Will Guaranteed Issue Survive? Perhaps, but an Economist Predicts Changes

The ban on insurers using pre-existing conditions to deny coverage is hugely popular with voters in both parties.

UPDATE: On Friday, November 11, 2016, The Wall Street Journal reported that President-elect Donald J. Trump said he would consider retraining provisions of the Affordable Care Act that bar insurers from denying coverage based on pre-existing conditions and the tenet that lets parents keep adult children on policies up to age 26.

As a candidate, President-elect Donald J. Trump vowed to “repeal and replace” the Affordable Care Act (ACA). Senate Majority Leader Mitch McConnell, R-Kentucky, said Republicans will waste no time scrapping President Obama's signature law.

But as the reality of Trump’s unexpected win sunk in Wednesday, healthcare experts and ordinary citizens alike pondered life without parts of the law that were game changers after January 2014. This includes “guaranteed issue,” the tenet that bans insurers from exclusions based on pre-existing conditions.

Glenn Melnick, PhD, a health economist at the University of Southern California, said he expects that whatever Republicans design to replace ACA will include guaranteed issue in some form, because it is hugely popular.

“Of all the policies within the ACA, this one seems too uniformly popular on both sides of the aisle,” he said in an interview. The other ACA provision that would likely survive, he said, allows parents to keep adult children on health plans up to age 26.

Guaranteed issue was popular back in March 2013, when the Kaiser Family Foundation’s Health Tracking Poll found that 66% of consumers supported it—including 75% of Democrats, 56% of Republicans, and 67% of independents.

Those results were reported when the concept existed only in theory—now that consumers have become accustomed to this benefit, taking it away may prove more challenging politically. Online forums have filled with stories of cancer survivors or mothers of special needs children who fear what the future holds.

On Pantsuit Nation, the Facebook page created for Hillary Clinton supporters, one woman from San Francisco wrote: “I am a two-time ovarian cancer survivor who is a single, self-employed woman—proudly so. But I have not slept for two days because I am terrified what will happen ... Previously, I was paying $1000 a month for terrible insurance and with the ACA, I now pay $337 a month. Will my pre-existing condition be brought back up? What will I get instead? What if my cancer returns?”

Melnick said he anticipates that ACA’s replacement would subsidize premiums differently and more efficiently than they are funded today. The current law functions with a series of subsidies—young adults subsidize middle-aged Americans (which is why so few young adults have signed up)—the taxpayers at large have subsidized the poor, and the individual market is set aside on its own, apart from the rest of the risk pool.

In a more efficient system, Melnick said, those with serious health problems would be eligible for tax credits if premiums rose above a certain percentage of income. This way, insurers can charge what is actuarially necessarily, but coverage remains affordable.

“Insurance companies don’t exclude people because they’re sick—they exclude them because they can’t charge an actuarially fair price,” Melnick said.

Because insurers now have several years’ worth of data on this new group of enrollees, Melnick believes it will be in their interest to find a way to keep them in the market, because they now know how to price the products. Companies, however, will demand a different way to set prices and ensure that revenues reflect risk.

As for the other subsidies in the system, such as Medicaid expansion, those are likely in serious jeopardy, Melnick said.

Before the ACA. Pre-existing conditions had become part of the landscape in the years before the ACA passed. More and more Americans faced barriers to coverage for a certain condition, or could not afford it, because they had type 1 diabetes or had survived a bout with cancer. A June 2013 poll by the Kaiser Family Foundation found that nearly half of adults under age 65 (49%) reported a pre-existing condition, and that 25% of these individuals—that means 14% of all non-elderly adults—said they or a family member had been denied coverage or had premiums rise because of it.

Another 9% said that in the previous 12 months, they or someone in the household had passed up a job offer, stayed in a job they would have otherwise quit, or decided against retirement because they had no other options to maintain health coverage.

For those who have pursed freelance careers with the flexibility the ACA offers, the opposite is now true. The woman in San Francisco posting on the Pansuit Nation Facebook page reported, “I am applying for digital content and PR jobs like crazy.”