By Scott Ehrlich • The Federalist
On the day the American Health Care Act passed the Republican-controlled House of Representatives, the hashtag #IAmAPreExistingCondition was trending on Twitter. At the time I saw it, there were about 65,000 tweets on it.
Earlier that day, I had read in a different article that at its peak only 115,000 were members of the Pre-Existing Condition Insurance Plan (PCIP), a high-risk insurance program established as a bridge between pre-Obamacare coverage and the establishment of its exchanges. This brought to mind two key realizations: people care very much about those with pre-existing conditions and want to see them taken care of, but it’s also not a huge number of people and it’s very hard and expensive to insure them no matter what mechanism Americans use.
How People with Pre-Existing Conditions Get Insurance
Before I dive into data, let’s take a look at what having a pre-existing condition means for getting insurance. I’ll use myself for an example. For nearly two decades, I have been taking a prescription anti-anxiety medication. About a year ago, I was also diagnosed with Type 2 diabetes. For purposes of individual insurance, I have pre-existing conditions.
Around the same time the Affordable Care Act (ACA) had passed but not been implemented, I looked to move off my wife’s group insurance to save money. I thought adding a spouse to her policy was unnecessarily expensive and, as a healthy 30-year-old with no medical history of concern other than taking a small dose of anxiety medication, I could get a cheaper policy on the individual market.
So I went shopping for a policy—which, for those who don’t know, was pretty easy before ACA. I was happy to find one that fit my needs for $120 per month, about half of what it would have cost to put me on my wife’s policy, which made me quite happy. What made me less happy was the letter I received a week later telling me I had been denied coverage due to a pre-existing condition, my anxiety medication.
I thought this was ridiculous as, again, it’s not like I had been institutionalized or talked off the ledge. I just had bad social anxiety and my medication helped considerably. It was also a drug available in generic, and therefore only cost $25 or so a month at the pharmacy, something I would have gladly paid out of pocket. But I was not given that option, or even the option to waive coverage for any health risks that may come from that issue, which I also would have done. Just a blanket denial.
I was able to find insurance through the second carrier I tried, which I believe was $150 a month, bumped up to $180 per month due to my pre-existing condition. But I did receive coverage with a high-deductible (which I think was $3,000). Some may have said what I had “wasn’t real insurance,” although the ACA now calls it a Silver Plan, albeit then at half the rate. But I was very happy with it and never had a problem with any denial of service, even got my prescription drugs covered and, even though I had a pre-existing condition at that point, I was able to find and enroll in an individual plan from a major insurer by clicking on two websites.
Fast-forward to now. I am a 35 year-old with all the same conditions as before, but also a three-year-old son, living in a post-ACA world. My wife got a new job and the cost of insurance, although much higher than before (the rate on her pay stubs show it costs more than $1,000 a month before the employer contribution), now made sense for me to join.
Fortunately, I make too much to qualify for subsidies. For me to get a similar plan through the exchanges now, my premium would be around $400, more than double what I was paying before. However, I would be able to get insurance, guaranteed. If I were to look for someone to cover me now, I doubt that I could find coverage as easily, and certainly not as cheaply, if at all. So I write this as someone who not only understands pre-existing conditions and denial of coverage for them, but who would absolutely benefit from their protections in the ACA.
But I am in the minority. One of the important questions is just how big the minority of people with pre-existing conditions actually is, as that will be a large factor in determining how expensive it is to care for them and, therefore, what is economically feasible.
How Many Uninsurable People Are There?
This Kaiser Family Foundation study says a whopping 27 percent of people were uninsurable due to pre-existing conditions prior to the ACA. That means look to your left, look to your right, then look at the guy ahead: one of you is statistically uninsurable. Now, I hate to impeach the credibility of KFF, as I don’t have their track record nor resources, but I’d say these numbers are not just unlikely but verifiably false, and not just because KFF has been a huge cheerleader for the ACA from the beginning. I simply look at the stats.
According to the Census Bureau, in 2009, before the ACA passed, and before the way to track the uninsured amount of people was changed to make it look lower to make the ACA appear more effective, the uninsured population was 16.7 percent. This was, as the graph shows, at the height of the recession, when the unemployment rate averaged around 7.5 percent nationwide.
