There is a lot of talk about medical “preexisting conditions” in politics these days. But what is the truth
about how preexisting conditions are treated under current law? What protections will be in jeopardy if
the Affordable Care Act (ACA) is fully or partially repealed?  Like most issues with health care… it’s complicated. Here are some details and background that should help clarify the discussion:

What are preexisting conditions anyway?

Preexisting conditions are previously diagnosed or treated health issues that existed before an individual
enrolled in an insurance plan. A lot of Americans have preexisting conditions. The Kaiser Family
Foundation (a program independent of Kaiser Permanente) estimated in 2016 that about 52 million
people, or about a quarter of the population under 65 have preexisting conditions. These numbers make
it clear why people are concerned that they keep their coverage without any exclusion for their preexisting
conditions.

Health insurers have struggled with how to price for preexisting conditions for decades. Health
“insurance” couldn’t exist if everyone could wait until they were sick to enroll in coverage. Can people
wait until their house is on fire to buy a homeowner’s policy? – Of course not. But that is what health
plans are asked to do if some protections aren’t in place that keep healthy people paying premiums.
There is a delicate balance between what is financially viable, and what is needed to protect people with
preexisting conditions.

Preexisting protections have been in place since 1996

There is a good deal of ambiguity about whether American’s are at risk of losing coverage for preexisting
conditions if the ACA is changed or overturned. The majority of Americans get health coverage at work
through employer-sponsored health benefit plans. Since the passage of the Health Insurance Portability
and Accountability Act (HIPAA) in 1996, Americans have been protected from losing their pre-existing
coverage status. This law banned applying waiting periods for preexisting conditions for any employee
who has been continuously covered without a break in coverage of more than 63 days. This provision
addresses the concern of people simply jumping in and out of coverage whenever they may need health
care. Of course, insurance can’t work for anyone if healthy people don’t pay for coverage.

This provision was designed to protect workers changing jobs from the application of new preexisting
waiting periods. This has been largely successful in eliminating preexisting exclusions in group health
plans. HIPAA also prohibited denying coverage or raising premiums for individuals and small groups
based on health status or medical history. This has been the law for 24 years.

So whats the problem?

HIPAA has been less successful at protecting the minority of Americans in the individual health insurance
market. Although individuals couldn’t be declined for coverage, there were no limits on the premiums
companies could charge on these policies. This resulted in some unhealthy people being charged
incredibly high premiums that effectively priced them out of coverage for their medical conditions.

The Affordable Care Act (ACA), passed in 2010, directly addressed these concerns by barring all health
insurers from excluding people based on preexisting conditions, placing waiting periods on conditions, or
charging higher premiums. The ability of Americans to enroll in individual health plans that are
guaranteed through the federal marketplace is what most people think of as “ObamaCare”. These
“ObamaCare” provisions of the ACA provide for premium reductions and tax credits for people below
certain income levels.

The downside of this has again been high premiums. Relatively few insurers have stayed in the individual
health insurance market due to losses they claim while attempting to insure individuals under these rules.
The result in many states has been few plan choices, or only one choice of plan, very high deductibles
and high premium rates. Many would argue that people, who don’t qualify for a premium reduction, can’t
afford individual coverage in most states.

What is the current debate about?

Neither Democrats nor Republicans have been completely honest about preexisting condition protections.
Democrats have successfully raised concern about the future status of preexisting conditions in
discussions of health care solutions. On the other side, while current law protects most Americans from
preexisting condition exclusions, Republicans have proposed dismantling parts of the ACA, and it is
conceivable that preexisting conditions could be collateral damage if the law were totally repealed. A
2019 Senate Republican bill would have required insurers to offer coverage to people with preexisting
health conditions, but would not have required coverage of the conditions themselves. This is likely the
source of much of the debate.

There have been half-truths and incomplete arguments coming from both political sides of this issue. It
seems neither side wants to clarify exactly what they are proposing. This creates speculation and anxiety
from the 52 million Americans with preexisting conditions. This uncertainty is also frustrating for the health
care benefits community as we advise clients on what’s next in this debate.

It now seems unlikely that health care proposals from either side will allow preexisting conditions to be
excluded from coverage. It has become a flashpoint issue in the presidential election. Time will tell if there
is more clarity about this during the upcoming election season.

Gregg Kennerly is the President at Advanced Benefit Strategies of Virginia, which designs and
implements innovative corporate health care plans. Reach him at service@absofva.com or 757-536-
4554.

If you have any additional questions regarding your health benefit coverage, visit our website.