Repeal of ACA pre-existing condition rules could leave millions of newly insured without coverage

The Republicans’ proposals to replace the pre-existing condition rules (sections 1101, 1331, 1341, and 1501) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) with states’ high-risk pools for individuals who would be denied insurance coverage or charged higher rates in the individual insurance market “will be insufficient to maintain the health care access gains made since 2010,” according to an Issue Brief (Brief) published by The Commonwealth Fund. The Brief, which compared coverage and access gains for people with pre-existing conditions after passage of the ACA with state high-risk-pool enrollment prior to the ACA, concluded “[i]f the ACA’s pre-existing conditions rules are repealed, millions of Americans could find it difficult to obtain affordable health care.”

Pre-existing conditions defined

The definition of pre-existing conditions includes a range described narrowly and broadly, the Brief explained. “The narrow definition includes very costly health conditions” that could result in the denial of coverage for individuals prior to the ACA provision, while “the broad definition includes sight less expensive chronic health conditions” that, without the ACA provisions, could result in unaffordable health insurance costs for most individuals with pre-existing conditions.

Key findings

A prior study conducted by The Commonwealth Fund concluded that there had been significant improvements in people with pre-existing conditions to purchase health insurance coverage on their own in 2016 relative to 2010. In this Brief, The Commonwealth Fund determined that people with pre-existing conditions gained coverage and had increased access to care and found that improvement of access to care was greatest in states where coverage gains were the greatest. The data indicated that 16.5 million more people were insured in 2015 than from 2011 – 2013. The newly insured population included 16 percent of individuals that fell into the narrow definition and 57 percent that fell into the broad definition.

High-risk pools

The Brief examined the relationship between the increase in insurance coverage and access to care among individuals with pre-exiting conditions and prior enrollment in pre-existing condition insurance plans (PCIPs) and high-risk pool programs. According to the Brief, “there was no relationship between enrollment in the PCIP or the share of the nongroup market enrolled in high-risk pools and gains in coverage or access post-2014.”

Highlight on Alaska: Alaskan fund reminiscent of high risk pools–Will the country follow suit?

In the summer of 2016, Alaska’s Republican legislature passed, and the independent governor signed into law, a bill that established a state health insurance fund to stabilize rates and cover the medical costs incurred by high-usage insured individuals with insurance companies. The fund is reminiscent of high-risk insurance pools that existed prior to the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), when individuals could still be denied coverage for pre-existing conditions and had difficulty obtaining insurance. Although the law was a reaction to rising costs among Alaskans and Alaska’s insurers, other states may follow suit, now that President-Elect Donald Trump has indicated that his administration will “work with both Congress and the states to re-establish high-risk pools.”

Alaska’s small population is subject to high health care costs.  Only 23,000 Alaskans enrolled in the non-group market in 2016.  Average monthly marketplace premiums were $863 pre-advance premium tax credit (APTC) in Alaska, according to an April HHS Assistant Secretary for Planning and Evaluation (ASPE) report, compared to $396 in the rest of the nation. Premiums rose by more than 31 percent in 2016 in Alaska, compared to just over 1 percent nationally, and not all marketplace enrollees qualified for premium tax credits. Only one insurer, Premera Blue Cross, will remain in the marketplace in 2017. Notably, Premera insured 8,500 people in 2015, but nearly one-quarter of its monetary claims arose from only 37 cases.

House Bill (HB) 374, which was signed into law in July 2016, earmarks $55 million accrued through an existing 2.7 percent premium tax on all Alaskan insurers–not only health insurers–for a comprehensive health insurance fund. The fund provides insurers with money to cover the costs of claims incurred by high-risk residents. The bill sunsets in two years, but allows the state to apply for a state innovation waiver under section 1332 of the ACA.

The incoming federal administration, however, has stated its plans to repeal the ACA and replace it with new legislation.  Other states may consider following Alaska’s lead in order to continue to provide insurance to those individuals with the greatest need for it.