Lawmakers in about a dozen states have touted their measures to enshrine Obamacare within their borders, saying their residents with preexisting illnesses will be protected even if the healthcare law meets doom in court.
But left out of their rhetoric is that paying for preexisting illnesses, from cancer to hemophilia, is expensive, and states aren’t rushing to pick up the tab.
“They put out the big headlines and everyone sort of cheers, but if the Affordable Care Act were to get overturned, it really wouldn’t do anyone any good,” Louise Norris, health policy reform analyst for HealthInsurance.org, said of state moves to replicate parts of Obamacare.
Obamacare not only made it illegal for health insurers to deny sick people or charge them more, but it also mandated a range of medical care. Because all of this is expensive, every year the federal government distributes billions of dollars so families only pay a fraction of what their coverage actually costs. Without the help, millions of people wouldn’t be able to afford the health insurance, making the protections moot to them.
According to Kaiser Family Foundation data, the federal government shells out more than $57 billion a year to help 9.2 million people pay for private health insurance under Obamacare’s marketplaces. It also pays for most of Obamacare’s Medicaid expansion, a price tag of $56 billion to allow almost 13 million poor people get government coverage.
A lawsuit waged by Republican state officials and supported by the Trump administration threatens these and a host of other Obamacare provisions. The 5th Circuit Court of Appeals is expected to rule on the case in the coming weeks, and if it doesn’t get sent back to the lower courts, then the losing side may appeal the decision to the Supreme Court.
States aren’t waiting until that happens and are codifying Obamacare’s protections. While some passed rules years ago, others were spurred by the lawsuit. Now, at least 15 states have some or all of the protective language in place, shows a report from the Commonwealth Fund.
But no state has a plan for how to make up the funding difference, which would require significant tax increases and sacrificing other programs.
“Picking up the federal share of Medicaid and the private plan subsidies is insurmountable for most states, if not all of them,” said Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University. “I don’t see how any state could step up to the plate.”
One of the reasons lawmakers passed protections is because they are popular with voters. The latest poll from the Kaiser Family Foundation found the majority of voters say it’s “very important” to keep them. The poll, however, does not ask how people feel about the protections if they cost more. Charles Gaba, a healthcare analyst who supports Obamacare and is the founder of ACASignups.net, said more states should pass the protections and face the cost question.
“It’s forcing people to literally put their money where their mouth is,” he said. “If you truly believe in the protections then guess what? It’s going to cost money, and a lot of people wont be able to afford it themselves.”
Years before Obamacare, a few states had preexisting illness protections and were met with premium spikes and insurer exits. When Obamacare came along, the cash influx helped 20 million more people gain coverage.
The pre-Obamacare history offers a cautionary tale for states that pass protections without allotting spending. Karen Pollitz, senior fellow at the Kaiser Family Foundation, said such state rules were important but also were insufficient on their own.
“It’s a key ingredient, it’s just not the full recipe,” she said.
States are reacting differently to the lawsuit. Washington state, for instance, codified the Obamacare protections but also is bringing a less-expensive health plan into its market. It kicked off a study to see how the state might offer subsidies in the future.
Jason McGill, who oversaw the healthcare plan, acknowledged it would be difficult for the state to replenish all funding.
“At the very least, it was important to guarantee that insurers could not take action against somebody with a preexisting condition,” he said. “I think we all understand the importance of that, that it is unconscionable someone who had pediatric cancer would be denied health insurance.”
If Obamacare is invalidated, then Louisiana will use a model similar to what Maine once had that was known as “invisible risk sharing,” in which customers don’t know they are in plans subsidized by the state. The plan was spreadheaded by GOP Attorney General Jeff Landry, who signed onto the lawsuit to strike Obamacare.
The Louisiana provision, known as a “guaranteed benefits pool,” would give the insurance commissioner the power to devise funding and was widely billed as a measure to protect preexisting conditions. Brent Littlefield, an adviser to Landry, said other states could consider a similar plan.
“Politicians that say there is only the Affordable Care Act or we have to go to ‘Medicare for all’ are ignoring these other potential solutions out there that may work well, if not better,” he said.
Another potential approach is what Massachusetts did before Obamacare, in which it worked with the federal government on a waiver to help pay for subsidies, though they weren’t as extensive as current law. Amy Lischko, who oversaw the plan and now teaches at the Tufts University School of Medicine, said states may be able to set up a similar arrangement depending on how the federal government responds if the law is struck down.
Though states are falling short with their rescue packages, there is a possible scenario in which their actions to codify protections would help: If the court were to leave Obamacare intact but throw out only the protections for preexisting conditions. The courts, however, have many ways they could rule.
If they were to strike Obamacare in full, then the affordability problem the law already faces would get worse. Under the current structure, only those making under about $48,560 a year for an individual and $100,400 for a family of four qualify for subsidies, while the rest have to pay full price. The unsubsidized population is pegged at roughly 4.5 million people.
Millions more choose to go uninsured altogether and therefore aren’t protected. The Trump administration found that 2.5 million customers who didn’t get help paying for their premiums recently left the market. Democratic lawmakers say the findings mean the government should be helping even more people pay for coverage, while Republicans say they show Obamacare is unworkable.
“People will write stories saying the protections are popular and stories saying the unsubsidized are getting whacked,” said Chris Jacobs, a conservative healthcare strategist. “They won’t necessarily connect the two: that the unsubsidized are getting whacked because of the protections.”
