Got a Pre-Existing Condition? Why You Should Worry

by Nancy Metcalf Health Writer

People with pre-existing medical conditions, such as heart disease or diabetes, will be taken care of under the replacement plan for Obamacare, President Trump has promised.

But that plan, called the American Health Care Act, which passed the House of Representatives earlier this month, could strand people who have pre-existing conditions with health insurance that has high premiums and skimpy coverage.

That’s on top of the higher premiums and deductibles that the law would create for everybody buying insurance on their own.

Here’s how that would work.

1. Insurance companies would still have to sell coverage to sick people, but they could charge very high premiums for it. Under the AHCA, insurance companies could go back to the pre-Obamacare practice of underwriting premiums, meaning they could charge people different amounts depending on their health history. That would mean low premiums for healthy people and high premiums for people with pre-existing conditions.

There would be no limit on how much they could jack up premiums for people with expensive conditions and it would be up to the insurance companies to decide what pre-existing conditions they don’t like. This would be especially painful because the AHCA also reduces the government subsidies that help lower-income people pay for health insurance.

The AHCA gives sick people a theoretical out: It says that if you don’t let your insurance lapse, you can stay in the “community rated” risk pool, where everybody pays the same regardless of their health history.

But insurance experts say that almost immediately healthy people would drop their community-rated plans and sign up for the underwritten plans, which would be cheaper for them.

“Insurance companies would probably encourage healthy people to ‘deny’ continuous coverage in order to get a lower rate,” predicts Karen Pollitz, who studies the individual market and tracks legislation at the Kaiser Family Foundation.

That would leave sick people with two bad choices: either stay in the community rated risk pool, which would get more expensive over time because all the healthy people would have abandoned it, or move to the underwritten pool and pay higher premiums.

2. Your plan might have dollar limits on coverage or even not cover entire categories. The replacement health plan would change the “10 essential health benefits" that insurance plans now sold to individuals must cover. States could take whatever they wanted to off the essential benefits list (the exception being preventive services like cancer screenings and immunizations).

For instance, states could declare that only generic drugs are essential benefits. Insurance companies would then be able to cap expenses for branded and specialty drugs or not cover them at all.

Or states could take outpatient treatments off the list, meaning insurance companies could once again sell policies that don’t cover, say, your chemotherapy bill for colon cancer.

3. A high-risk pool won’t save you. The AHCA’s supporters say the law won’t leave sick people high and dry because it sets aside roughly $23 billion over nine years in high-risk pools for people priced out of the individual market.

That may sound like a lot but wouldn’t come close to meeting the need, according to numerous analyses, including one from Avalere Health, a respected health care consulting firm.

Avalere estimates this high-risk fund would only meet the needs of about 110,000 people—about 5 percent of the estimated 2.2 million Americans in the individual market who have chronic health conditions.

“There just isn’t going to be enough money,” Kaiser’s Pollitz says.

Nancy Metcalf
Meet Our Writer
Nancy Metcalf

Nancy Metcalf is an award-winning independent journalist specializing in health topics. A senior writer and editor for Consumer Reports for more than 25 years, she is a nationally recognized expert on health insurance and health reform.