I Have a Pre-existing Condition—Do I Need to Worry About Trump's Plan?

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The future of the Affordable Care Act and healthcare reform are uncertain now that the Trump Administration is in place. President Trump campaigned heavily on the promise that he would repeal Obamacare and start from scratch. He has since moderated his stance somewhat, stating that he'd like to keep some aspects of the ACA in place, including the requirement that health plans cover pre-existing conditions and accept applicants regardless of their medical history.

But one of his first acts as President was to issue an executive order directing government agencies to be as lenient as possible (within the confines of existing law) in enforcing the ACA's penalties and taxes.

Most Congressional Republicans are intent on repealing the ACA during the 2017 legislative session, but with a delayed implementation for the repeal so that they can work out a replacement in the interim. The general consensus is that they'll likely use a reconciliation bill (which is filibuster-proof and only requires a simple majority to pass), which would allow them to repeal spending-related aspects of the ACA (things like subsidies, Medicaid expansion, the individual and employer mandates).

But a reconciliation bill would not repeal non-spending measures like the requirement that plans cover pre-existing conditions. That would come later, as part of a replacement bill that would be more comprehensive and would include whatever proposals lawmakers settle on in terms of how healthcare reform should look going forward.

Congressional leaders have indicated that there will be a significant delay—likely two to four years—between when they pass the repeal bill and when the repeal actually takes effect simultaneously with the implementation of the replacement measures.

What to Expect for 2017

So for 2017, there will be no change in how health plans cover pre-existing conditions, and that is expected to continue to be the case in 2018 as well.

There's still quite a bit of uncertainty, however, since a repeal bill in early-mid 2017 with no clear replacement at that point would bring a great deal of uncertainty to the insurance markets, and the ripple effect for 2018 could be significant.

For the time being, nothing has changed regarding pre-existing conditions, and nothing is likely to change in the immediate future. But this is an issue that's causing plenty of people to worry; recent Kaiser Family Foundation data indicates that 27 percent of non-elderly adults in the U.S. have pre-existing conditions that would make them uninsurable in the individual market if we returned to the medical underwriting standards that were in place in nearly every state prior to 2014.

So let's take a look at how repealing the ACA could impact Americans' ability to obtain health insurance coverage if they have pre-existing conditions, depending on what type of coverage they expect to have. 

Pre-ACA: Rules Varied Based on Type of Insurance

There are four main ways that Americans get health insurance: Employer-sponsored coverage, Medicare, Medicaid, and the individual market.

You can expect different things for each of them under the Trump Administration.

If the ACA is repealed—and eventually replaced—the impact on pre-existing condition coverage would not be uniform across those four groups. The primary changes wrought by the ACA in terms of pre-existing conditions were in the individual market, where about 7 percent of the U.S. population gets their health insurance.

HIPAA Would Still Protect Group Plan Enrollees

HIPAA (the Health Insurance Portability and Accountability Act) dates back to the mid-90s, and has long provided significant protection for people who obtain coverage from an employer (about 49 percent of the U.S. population has employer-sponsored coverage). Repealing the ACA would not eliminate HIPAA provisions, so people who get coverage from their employers would still have coverage for pre-existing conditions.

But prior to the ACA, under HIPAA regulations, employer-sponsored plans could impose waiting periods for pre-existing condition coverage (except maternity, assuming the plan provided maternity benefits) if the enrollee had not maintained continuous coverage prior to enrolling in the plan.

As long as the person had maintained continuous coverage for at least 12 months without a gap of 63 days or more, pre-existing conditions were covered as soon as the overall coverage became effective. But if the enrollee had a gap in coverage of more than 63 days prior to enrolling in the employer-sponsored plan, the plan could impose a waiting period of up to 12 months for pre-existing conditions.

The ACA eliminated that provision. Under the ACA, pre-existing conditions are covered on every employer-sponsored plan, and on all non-grandfathered (and non-grandmothered) individual market plans, as soon as the person's coverage under the plan takes effect.

