Here's how 'Obamacare' covered Americans with pre-existing conditions. What happens next?

Here's how 'Obamacare' covered Americans with pre-existing conditions. What happens next?

Nadja Popovich, Rich Harris and Jan Diehm

One of the most popular parts of the Affordable Care Act guarantees health insurance for people with “pre-existing conditions” – medical problems such as HIV, Alzheimer’s disease, and epilepsy. Before the law took full effect in 2014, people with these conditions were routinely denied coverage.

Back then, insurers in 45 states and the District of Columbia could reject individual applicants — those who didn’t receive insurance through an employer or the government — on the basis of health; five states didn’t allow so-called “medical underwriting”.

Insurers’ rationale for rejecting people with pre-existing conditions was straightforward: sick people are more expensive to cover than the healthy and young.

"Someone with cancer is going to make, let's say, a hundred times the health insurance claims of someone in good health in a year," said Karen Pollitz, a senior fellow studying health reform at the Kaiser Family Foundation. A study Pollitz authored last year found that, in 2011, the sickest 10% of Americans accounted for almost two-thirds of health spending in the population.

In all, at least 30 pre-existing conditions would automatically disqualify people from major health insurance plans before the Affordable Care Act, according to another recent study by the Kaiser Family Foundation. Even when applicants had less severe conditions, such as high cholesterol, insurers often sought to limit costs by charging higher premiums, increasing deductibles or modifying benefits.

The Affordable Care Act – or “Obamacare” as it’s affectionately and not-so-affectionately known – required insurers to cover everyone who applied on the individual market, regardless of their health. Insurers couldn’t limit coverage or charge more for the plans, either.

The law also required insurers to cover a wider range of benefits than before. These included annual doctor’s visits, preventive screenings, prescription benefits and mental-health care – often without charge.

As Donald Trump and congressional Republicans begin to dismantle the Affordable Care Act, the fate of such protections – and the millions of Americans who rely on them – is uncertain.

President Trump has signalled he would like to keep coverage for people with pre-existing conditions. Shortly before taking office, Trump told the Washington Post that a Republican healthcare plan would provide “insurance for everybody”.

But covering “everybody” is expensive — both for insurers and the government.

The Affordable Care Act spread the costs of covering sick people by requiring everyone, even the healthy, to buy insurance. This “individual mandate” meant that people couldn’t just wait until they got sick to get care. The law also provided subsidies to help low-income Americans afford coverage.

Here’s a simplified version of how it worked:

Let’s start with a hypothetical 100 people who don’t get insurance through an employer or the government. They’re seeking coverage on the individual – or “nongroup” – market.

For every 100 Americans, 27 have a “pre-existing” health problem.

This could be hemophilia, Crohn’s disease, sleep apnea, a history of cancer, or alcohol or drug abuse (even with recent treatment), among other problems.

Before the Affordable Care Act, people with these problems were routinely denied individual health insurance in most states.

A small fraction of those people were able to get coverage through special, state-run programs known as high-risk pools. These programs were expensive to run, hard to get into, and often offered limited benefits.

The rest remained “uninsurable” and had to pay out of pocket for their own care.

The Affordable Care Act brought everyone into a single insurance “pool”.

As mentioned before, the law mandated that insurers cover anyone who applied to their plans, regardless of previous health problems. It also required young and healthy people to buy health insurance and subsidized costs for low-income Americans.

The Affordable Care Act helped millions of previously uninsured Americans get coverage, including those with pre-existing conditions. But high costs were a leading criticism of the law.

Republicans must now figure out how to preserve one of the law’s most popular policies (covering people with pre-existing conditions) while dismantling others that it relies on (the “individual mandate” and subsidies).

No official replacement plan has yet been announced. But previous Republican healthcare plans offer a glimpse of what’s to come.

Last year, for example, Republicans passed a bill to replace the Affordable Care Act that was vetoed by Barack Obama. The bill’s architect, Congressman Tom Price, is now Trump’s pick to lead the Department of Health and Human Services.

Price’s plan still guaranteed coverage for people with pre-existing conditions, but only as long they kept paying for insurance. If their coverage lapsed – due to a job loss or other financial hardship, for example – insurers could reject future applications or charge higher prices.

To help cover these new uninsurables, Price and other Republicans have suggested reestablishing state-run insurance plans known as high-risk pools.

Such programs existed for 35 years before the Affordable Care Act and are “essentially the opposite” model, said Jean Hall, professor of health policy at the University of Kansas.

“With the high-risk pools, instead of spreading risk across a very large group, you concentrate risk in a very small group. You put all of the people with very high healthcare costs into their own pool, and of course the cost of covering them is very high because there aren’t any healthy people to offset” it, she said.

Not only were high-risk pools’ premiums and deductibles high, but the pools often capped annual or lifetime benefits and limited enrollment. The Affordable Care Act bars insurers from imposing such limits.

In 2011, high-risk pools covered just over 226,000 people across 35 states.

“Remember, we had a very high uninsured rate before the Affordable Care Act, when state high-risk pools were operating,” Hall said. "I don’t know why they would work better now than they did before."

If new and improved high-risk pools are expected to insure more people and provide better coverage, she said, they will need more generous funding from states and the federal government than they had in the past.