6.3 million with pre-existing conditions face higher premiums under ACA replacement

If the current version of the American Health Care Act (AHCA) became law, 6.3 million people with pre-existing conditions could be charged more by insurance companies, according to an analysis from the Kaiser Family Foundation.

The Affordable Care Act (ACA) replacement plan, which was passed May 4 by a narrow margin in the House, doesn’t allow insurers to deny coverage based on pre-existing conditions, as insurers could do prior to the ACA. Individual states, however, would be allowed to waive the ACA’s community rating provision, allowing insurers to take a person’s medical history into account when determining their monthly premium—potentially pricing people with pre-existing conditions out of the insurance market.

The provision kicks in only if enrollees have a gap in their insurance for 63 consecutive days or more in the last year, which isn’t an uncommon occurrence. An earlier Kaiser analysis found that a total of 27.4 million people had an insurance gap of several months in 2015. Of that group, 21.1 million (77 percent) didn’t have a condition that would be declinable in the pre-ACA individual market, while 6.3 million (23 percent) did, which would “lead to a substantial premium surcharge under AHCA community rating waiver.”

“In many cases, people uninsured for several months or more in a year have been without coverage for a long period of time,” the analysis said. “In other cases, people lose insurance and experience a gap as a result of loss of a job with health benefits or a decrease in income that makes coverage less affordable. Young people may have a gap in coverage as they turn 26 and are unable to stay on their parents’ insurance policies. Medicaid beneficiaries can also have a gap if their incomes rise and they are no longer eligible for the program.”

Of those who received their insurance in 2015 on the ACA exchanges, 3.8 million had a pre-existing condition, making up about 25 percent of all adult enrollees on the individual market.

The Kaiser authors admitted their estimates could be off the mark for several reasons. The continuous coverage provision may act as a “strong incentive” for pre-existing condition patients to avoid insurance gaps, and it’s uncertain how many states would waive community rating. States which choose to do so would have to set up a high-risk pool or reinsurance program to cover those enrollees, but the funding in the AHCA for that purpose has been criticized as inadequate. 

“Some states might do so to roll back what they consider to be excessive regulation of the insurance market initiated by the ACA and preserved under the AHCA,” the analysis said. “Other states might come under pressure to implement waivers from insurers who believe the market would be unstable, given that the AHCA repeals the ACA’s individual mandate.”

How the Senate will change the AHCA adds to the uncertainty. Veteran healthcare lobbyist Julius Hobson Jr., predicted to HealthExec “what passed the House isn’t going to pass in the Senate.”

The Congressional Budget Office could make its own estimates on how patients will be impacted when it releases its updated analysis of the AHCA the week of May 22.