So, at the worst possible time, when Americans, most of whom get insurance through their employers, had high unemployment, the rate of uninsured was still 16.7 percent. Now even I can see that is a smaller number than the 27 percent KFF claims are uninsurable, since a heck of a lot more people than that were insured at this time, and, therefore, insurable.
On the other end, the ACA established PCIP. This was incredibly generous insurance to people with pre-existing conditions, far more generous than previously established high-risk pools. There were no exclusions, no waiting periods to sign up, deductibles were as low as $1,000, and out-of-pocket maximums were less than $6,500. I am sure many of the healthiest people reading this article wish they could get a policy like that today, let alone a person who has a serious condition in need of immediate treatment. Yet only 115,000 people took advantage of this offer, at its highest level of enrollment. That, again, seems like far less than 27 percent of the population, KFF.
To be completely blunt, I follow this stuff pretty closely, and until I was researching this article I had never heard of the PCIP. I was aware there were largely unutilized pools for high-risk people but knew little more about them. So we can assume many people who may have benefitted from this program didn’t know it existed. Another 200,000 people took advantage of state-run high-risk programs, which were often far less generous.
So we can assume there were at least 500,000 people who would have taken advantage of one of these programs if they were aware of and could afford them. Despite the widely reported 1 in 4 figure, we can also safely assume no more than 50 million people were uninsurable pre-ACA.
‘Uninsurable’ Is a Flexible Term
We need to also remember that not everyone “uninsurable” was truly that. According to my first insurer, I was. According to the second, I was not. If you were a member of Medicaid, Medicare, Tri-care, or an existing group plan, you didn’t have to worry about pre-existing conditions, even then, as these are group plans that base risk on the pools, not individuals. So only people in that market (like me) had to worry about that clause pre-ACA.
That wouldn’t even include citizens of Maine, Massachusetts, New Jersey, New York, Vermont, and Washington, as their states already had (and still have) guaranteed issue. Since then, many states have passed additional guaranteed issue protections that are unlikely to be repealed.
Further, it’s hard to imagine states with at least one house of their legislature or a Democratic governor would apply for a waiver and move to abandon coverage for pre-existing conditions. So let’s assume, for the sake of discussion, that only states under complete Republican control would consider applying for waiver (states without waivers keep community rating and guaranteed issue, making the pre-existing coverage issue moot regarding insurance access).
As of February 2015, there were about 6,943,000 people in those states with coverage through the exchanges. Let’s round that up to 7 million to account for people who purchased outside the exchanges, population growth, enrollment growth, and general simplicity. Using the KFF number of 27 percent uninsurable leaves us with about 1,900,000 people who may be affected on the higher end. Using the 16.7 percent Census Bureau number, equal to the percentage uninsured at the height of the recession, and you are talking about 1,170,000 million people potentially affected by this change.
So will these 1.2 to 1.9 million people be worse off under the AHCA than under ACA? Probably. This assumes the 25 states under Republican control all ask for and are able to get waivers, and these waivers aren’t rescinded by a potential new administration in 2021. These numbers are also on the high end, as people that are currently insured and keep constant coverage will still get guaranteed issues and community rating.
Therefore, on the very high-end, we are talking about 1 million people, almost all of them older than 18 (since those younger than that are covered by Medicaid or the Children’s Health Insurance Program, depending on family income). That’s also if all of these conditions are met in the maximum number of cases, meaning the true number of people to be affected will probably be less than half a million people. While it is terrible that it’s still that many people, you are probably only looking at 0.5 of the adult U.S. population facing any chance of a potential insurance issue.
Now that we’ve discussed pre-existing conditions and seen how they can affect insurance access and rates, next we’ll look at what caring for those with pre-existing conditions mean to everyone else’s rates, what can be done to help them, and what those decisions would cost us.
Scott Ehrlich is the COO of DTC Perspectives and the host of the upcoming health policy radio show “Debating Health.” You can see more about his show at www.debatinghealth.com or contact him on twitter @debatinghealth. He lives just outside of Atlanta with his wife, son, and 3 pugs.