Update: The AHCA or Trumpcare was passed by the House on May 4th, 2017
As Republicans gear up for another fight to push their proposed healthcare bill, the American Health Care Act (AHCA), through Congress and onto President Trump’s desk, millions of Americans await the fate of coverage for pre-existing conditions. This particular feature of the healthcare bill – a staple protection under Obamacare – has been debated among healthcare analysts for months. Will Trumpcare cover pre-existing conditions? If you have a pre-existing condition, how will your health plan change under the proposed bill? These and other questions continue to plague politicians in Congress on both sides of the aisle.
In short, the AHCA does not eliminate coverage for pre-existing conditions. Like the Affordable Care Act, Trumpcare will require all health insurers to cover people who apply regardless of their medical history. But there are some key differences in what that coverage looks like under Trumpcare vs. the current law.
What Does “Pre-Existing” Mean?
Like its name suggests, a pre-existing condition is a medical problem that exists before you sign up for health insurance. Before Obamacare became law, people with medical problems – ranging from asthma to cancer – could be denied health insurance based on those medical problems. Insurance companies defined pre-existing medical conditions in different ways, some with stricter guidelines than others. You might have been denied coverage for a variety of different conditions, including:
- Chronic back problems
- High blood pressure
- Autoimmune disorders
These are all fairly expensive conditions to treat over the course of someone’s life. But pre-existing conditions also extended to other health situations, such as pregnancy, that weren’t permanent. Imagine finding out that you were pregnant only to be denied health insurance for you and your growing child.
There’s no standard definition of a pre-existing condition other than that it must have been present before you signed up for health insurance. It doesn’t have to be diagnosed or treated, either.
For example, let’s say that you just got approved for health insurance. About a week later, you see your doctor for ongoing wrist pain, which is noted in your file as a problem you’ve discussed before. Your doctor diagnoses you with carpal tunnel syndrome and recommends surgery to correct the problem. Before the ACA took effect, your insurance company could deny the claim because you had a history of wrist pain before buying a policy. They could also deny your application for a new policy once you tried to sign up again.
There was a legitimate reason for doing things this way. Insurance is sold on the premise of a “what if” scenario – what if you break your leg or get the flu, for instance. The same principle applies to any kind of insurance. You don’t purchase flood insurance the day after your home gets destroyed by a flood. It’s too late. In order to prevent people from buying health insurance after accumulating lots of medical bills, insurers were able to deny people coverage if they already had health problems.
The problem here is that people with unavoidable medical problems, like type I diabetes or Crohn’s disease, were treated the same way. Likewise, pregnant women may have also faced the same discrimination. It essentially forced people who truly needed care, the sickest in the population, to forgo health insurance because it was too expensive.
The Affordable Care Act sought to correct this problem, but it created a new problem in doing so. Under the ACA, people with pre-existing conditions can’t be denied coverage or charged more for coverage than healthy people. Insurers have to treat every applicant the same in terms of medical history, with the exception of smoking, a habit that insurers can still charge higher premiums for. This solution allowed millions of people to sign up for affordable health insurance for the first time, but there was a catch.
Suppose that after a flood destroyed your home, you were legally allowed to buy flood insurance the next day. You call your home insurance company, sign up for coverage, and then immediately file your first claim for damages. The same thing started happening once people with pre-existing conditions were able to purchase health insurance without medical underwriting. Insurance companies started losing money because they had to cover a sicker beneficiary base than they had anticipated.
The government assumed that more healthy people would sign up to balance out the influx of sicker participants, but that didn’t happen, primarily because the incentive was gone to buy health insurance in the first place. After all, if you can buy coverage after you have a problem, why should you waste money each month on insurance that you won’t use? The individual mandate, which forced everyone to buy coverage under threat of a tax penalty, wasn’t strong enough to motivate young and healthy individuals to buy health plans. The system started collapsing, evidenced by astronomical premium increases for 2017 in much of the country.
Please note: we are not advocating for a system under which people with medical problems are denied coverage. We are simply outlining one of the reasons insurance companies started charging much more money for coverage than initially expected. Pre-existing conditions are expensive to maintain, which is why companies charged more for these conditions before the ACA.
How Republicans Will Address Pre-existing Conditions
To reiterate, Republicans are not planning to eliminate protections for people with pre-existing conditions. Despite the fact that almost every Republican supports repealing the ACA, most people (conservatives and liberals alike) agree that the pre-existing conditions clause is a feature worth keeping. Instead, the difference lies in how Republicans intend to offer coverage to people with medical problems. Per the AHCA and recent amendments, several things could happen, including the following:
- States could apply for a waiver from the requirement to offer health insurance without medical underwriting if they establish high-risk pools that demonstrably save them money.
- If a person with a pre-existing condition allows his health insurance policy to lapse, then he could be charged more by the insurance company when he signs up for another plan later.
These provisions are specifically addressed in a recent set of changes to Trumpcare proposed by Rep. Tom MacArthur (R-NJ), known collectively as the MacArthur amendment. The amendment was an attempt to garner favor among far-right conservatives, specifically the House Freedom Caucus, and it worked. However, moderate Republicans object to these changes because they fear that the language strips away rights from people with pre-existing conditions.
A divided Republican Party now faces the possibility of healthcare reform grinding to a halt in light of the issue over pre-existing conditions. President Trump, for his part, seems unsure about what’s in his own bill, which only adds to the confusion. Optimistic members of Congress have suggested that they could push the AHCA to a House vote by next week, but there doesn’t appear to be widespread support even for the revised version. For people with medical problems, the debate over healthcare reform continues to play fast and loose with their care.