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How Pre-existing Conditions Factor in to the Healthcare Economy

One of the campaign promises made by President Donald Trump was that he would keep coverage for pre-existing conditions in any healthcare reform he proposed. Trump repeatedly stated on the campaign trail that he believed that people who had pre-existing health issues should still be able to get affordable health coverage. But there’s some question as to how he would fund the coverage for people with chronic illnesses since he wants to eliminate the individual mandate required under the Affordable Care Act, more commonly known as Obamacare, leading some experts to warn that his plan to change the law could lead to millions losing their healthcare coverage or being unable to pay premiums due to prior health issues.

What Are Pre-Existing Conditions?

Pre-existing conditions are health issues that someone has prior to applying for health insurance. A pre-existing condition can be life-threatening, such as a previous cancer diagnosis or heart attack, or it can be a chronic illness like diabetes, epilepsy or high blood pressure. If you’re pregnant when you apply for insurance, then pregnancy can be considered a pre-existing condition as well.

Before passage of the ACA, insurance companies were permitted to deny coverage to anyone who had a pre-existing condition. If they did offer coverage, they could charge higher premiums with higher deductibles. In some cases, premiums and deductibles were so high that many people with chronic illnesses avoided treatment as they could not obtain insurance. Pre-existing illnesses could also prevent someone from working, as is the case for someone with epilepsy that can’t be controlled by medication or a patient undergoing chemotherapy for cancer. Other types of pre-existing conditions can be managed, allowing the person to work while still being treated for the illness, such as diabetes or asthma.

Trumpcare and Pre-Existing Conditions

Trump has consistently said he plans to keep coverage for pre-existing conditions in any healthcare reform he proposes. He plans to manage the higher medical costs for protecting people with pre-existing conditions in a couple of ways.

  • His first step is to reinstate high-risk pools in each state where people with pre-existing conditions can purchase healthcare coverage separate from healthy people.
  • He also plans to implement a “Continuous Coverage Exclusion.” Anyone with a pre-existing condition who allowed their insurance to lapse, whether due to job loss or inability to pay the premiums, could be charged a higher premium for coverage for up to 18 months if they have a gap in coverage of more than 63 days between insurance coverage.

Experts claim that this type of coverage is very similar to the mandate currently in place that requires all Americans to have health insurance or face a tax penalty, except it’s more discriminatory since it only punishes those with current health problems when their insurance lapses, not the healthy. Supporters of the plan say that it would also punish those who wait until they are sick to purchase insurance, something that could lead to a “death spiral” if too many Americans chose to wait until they were sick to purchase health insurance.

Current ACA Protections

Under the ACA, no one can be denied coverage, charged more or denied treatment if they have a medical condition before applying for health insurance. In other words, an insurance company cannot refuse coverage if you have been sick in the past or have been diagnosed with a condition that could be considered chronic. Even pregnancy must be covered from the first day of your policy, right from the start.

In addition, under Obamacare, insurance companies cannot place lifetime or annual limits for screenings, treatments or preventive care. Plans must also include free wellness and preventive services. For those who make less than 400 percent of the poverty level, there are federal subsidies to make premiums and co-pays more affordable. Critics of the plan say that although premiums are affordable for most people with pre-existing conditions, the costs are skyrocketing for healthy individuals because not enough healthy people are enrolling in ACA-compliant plans. In some cases, the fine for not enrolling is far less expensive than the premium. Because healthy people don’t feel the need to visit doctors as often as those with illnesses, they don’t feel the cost of premiums is justifiable.

Number of People with Pre-Existing Conditions

One in four Americans has a pre-existing condition that made it difficult for them to obtain insurance prior to the ACA. Florida and California have the highest number of people with pre-existing conditions at 3 million and 4 million, respectively. About 30 percent of people under the age of 65 have pre-existing conditions in 11 states, including:

  • Alabama
  • Arkansas
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • Mississippi
  • Missouri
  • Oklahoma
  • Tennessee
  • West Virginia

Impact on People with Pre-Existing Conditions

If Obamacare is completely repealed, something that isn’t likely to happen primarily because Republicans don’t have the majority that they need to overturn the law entirely, as many as 19 million people could lose their insurance. By 2025, it’s expected that 24 million could lose insurance, although not all of these people may have pre-existing conditions. It appears that many people who are claiming that unhealthy people will lose coverage are basing their belief on Trump’s statement that he would “totally repeal Obamacare” and ignoring comments on his website as well as during speeches and interviews that he planned to keep the pre-existing conditions portion of the ACA. The difficulty will be in how to fund that portion of Trumpcare and how high-risk pools at the state level will work to keep those who have coverage now insured.

Insurance Rate Increases

Congress has already begun the steps to repeal portions of the ACA under a reconciliation bill. Such a bill passed the House and Senate in 2015 but was vetoed by President Obama. This bill would have repealed Medicaid expansion, premium and cost-sharing subsidies, as well as both the individual and employer mandates. The mandates have been Trump’s focus throughout the campaign, with his promises to eliminate them as soon as possible.

However, eliminating the mandate may reduce the number of insurance companies that participate in the exchanges and create much higher premiums than already found under Obamacare. Trump does not believe insurance rates will rise under his plan. He hopes to allow insurance companies to sell coverage across state lines to improve benefit offerings and spur competition nationwide.

Impact of Pre-Existing Conditions on the Economy

According to the White House, the ACA has been very beneficial for the economy as it worked to improve the health of all Americans, including those with chronic conditions. People who report better health are more likely to be employed, according to a recent population survey. There is less chance that someone will become “job-locked,” which occurs when someone with a health condition remains in a position that is not challenging or they have no opportunity for advancement simply because they are afraid they will lose their health insurance. Prior to the passage of the ACA, many people with chronic conditions could not get the medical attention they needed because they were unable to get insurance. This may have kept them out of the workforce or unable to obtain full-time employment due to the symptoms of their medical condition.

Healthcare Spending and Pre-Existing Conditions

Healthcare spending is on the rise once more after enjoying a modest break over the last few years. The Department of Health and Human Services estimates that healthcare spending will continue to outpace the national economy over the next decade. Covering people with medical problems is costly.

But there have also been improvements made in the quality and efficiency of healthcare services. Hospitals are working on reducing the number of patients who return after discharge by ensuring that people who get discharged receive better instructions for at-home care. Community-based organizations are also providing assistance for patients transitioning from long-term hospital care to home. As a result, Medicare 30-day hospital readmissions have dropped significantly.

It’s difficult to say for certain what will happen under Trumpcare as much of Trump’s healthcare plan is vague. He has promised to keep the pre-existing conditions protections, but he has not revealed exactly how this coverage will be funded. A complete repeal of Obamacare, however, could result in millions of people losing their health benefits and being unable to replace them.