Saturday, May 03, 2014

Fauxbamacare freebie No. 1: Covering those with pre-existing conditions

In their burgeoning promotion of Fauxbamacare -- promises to repeal the ACA while retaining its most popular features, without specifying how -- dozens of Republican incumbents and candidates are promising to maintain affordable coverage for people with pre-existing conditions. Small wonder: approval of the provision is at 70% nationally, according to the Kaiser Family Foundation's March poll.

Of course, Republicans also love to bash the ACA for driving up the cost of private-market insurance for the unsubsidized.  They blame the rise -- which is real for those who earn too much to qualify for ACA subsidies and have no pre-existing conditions in their household -- on the ACA's new rules for what all insurance policies must cover, which took full effect on Jan. 1, 2014.

Here's the thing, though. Guaranteed issue -- the prohibition against varying the price or scope of insurance on the basis of the buyer's health and medical history -- is the prime driver of the increase in the base price of private insurance triggered by the ACA.

According to a study prepared for the state of California by benefits consultancy Milliman in March 2013, the average premium for unsubsidized buyers of private insurance in California would rise 30% in 2014. Nine percent of that rise was independent of the ACA. Various ACA provisions would raise or lower the cost. Among them, guaranteed issue, leading to an influx of less-healthy customers into the individual market, was forecast to push prices up 26.5%. The ACA's benefit requirements, in contrast, would raise premiums only by an estimated 4.8%.

Republicans hate on the benefit requirements, which could be tweaked if Republicans were interested in improving the law by their lights, and which in fact Republican governors and state legislators can toy with via state waivers provided for in the ACA (effective in 2017), if they're so inclined. They of course also vilify the individual mandate, which is the prime means of making guaranteed issue viable, as it offsets the influx of sick plan participants by bringing in many healthy ones as well. Yet they pay lip service to guaranteed issue, which under any "repeal and replace" scheme would drive up the cost of insurance for unsubsidized healthy customers, as it does under the ACA.

Some Republicans profess to favor covering those with pre-existing conditions via state-run high risk pools -- which have historically been drastically underfunded, and which would shift costs to taxpayers and to those with pre-existing conditions, in varying proportions depending on how they're funded.

It's important to keep in mind that people with pre-existing conditions are not some tiny unfortunate subset of the population.In a recent poll of four southern states, 57-60% of participants said that someone in their family had a pre-existing condition. Nationally, the percentage of Americans who have a preexisting condition -- one that would affect their ability to obtain insurance in the pre-ACA individual market -- ranges from 19 to 50 percent, according to an HHS report overviewing various studies.

For a detailed look at Milliman's assessment of the impact of various ACA features on the cost of insurance, see my prior post. This second take is one of my periodic exercises in unburying the lede, as I bury it too often.

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