How the Senate's Health-Care Bill Would Cause Financial Ruin for People With Preexisting Conditions

Republicans are going to insist otherwise, but that’s simply not the case.

Senate Majority Leader Mitch McConnell
J. Scott Applewhite / AP

If there was one goal Senate Republicans had set out to achieve in developing their health bill to show they were less “mean” than their colleagues in the House, it was to take away the House Republicans’ green light for insurers to once again discriminate against those with pre-existing health conditions. Senate Republicans were willing to drive up deductibles and co-pays and be more draconian on Medicaid cuts, but on the one issue of pre-existing conditions they were intent on being less “mean,” as President Trump termed the House bill. Now that the text of the bill has been released, it’s clear that they have failed to achieve that.

As they argue for the bill, Republicans are going to claim that it will not allow insurance plans to discriminate against people because they have a pre-existing condition. But that just isn’t the case. The Republican plan may not allow insurers to discriminate against a pre-existing condition through the front door, but they’ve created a backdoor way in.

So what is this backdoor for discriminating against those with pre-existing conditions and how does it work?

Answering that question requires understanding the importance of a key protection in the Affordable Care Act, what is known as the “Essential Health Benefits” requirement. These Essential Health Benefits rules require insurance companies to cover critical care, such as treatment by doctors, hospital stays, and prescription-drug costs. The guarantee of Essential Health Benefits means that no insurer can provide any health plan that excludes these critical benefits. Perhaps it goes without saying, but if these benefits are not covered, a plan is all but worthless to those with serious pre-existing conditions.

The Affordable Care Act does allow, through Section 1332, for states to have some flexibility to waive these and other requirements, but only if they meet very rigorous conditions or “guardrails” that ensure coverage remains available, affordable, and high-quality. This is where the new Senate bill makes significant—and dangerous—changes. The bill drives straight through these carefully crafted guardrails. Today, to waive requirements like essential benefits, a state must show that the alternative insurance being provided is “comprehensive,” and “will provide coverage and cost-sharing protections against excessive out-of-pocket spending.” These careful conditions on quality are removed in the Senate bill, replaced with a bare-minimum requirement that the alternative doesn’t increase the federal budget deficit. States will be able to easily waive the requirement to cover Essential Health Benefits, without any careful conditions to ensure the quality and affordability of coverage.

As a result, insurers will offer skinny plans with less coverage that falls far short of the needs of those with serious health conditions. This is how it used to work: Before the Affordable Care Act, according to the Kaiser Family Foundation and the Department of Health and Human Services, almost one in 10 Americans in the individual market didn’t have coverage for prescription drugs. Young and healthy people will opt for those plans, leaving those with pre-existing conditions in their own, much more costly, market. In the end, the effect is the same as if companies could just outright discriminate against those with serious health problems.

Consider, for example, a family with a spouse or parent with cancer whose drug treatment costs thousands of dollars for their drugs. They think they have a victory in that under the Senate plan, their insurance company can’t explicitly charge them more because of their family member with a pre-existing condition. But, unfortunately for them, they find that they live in a state that allows insurers to offer plans that don’t cover prescription-drug costs. This family will face nothing but bad choices.

Because the skinny, incomplete plans are a non-starter for them, they can’t take the cheap option. But everyone who’s young or healthy does. The only people choosing the alternative, signing up for a plan that actually meets their needs, are those with serious conditions. This will further drive up the costs of these plans—the only plans that actually cover the treatment that seriously sick people need—and will further drive the young and the healthy away.

The state may not explicitly say they are making those with pre-existing conditions pay more, but that will be the impact. Many of those families will simply not be able to afford the care they need. And it could get worse. A thoughtful analysis by Matt Fiedler at the Brookings Institution found that where states can waive Essential Health Benefits, insurance companies and employers could reinstate annual and lifetime limits on coverage.

Simply put, the Senate bill will open the door to states forcing people with pre-existing conditions into segregated markets that will lead them to pay far, far higher costs than everyone else. People with pre-existing conditions could run into new annual or lifetime limits on how much insurance coverage they can get. That means those with the most serious chronic health conditions (and their families) will be at increased risk of financial devastation and even bankruptcy. The bottom line is that the backdoor discrimination the Senate plan allows against those with pre-existing conditions is as cruel as the discrimination in the House bill which the Senate claimed to fix.

These are exactly the reasons why the American Cancer Society urged concern about waiving these critical protections: “If a state decides that prescription drugs are no longer an essential health benefit, a plan could cap the amount it covers for cancer drugs—or decide to not cover cancer drugs at all—leaving patients to pay the entire bill.” And it is why they urged the Senate to “return to the drawing board” when they saw the bill’s text.

And it’s not only coverage for expensive drugs: By requiring insurers to cover Essential Health Benefits, the Affordable Care Act protected the 62 percent of individual-market enrollees who before the law did not have maternity coverage, the 34 percent who didn’t have substance-abuse-treatment coverage, and the 18 percent that did not have mental-health coverage. With the broad waivers like those possible under the Senate bill, one could expect that Essential Health Benefits like covering drug-abuse treatment, including for those with opioid abuse, and mental illnesses and maternity coverage could be dropped in various states, meaning more discrimination against women and millions with mental illness or histories of drug abuse.

This bill will take American healthcare back to what everyone in the U.S. should recognize was a completely broken system before the Affordable Care Act. It will takes the country back to a system in which companies often profited not by how well they provided healthcare but by how well they discriminated against or screened out those who faced the most challenges. President Trump promised “insurance for everyone” and lower costs, but this bill will bring the country back to a system in which insurance only works for the healthy, and the sick can’t afford the coverage they need.