The term “pre-existing conditions” has become a catch-all to describe a certain category of health status, high-cost medical patients, and a popular provision of Obamacare under scrutiny in the health care reform process. It’s applicable to all three of these things. But without understanding how, debate of the GOP’s health bill has become further politicized and misinformed: What the legislation actually does to address consumers with pre-existing health conditions isn’t clearly understood.
The latest and perhaps most egregious instance yet happened Sunday morning, when President Trump participated in a messy interview on CBS’s Face the Nation. Trump brought up the issue of coverage for individuals with pre-existing medical conditions in the latest version of the American Health Care Act. After raising the point, host John Dickerson challenged Trump repeatedly to clarify and explain himself, leading to an inarticulate exchange that provided neither clarification nor helpful explanation of the Republican legislation.
The term “pre-existing” was used 18 times in the interview. Here is a review of the most relevant mentions, sometimes grouped together. First:
The amended AHCA includes language that allows states to waive two of Obamacare’s mandates on insurers, provided that the states demonstrate to the federal government how they would improve their insurance markets by doing so. One of these mandates relates directly to how much consumers with pre-existing conditions could be charged for coverage. But the mandate guaranteeing insurance to individuals who want it—including those with a pre-existing condition—is left alone. It is inaccurate to say the AHCA undoes the basic guarantee of medical coverage to those with pre-existing conditions.
Trump went on to describe, briefly, how the AHCA would address costs for individuals with those conditions. Because the conditions are expensive to treat, the cost of insurance to people who possess them is relatively high.
The original GOP legislation authorized $10 billion of federal funds that states could use in-part to establish “pools” for high-risk consumers—or those with pre-existing conditions. The money could be used by state governments to subsidize the high costs facing such people. The idea is to sequester those individuals in the insurance market and stabilize costs for relatively lower-risk consumers.
The amended GOP bill adds a $15 billion “risk-sharing” program to further support people with pre-existing conditions. The Washington Examiner’s Philip Wegmann explains: “In broad strokes, here’s how it would work. First the program identifies individuals who are driving up the cost of premiums because of pre-existing conditions. Then, unbeknownst to that enrollee, federal dollars subsidize their insurance while allowing the company to underwrite them as if they were healthy.”
At this point, it’s worth introducing how Obamacare tries to contain the costs for the people with pre-existing conditions—again, with the understanding that both the law and the AHCA guarantee coverage to people who possess them. Obamacare sets tight restrictions on how much insurers can vary the premiums of consumers based on certain factors. The factor most pertinent to the current Obamacare versus AHCA debate is based on “health status”: The law forbids an insurer from charging people of a similar age different premiums based on their health risk. The rub is this: If individuals are guaranteed coverage no matter what and won’t be charged more if they wait until they get sick to obtain it, they’re incentivized to simply forgo insurance. Why waste money every month if there’s no penalty in the long run? Without these sorts of consumers in the health care market, the leftover individuals are all high-cost, making premiums skyrocket and coverage unaffordable. To offset this problem, Obamacare included the individual mandate to try coaxing people into purchasing insurance. The more healthy (generally younger) people who buy in, the lower the average cost of coverage in the market.
Dickerson eventually got around to pressing Trump for more specifics:
After continuing to go back and forth, Trump’s answer eventually amounted to “yes.” This is where the discussion went off the rails. Dickerson incorrectly described what the Republican legislation does. One of the “fixes” to the bill was not to make “pre-existing optional for the states”—that would mean states were allowed to waive the guarantee of coverage. Instead, the fix was to allow states to waive the restriction on how insurers could charge people with pre-existing conditions.
The bottom line: Obamacare and the GOP bill both guarantee coverage to people with pre-existing conditions. Those individuals are costly. So Obamacare tries to suppress the expenses they face by regulating how much insurers can charge them. Republicans want to subsidize the expenses instead of squash them, with the use of funds from the government. Disregarding the merits, they’re simply two different ways of addressing the same problem.
Dickerson and Trump’s exchange remained unclear because Trump accepted Dickerson’s faulty premise. More:
Politico published the principles of the new AHCA amendment almost two weeks ago. The principles stated the amendment would maintain a “prohibition on denying coverage due to preexisting medical conditions” and “guaranteed issue of coverage to all applicants.” The text of the amendment covers the GOP’s bases doubly: “Nothing in this Act shall be construed as permitting health insurance issuers to limit access to health coverage for individuals with preexisting conditions,” a clause reads.
The ultimate issue here is that neither the interviewer nor the interviewee understood the legislation. That’s one way to guarantee that this debate remains murky.
