Conflicting Ideas: Covering Pre-existing Conditions without an Individual Mandate

President Donald Trump repeatedly promised during his campaign that although he planned to dismantle the Affordable Care Act, known as Obamacare, there were some portions of the law that he wanted to keep intact. One of those was the coverage of Americans with pre-existing conditions. Under the ACA, people with pre-existing conditions cannot be denied coverage and must not be required to pay higher premiums. One of the ways that the ACA covers the higher cost of health insurance for people with pre-existing conditions is requiring all Americans to have healthcare coverage, even those who are healthy. This is called the individual mandate.

The ACA penalizes Americans who don’t have health insurance by requiring them to pay an income tax penalty each year. Trump targeted the individual mandate as one of the key aspects of the ACA he wanted to repeal, stating that the American people should not be forced into purchasing insurance they either do not want or cannot afford. While this might sound like a good idea – especially since many people disliked the idea of forced coverage in the first place –  analysts say that the only way to cover those with pre-existing conditions is to have enough healthy people pay premiums, which will offset the higher cost of coverage for those who need more care.

Trump’s Plan

Trump has not given us a detailed plan on how his new healthcare program will work. But working with Speaker of the House Paul Ryan and Vice President Mike Pence, Trump has offered insights into how he intends to handle providing insurance for those who are already sick. Their plan is a two-track system with one track for people with pre-existing conditions who maintain continuous coverage, and a second track for those whose coverage lapses or expires. Instead of Obamacare subsidies based on income, the Trump/Ryan plans call for a tax credit or deduction based on age that would help people pay premiums. The Republican plan would not allow insurance companies to drop coverage for people with pre-existing conditions or allow them to refuse renewal because of a prior medical condition, but insurance companies could charge higher rates if there was a lapse in coverage.

Higher Premiums Under Obamacare

The Affordable Care Act granted millions of people health insurance, but it’s not a perfect system. Before the law was even passed, states that prohibited insurance companies from discriminating against pre-existing conditions had significant problems with their insurance market, with some collapsing due to substantially higher premiums. For this reason, many opponents of the ACA believed that basing coverage for non-healthy people on the enrollment of healthy people was ill-advised.

Unfortunately, some of their predictions became reality. Under Obamacare, the system was showing signs of failure as premiums rose an average of 22 percent for the benchmark plan this year. In Arizona, premiums rose as high as 116 percent. The lowest-priced health plan under the ACA had a deductible of $6,000 for 2017 while 72 fewer companies participated in the exchanges. This meant not only were premiums rising, but people were facing fewer options when looking for coverage. Not enough healthy people have signed up for insurance under the ACA, which is one reason for the instability of the current system.

Damage to Those with Pre-Existing Conditions

While millions of people with pre-existing conditions have been able to sign up for coverage under Obamacare, there are still limitations that make health insurance impractical. To curb costs, some insurance companies on the exchanges limit doctors and medical facilities, requiring people to make changes even though they may have been happy with the doctors and facilities they had been using.

Changing doctors might be a minor inconvenience for the healthy, but for those with certain medical problems, the consequences can be devastating. People with chronic illnesses often need specialized care and must have a good rapport with their physicians. Requiring them to change doctors during treatment could result in missed diagnoses or delays that could be uncomfortable at best and life-threatening at worst. For rare conditions or diseases, specialists who can treat specific conditions may be limited. There are only 120 approved cystic fibrosis centers in the country, for example, so patients already must travel for treatment for the disease. Eliminating one of these specialists from the exchange could be a life-threatening decision for someone with cystic fibrosis. In some cases, drug coverage is also limited.

Reimplementation of High Risk Pools

One of the ways that both Trump and Ryan plan to manage pre-existing conditions for those whose coverage lapses is to reinstate high-risk pools in each state. Ryan’s plan also includes $25 billion to fund the programs as well as premium caps. His plan would ban waiting lists for people with pre-existing conditions.

Before the ACA was passed, 35 states had high-risk pools, and each pool varied by state. Most were similar to individual insurance policies and some charged as much as 250 percent more in premiums for people with medical problems compared with premiums for healthy people. Some plans had deductibles as high as $25,000, and annual benefits could be capped at $75,000. Operating costs often had to be subsidized by the state due to high losses. People who were included in state high-risk pools before the passage of Obamacare are now concerned that they’ll have to let coverage lapse because they won’t be able to afford premiums, deductibles and co-pays.

Cutting the Individual Mandate

Critics of the Trump and Ryan plans say that it’s impossible to cover pre-existing conditions without the individual mandate, something Trump has been adamant that he would eliminate. The individual mandate was designed to protect insurance companies from healthy individuals waiting until they got sick to purchase insurance. If older, sicker people enrolled in the insurance marketplace without a corresponding number of young, healthy individuals, costs would skyrocket, leading to what’s known as a “death spiral.” Premiums paid by healthy individuals offset the costs of medical services to those with pre-existing conditions.

According to Trump, the individual mandate isn’t necessary to cover pre-existing conditions as long as high-risk pools are reinstated and those who wait until they’re sick to purchase insurance are charged higher premiums than those who have insurance throughout their lifetime. Trump’s plan would allow for higher premium charges for individuals who allow their coverage to lapse, a practice that isn’t currently allowed under Obamacare.

Crossing State Lines

Another aspect of the ACA that Trump would like to eliminate, which he says will also help fund the pre-existing conditions clause, is allowing insurance companies to sell coverage across state lines. Under Obamacare, each state and the District of Columbia establishes its own insurance market and can limit which insurance companies are included in that market. Trump believes that by cutting through the regulations tied to states, insurance companies could offer national plans at much lower prices while also reducing their own administrative costs. This would ideally lower premiums and help fund the pre-existing conditions portion of the new law.

Critics say that allowing insurance companies to sell on a national level could reduce regulatory control, reduce the availability of plans and prevent states from assisting consumers who may have problems with an out-of-state insurance company.

Although Trump and Ryan have both indicated that their new version of healthcare would include pre-existing condition protections, many say that their options for paying for that coverage are not adequate and have failed in the past. Industry leaders agree that the current method of funding the pre-existing conditions protection through enrollment of healthy individuals may be flawed, but it may just be a matter of adjusting costs so that the average healthy citizen can afford coverage.