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Health Deal Could Weaken Protections for Pre-Existing Conditions

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Less than a month after President Donald Trump walked away from health care legislation, members of the House Freedom Caucus are working on a deal with the White House to revive the failed bill. But the emerging compromise could overturn a popular element of the Affordable Care Act that Trump has repeatedly promised to keep: Protections for people with pre-existing conditions.

Under the ACA, insurers are required to offer comprehensive health plans to everyone and charge them the same price regardless of whether they have a pre-existing condition. They can charge smokers more than non-smokers and older people up to three times as much as young people, but they aren’t allowed to take other health factors into account.

The proposal the White House is floating would change all that.

Pres. Trump and Trump Admin. Trying to Resurrect Health Care Deal 1:53

It would enable states to request a waiver to drop the ACA’s "community rating" provision, which would allow insurers to charge sick people more for insurance than healthy people. It also would allow states eliminate the package of 10 essential health benefits insurers are currently required to provide in each plan.

“We haven’t seen anything in writing, but our understanding is that both essential health benefits and community ratings would be part of those items that would be waivable,” Freedom Caucus Chairman Rep. Mark Meadows (R-NC) told reporters on Monday.

The combination would radically alter the insurance landscape and move it closer to the way things operated before Obamacare, when insurance was unattainable for many people with chronic health conditions.

While insurers would not be allowed to deny anyone insurance outright, they could charge sick people more than they could realistically afford for insurance while corralling healthy customers into cheap plans that don’t cover treatments that people with chronic illnesses need.

“Guaranteeing people with pre-existing conditions access to insurance with no rules about how much they can be charged means there is effectively no guarantee at all,” Larry Levitt, Senior Vice President of the Kaiser Family Foundation, told NBC News.

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Banning insurers from discriminating between healthy and sick customers is one of the most popular parts of Obamacare and both Trump and Republican leaders have been eager to claim credit for keeping these provisions in place.

In his first major speech to Congress in February, Trump promised his ACA replacement would “ensure that Americans with pre-existing conditions have access to coverage.” The House GOP’s website promoting its health overhaul still assures visitors that “Americans should never be denied coverage or charged more because of a pre-existing condition.”

Conservatives like the idea because it would bring down premiums for many healthier people, who would be able to purchase less comprehensive insurance at a lower rate. They argue states could insure sick people through subsidized high risk pools, but these systems had a weak track record before Obamacare and the House bill provides only temporary funding for states to implement them.

The group of people who need additional help to afford coverage under the proposed changes could also be significant: The Kaiser Family Foundation estimates some 27% of adult Americans under the age of 65 have a pre-existing condition that could have been used to deny them insurance under the old rules. The healthy winners under this plan could also become losers at any time if they get into an accident or develop an illness and discover their treatment is not covered.

Making things more difficult, the original House GOP bill would dramatically reduce subsidies to buy health insurance, especially for people most likely to be affected by the changes the White House is considering. The Congressional Budget Office projected that an earlier version of the House bill would hike annual premium costs for low-income 64-year-olds by $12,900 on average for insurance that covers fewer expenses. The CBO has yet to score the latest proposed changes, including the opt-out for essential health benefits, all of which would greatly affect the law.

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A major question is whether states would choose to significantly water down essential health benefits and community rating.

“I think most states would choose to waive community rating and many benefit requirements, under pressure from insurers who would likely threaten to drop out of the market otherwise once the individual mandate were repealed,” Levitt said.

But Michael Cannon, director of health policy at the Cato Institute and a proponent of reducing insurance regulations, suggested that activists might block changes under the current version of the bill in many states.

“Under an opt-out, ObamaCare opponents would have to fight state-to-state across 50 states to get even a partial repeal,” he said.

He also worried a future administration could reject state’s efforts to drop regulations, setting them up for a return to the Obamacare-era system if Democrats retake the White House.

“The federal government is still the big boss,” Rep. Louie Gohmert (R-TX), a Freedom Caucus member, complained to reporters on Tuesday. He argued states should not have to apply for waivers to make changes to regulation.

As both Speaker Paul Ryan and Freedom Caucus members stressed on Tuesday, there’s no deal in place yet. The proposed changes could alienate moderate members, many of whom also opposed the most recent health bill. Even if it passes the House, the Senate has shown little enthusiasm for their efforts so far.

There are procedural hurdles to passage as well: It’s very possible that the changes to regulations will violate the Byrd Rule, which requires reconciliation bills to stick to items that relate to the budget.

But the talks are significant for a bill that just days ago had been left for dead and the negotiations themselves could still affect policy even if they don’t produce a final deal. Major insurers are threatening to drop out of the individual insurance market next year and a big factor is ongoing uncertainty over how Congress and the White House will handle health care.