollars) Avalere 2018 Stability Fund Allocation Estimate (millions of dollars)
Alabama 1.4% $3,010 $6 $277 $393
Alaska 5.3% $20,719 $11 $53 $45
Arkansas 2.9% $3,526 $10 $284 $64
California 1.0% $5,207 $33 $1,675 $2,115
Colorado 7.1% $5,597 $78 $255 $165
Connecticut 2.6% $6,808 $11 $132 $361
Florida 0.0% $10,797 $2 $1,657 $831
Idaho 1.7% $2,724 $5 $137 $46
Illinois 6.0% $4,743 $95 $510 $453
Indiana 6.5% $9,369 $70 $244 $139
Iowa 2.7% $6,063 $20 $45 $78
Kansas 2.5% $9,952 $15 $143 $91
Kentucky 2.3% $6,117 $29 $102 $173
Louisiana 1.0% $6,256 $11 $266 $142
Maryland 15.8% $6,143 $127 $181 $178
Minnesota 12.0% $5,931 $159 $254 $296
Mississippi 7.2% $2,908 $10 $108 $236
Missouri 2.4% $4,816 $19 $210 $168
Montana 8.5% $3,313 $10 $84 $24
Nebraska 6.1% $6,773 $27 $111 $126
New Hampshire 9.2% $2,760 $7 $46 $33
New Mexico 15.6% $11,358 $96 $64 $92
North Carolina 2.2% $758 $6 $709 $743
North Dakota 3.6% $3,691 $5 $30 $38
Oklahoma 3.1% $5,471 $13 $203 $319
Oregon 7.7% $6,946 $84 $187 $187
South Carolina 2.2% $2,686 $5 $251 $314
South Dakota 1.2% $4,834 $3 $39 $75
Tennessee 1.8% $3,306 $11 $332 $181
Texas 3.9% $4,191 $104 $1,708 $705
Utah 3.2% $2,577 $10 $156 $105
Washington 1.3% $17,142 $66 $207 $293
West Virginia 8.9% $230 $0 $62 $72
Wisconsin 19.7% $2,172 $46 $285 $637
Wyoming 6.3% $3,847 $4 $36 $30
Total 3.8% $5,335 $1,209 $11,043 $9,948

* Does not include premiums paid by enrollees.

Sources: National Association of State Comprehensive Health Insurance Plans, Oliver Wyman Health, and Avalere Health.

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