The ACA also prohibited insurers from charging small groups extra premiums based on their employees' medical history. Small group coverage was already guaranteed-issue under HIPAA, but carriers could charge higher premiums to groups with poorer overall health. Once the ACA took effect, this was banned, and small group premiums could only be based on enrollees' ages, geographic location, family size, and tobacco use.

If the ACA were repealed and a replacement didn't include a provision banning waiting periods for pre-existing conditions, the rules would revert to the way they were prior to 2014. People who maintained continuous coverage would have no waiting periods for pre-existing conditions when joining an employer's health plan. But people with a gap in coverage would potentially be subject to waiting periods for pre-existing conditions. And small groups with employees in poor health could face higher overall premiums than small groups with healthy employees.

Medicare and Medicaid Would Still Cover Pre-Existing Conditions

Medicaid and Medicare cover pre-existing conditions. There are some caveats with Medicare, however, which do not have anything to do with the ACA:

  • In most states, people enrolling in a Medigap plan after their initial enrollment window (and without access to one of the very limited Medigap special enrollment periods) are subject to medical underwriting. Their applications can be denied, they can be offered a plan with a higher-than-standard premium, or the carrier can impose a pre-existing condition waiting period.  
  • In most cases, if you have end-stage renal disease (ESRD), you cannot enroll in Medicare Advantage

Although the ACA didn't change anything about pre-existing condition coverage under Medicare and Medicaid, it did substantially expand access to Medicaid. Total enrollment in Medicaid/CHIP has increased by nearly 17 million people since the end of 2013, thanks in large part to the ACA's expansion of the eligibility rules for Medicaid.

Prior to the ACA, Medicaid (which included coverage for pre-existing conditions) was available in most states only for low-income pregnant women and children, some very low-income parents, along with low-income residents who were disabled and/or elderly.

Under the ACA, 31 states and the District of Columbia have expanded Medicaid to all adults with household income up to 138 percent of the poverty level, which is a little more than $16,000 in annual income for a single person. 

If the ACA is repealed and the replacement isn't as robust, millions of people who currently have Medicaid could lose realistic access to coverage. They would be able to purchase coverage in the individual market (likely with some type of tax subsidy), but that might not be financially feasible for those with the lowest incomes. If they were to become uninsured, their pre-existing conditions would no longer be covered, nor would any unforeseen medical care they might need.

Pre-Existing Conditions Could Become a Problem Again in the Individual Market

The main reason there's so much talk about pre-existing conditions again now that ACA repeal is on the horizon is because coverage in the individual market in all but five states was medically underwritten prior to 2014, when the ACA banned that practice (individual market coverage is the kind you buy for yourself—through the exchange or off-exchange—rather than getting from an employer).

There are more than 20 million people who have coverage in the individual market. Many of them already had individual market coverage pre-ACA, but some were only able to obtain coverage when the ACA's rules took effect and carriers were no longer able to deny applications based on applicants' medical history. 

Medical underwriting meant that individual market health insurance applications included long lists of questions about applicants' medical history. Coverage eligibility depended on the answers, and for people who were allowed to enroll despite their pre-existing conditions, premiums were often higher than the standard rates.

Pre-existing conditions included basically any medical diagnosis. Being overweight, having elevated cholesterol or blood pressure, a history of visits to the chiropractor... everything was analyzed by medical underwriters to determine whether the applicant was eligible for coverage, and if so, at what price.

The ACA changed all that. For the individual market, the ACA's pre-existing condition rules were a game-changer. Rejected applications and increased premiums due to medical history became a thing of the past, as did pre-existing condition waiting periods. 

So what happens now, if Congressional Republicans repeal and replace the ACA? We don't yet know exactly what will be included in the replacement legislation, and some proposals that have been introduced in 2017 (including the Patient Freedom Act, introduced by two Republican Senators in January) simply call for retaining the ACA's current protections for people with pre-existing conditions.

