Pre-Existing Condition—What It Is & Why It’s a Big Deal

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At its most basic, a pre-existing condition is a medical condition you have before you apply for health insurance coverage. Pre-existing conditions used to be an obstacle to obtaining coverage in the individual health insurance market, but the ACA changed that.

Why Pre-Existing Conditions Used to Be a Big Deal

Prior to the Affordable Care Act, in some instances, an insurer could refuse to sell you a health insurance policy if you had a pre-existing condition.

In other instances, an insurer would exclude your pre-existing condition from your health insurance coverage. This was known as a pre-existing condition exclusion.

In some cases, the insurer might have agreed to cover your pre-existing condition, but would have charged you much higher premiums for that coverage than you would have been charged for the same coverage without a pre-existing condition. This approach gained favor with insurers as time went by, simply because it was administratively easier than excluding pre-existing conditions.

Having a pre-existing condition like high blood pressure excluded from your health insurance coverage was a bigger deal than just having to pay for your own high blood pressure pills. The pre-existing condition exclusion could exclude more than just that single pre-existing condition from coverage. It could exclude all other conditions that developed as a result of your pre-existing condition.

For example, if your excluded pre-existing condition was high blood pressure and you had a stroke as a result of your high blood pressure, the health insurance company might refuse to pay for your stroke treatment.  It would say that, since your stroke was a direct result of your excluded high blood pressure, the stroke was also excluded from coverage.

Pre-existing condition exclusions made it difficult for people with even simple pre-existing conditions to get health insurance coverage for reasonable premiums. Frequently, they couldn’t get coverage at all. If they were able to get coverage, it was very expensive and/or excluded their pre-existing condition.

In 1996, HIPAA, the Health Insurance Portability and Accountability Act, put limitations on when health insurers were allowed to exclude pre-existing conditions and on how long a  pre-existing exclusion period could be in some instances. Learn more about this. However, HIPAA protections mainly applied to people seeking coverage under employer-sponsored plans.

In the individual market (coverage you buy for yourself, rather than obtaining from a job) pre-existing conditions were still a major problem for applicants in most states prior to 2014. It was difficult, expensive, or impossible to obtain health insurance that would cover a pre-existing condition and any other potentially related conditions.

The Affordable Care Act and Pre-Existing Conditions

In 2014, the Affordable Care Act’s consumer protections kicked in. Now, thanks to the Affordable Care Act, health insurers in the United States can’t take your health history into account when deciding whether or not to sell you a major-medical, comprehensive health insurance policy.

They cannot exclude a pre-existing condition from coverage, nor can they charge you more because you have a pre-existing condition.

This has made it much easier for people with pre-existing conditions to buy individual health insurance, to change jobs, to retire prior to being eligible for Medicare, or to strike out on their own as an entrepreneur. People no longer have to worry that they’re one diagnosis away from being uninsurable.

Health insurance sold on the health insurance exchanges created by the Affordable Care Act is guaranteed issue, meaning a health insurance company can’t refuse to sell you health insurance coverage as long as you’re applying for that coverage during the annual open enrollment period.

The same is also true for individual major medical coverage sold outside the exchange, which must also be ACA-compliant.

When Is Open Enrollment on Health Insurance Exchanges?

If the ACA Is Repealed, Will Pre-Existing Conditions Become a Problem Again?

On May 4, 2017, Republicans in the U.S. House of Representatives passed the American Health Care Act (AHCA) and sent it to the Senate. But despite introducing several different variations of the bill, Senate Republicans were unable to garner enough support to pass any of them.

The initial version of the AHCA would have retained pre-existing condition protections, but the MacArthur Amendment altered the bill to allow states to waive some ACA consumer protections. Notably, states would have been able to allow insurers to charge higher premiums in the individual market when an applicant had a pre-existing condition and hadn't maintained continuous coverage for the 12 months prior to enrolling in the new plan. 

The MacArthur Amendment in the AHCA would also have allowed states to change the definition of essential health benefits, so skimpier plans could be sold. That would have indirectly impacted people with pre-existing conditions, as plans that include coverage for their conditions might have become unavailable or prohibitively expensive.

The Senate versions of the legislation that were introduced in 2017 took varying approaches to the issue of pre-existing conditions. In general, while the talking point was generally that people with pre-existing conditions would be protected, the reality was that they might not be. A common theme was the idea of giving states more flexibility to change the definition of essential health benefits, or block granting the ACA's funding to the states and let them develop their own solutions.

The clock ran out on budget reconciliation for 2017 on September 30, and with it, the possibility of repealing the ACA with a simple majority in the Senate. But Republican lawmakers have vowed to try again in 2018 to repeal the ACA, and it's unclear whether they'll be successful.

Eliminating pre-existing condition protections is anathema to most people, as that protection tends to be one of the most popular ACA provisions. But it's also a factor that has caused premiums to increase in the individual market, and some lawmakers would like to see less robust protections for people with pre-existing conditions, in trade for lower overall premiums.

A lot remains to be seen about the future of the ACA, and the issue of pre-existing conditions is likely to come up again in the near future. But for the time being, all of the ACA's consumer protections remain fully in place. Open enrollment for 2018 coverage begins November 1, 2017 and in most states, it will end December 15, 2017. This is your opportunity to purchase individual market coverage, and your medical history will not be a factor in your eligibility or your premium.

Sources:

Department of Health and Human Services, Your Rights Under HIPAA.

Healthcare.gov. Read the Affordable Care Act.

House Committee on Energy and Commerce, MacArthur Amendment to H.R. 1628, Section by Section Summary.

Kaiser Family Foundation, Health Insurance Market Reforms: Guaranteed Issue. June 2012.

Kaiser Family Foundation, Summary of the American Health Care Act, May 2017.

 

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