But if the ACA's guaranteed issue requirements are not retained, there are two main avenues for covering pre-existing conditions that have been included in most of the proposals put forth over the last few years: high-risk pools or a "continuous coverage" requirement, or both.

Both are included in the Empowering Patients First Act, introduced by Rep. Tom Price (R, Georgia), who was confirmed by the Senate in February 2017 to be the Secretary of Health and Human Services. Both are also included in A Better Way, the healthcare reform proposal put forth by House Republicans in June 2016.

Continuous Coverage

Under the ACA, coverage is guaranteed issue, period. It doesn't matter how long you've been uninsured when you enroll, and it doesn't matter what pre-existing conditions you have.

Under the various GOP replacement proposals that call for continuous coverage, the idea is to basically extend some of HIPAA's protections to the individual market. People who maintain continuous coverage (either in a group plan or an individual plan) would be able to enroll in a new plan at the standard premium, regardless of pre-existing conditions (ie, with no medical underwriting).

But people who experience a gap in coverage would be subject to medical underwriting. The idea is to incentivise people to maintain continuous coverage without resorting to the ACA's unpopular individual mandate.  

High-Risk Pools

Most of the Republican proposals also include a return to high-risk pools for insuring people who aren't able to obtain coverage in the individual market (in proposals that include continuous coverage provisions, high-risk pools would be needed to insure people who don't maintain continuous coverage, and whose pre-existing conditions are significant enough that they're not able to obtain medically underwritten coverage).

High-risk pools were established in 35 states during the 90s and 00s. But the overall shortcomings of the high-risk pool model were part of the reason the ACA was needed in the first place. The plans tended to be expensive, and typically had high out-of-pocket exposure and limited lifetime maximum benefits. In addition, some high-risk pools had to limit enrollment over the years due to budget constraints.

High-risk pools mostly ceased operation when guaranteed-issue individual market coverage became available in 2014. But some states still have functional high-risk pools. With adequate federal funding, high-risk pools could be a viable solution going forward. But without adequate funding, it's unlikely that they'd be any more successful than they were in the years leading up to the implementation of the ACA.

Do I Need to Worry?

It depends on where you get your health insurance, and what plans you have for the future.

If you have job-based health insurance and anticipate that continuing in the future (either at the same job or another job that also offers coverage), you should be fine, as HIPAA will protect you. But if the ACA is repealed, it will become particularly important to ensure that you maintain continuous coverage, in order to avoid the pre-existing condition waiting periods that HIPAA allows.

If you're covered by Medicare, or were already eligible for Medicaid prior to the ACA's expansion of Medicaid eligibility, you should be fine.

But if you're covered by expanded Medicaid or an individual market plan, or if you anticipate losing access to a job-based insurance plan in the near future (and were planning to transition to Medicaid or the individual market), you'll need to pay close attention over the coming months to see exactly what rules are proposed and ultimately put in place.

If a continuous coverage requirement is implemented, it will be essential for people with pre-existing conditions to maintain coverage without gaps. In reality, it will be essential for everyone to maintain coverage without gaps, as nobody knows when a medical condition will develop, and once it does, it's a pre-existing condition.

For the time being, nothing has changed. If you've already enrolled in coverage for 2017, it will still be effective (and covering pre-existing conditions) even if Congressional Republicans pass a bill to repeal the ACA at some point during the year. And Medicaid expansion is almost certain to remain in place throughout 2017.

But if and when the ACA is ultimately replaced, pre-existing conditions are likely to once again be an issue, in ways they haven't been for the past three years. The overall impact will vary depending on the type of coverage people have, but this is certainly something to watch.

Sources:

HealthCare.gov, Grandfathered Health Insurance Plans.

Kaiser Family Foundation, Health Insurance Coverage of the Total Population. 2015.

Kaiser Family Foundation, Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA. December 12, 2016.

United States Department of Labor, Health Benefits Coverage Under Federal Law. September 2014.

United States Department of Labor, Health Insurance Portability and Accountability Act (HIPAA) Portability Of Health Coverage And Nondiscrimination Requirements FAQs.

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