Alternatives to the GOP’s Pre-Existing Conditions “Fix”
An Alternative to the Proposed Preexisting Conditions “Fix” Found in Tom Price’s Plan and the House GOP Better Way Plan
Tom Price (Trump’s pick for health secretary) and the House GOP (like Speaker Paul Ryan) all seem to agree that preexisting conditions are best solved by requiring “Continuous Coverage” and repealing ObamaCare’s mandates. We strongly disagree and believe many healthcare experts would too.
A provision that punishes people for wanting to re-enter the market essentially ensures the young and healthy will avoid getting covered, and this will likely raise costs. This isn’t the only gripe, but it is an example.
We offer our thoughts on the continuous coverage provision and suggest better ideas below.
On this page: We examine the GOP’s “fix” for preexisting conditions and the mandate, and offer alternative solutions that pair with Price and Ryan’s ACA replacement plans. These solutions include the use of a public option to replace public insurance and sick pools, a non-profit public network to keep costs down, and more. In this way, we are offering not just criticism on moral grounds, but a solution on practical grounds that takes the needs and wants of the GOP (like HSAs and a focus on the market system and private market) into consideration.
TIP: Our “fix of the fix” elaborates on an idea from the Burr, Upton, Hatch plan, a GOP repeal and replace plan that suggests automatic coverage with an opt-out. We offer an in-depth look a the House GOP “Better Way” plan here and TrumpCare here. We will be analyzing Price’s full plan soon. The perceptive reader will note that we aren’t anti-GOP or anti-Trump and that we offer praise where praise is due, so please don’t misread our staunch opposition to some provisions as opposition in general. We were also critical of the individual mandate before the ACA was passed, as that didn’t fair much better at addressing the real underlying issue.
How Did ObamaCare Address Preexisting Conditions? What Didn’t Work? What is the GOP “Fix”?
Before we can understand the Solution, we have to understand the Problem.
The General Problem – Preexisting Conditions and Mandates
Healthcare is a large part of our federal spending, and it is a large part of our economy.
In fact, if America’s health care industry were a country it would be something like the 6th largest country on earth. It’s a multi-trillion dollar economy.
Sick people, poor people, and old people use most of the money we spend. See one example of a study on this easily confirmable issue. If we allow the most costly to be excluded, then everyone else theoretically would get lower premiums and higher profits, depending on what type of entity one is.
Essentially, all of our healthcare problems are related to this one factor (Price gouging in drugs being a glaring “meta” issue, but not an issue directly addressed in Trump’s plan.)
The issue here is that the simplest way to lower costs is to limit spending on the costly sick, poor, and old by excluding preexisting conditions. However, to get 100% of America covered, all the sick must be covered. Meanwhile, nothing is worse for the healthcare economy than having sick people sign up but healthy people do not pay in. This is a worry of insurers that keeps rates rising under the ACA.
In other words, base healthcare costs and the reason for those costs aside, covering sick people is at the heart of rising costs. It is also at the heart of the debate about mandates (mandates to get coverage, mandates to keep coverage, and mandates for insurers to cover preexisting conditions and related services).
Obamacare’s Solution and Its Problems
ObamaCare (the Patient Protection and Affordable Care Act) eliminated preexisting conditions by phasing in a complete ban via a high-risk pool and readjustment payments made to insurers.
The mandate to cover the sick (and some state-based opposition) caused insurers to raise rates and required the individual and employer mandates as a protection for insurers. Thus, this one provision is in many ways the core of everything people love and hate about the ACA. It is also at the core of any “repeal and replace” plan. Thus, it makes sense that the GOP would offer a solution. That solution is “the Continuous Coverage Exclusion.”
The GOP’s Solution and its Problems
The GOP’s “Continuous Coverage Exclusion”:
- Allows insurers to charge you more and exclude coverage preexisting conditions for up to 18 months upon entering a contract. This is an “18-month preexisting conditions exclusion period.” See page 150 of Price’s bill for his version.
- Preexisting conditions exclude you if you have a gap in coverage of more than 63-days before entering a new contract.
- Meanwhile, anyone who can’t get private coverage can buy into a high-cost high-risk-pool.
The problem is that anyone who can’t get or keep continuous coverage, for any reason, at any time in their life, will face higher insurance premium costs and 18 months of having coverage for preexisting conditions excluded. UPDATE: The AHCA (the GOP repeal and replace bill) has a similar mechanism, see a summary of the AHCA for details.
People without health insurance coverage get cancer. People who had coverage their whole life, but were dropped when they got getting cancer because they couldn’t pay the bills or keep up with the workload lost their insurance. Many families were forced into medical bankruptcy. Those people had only one chance for coverage, a preexisting conditions pool. For more information about “a State health benefits risk pool,” see page 156 or see the temporary provision the ACA enacted that these pools would likely mirror.
This pool would be a state-run last-ditch effort to care for the sick that will cost taxpayers and those buying into the pool dearly if past pools are any indicator. This could leave millions without affordable healthcare choices, and those millions would surely be the sick, poor, unemployed (even temporarily), and many in the middle-class. Worst of all, the government takes on the full bill instead of the insurers. This means that taxpayer is on the line for our sickest, but insurers aren’t.
We can say the GOP’s solutions with “exclusion periods,” “high-risk pools,” and most importantly “FORCING AMERICA TO KEEP COVERAGE FOR LIFE VIA THIS NEW GOP MANDATE” is an out-of-date “fix” for the rising costs of ACA’s preexisting conditions provision. It protects insurance company profits at the expense of the taxpayer.
Furthermore, we can say that it re-awakens the added insult and injury of excluding the sick and poor from the healthcare system to keep everyone else’s costs down. This may seem as though it helps average citizens, but they are the ones picking up the tax burdens for all the unpaid medical bills. It is only helping the-1%-investor-or-employer who shares in insurance company profits. This is simply not moral by any reasonable philosophical measure.
So then, on to better solutions.
Better Ways: Ideas for Alternatives to the GOP Preexisting Conditions Exclusion
We cannot keep everything Price, Trump, and the GOP suggest. We cannot have a new HSA-based system with private Medicare and block-grant Medicaid, supplemental coverages, and tax credits based on income and age. If we could, we could try to “fix the fix.”
- Expand original Medicare to cover all citizens as a tax (original Medicare-for-all). There would never be an instance where a person lacks coverage. Everyone has catastrophic coverage as a tax, and the private market could sell supplemental coverage. GOP saves the day; the healthcare crisis is solved. TrumpCare is pure gold, not just in our time, but in the history books.
- Or, Offer a public option that doesn’t exclude preexisting conditions that everyone can buy into. An opt-in original-medicare-for-all.
Both of these solutions could come with a waiver for states to manage their networks, coordinating on a state-based level, which the GOP likes.
Both of these solutions are just screaming to have an HSA attached to them. So, if they do, that would be 320 million HSAs and 320 million customers to sell supplemental plans to and also, 320 million people covered for life! What a perfect marriage of liberal and conservative ideas.
Now, what if we offer to fund HSAs instead of offering tax credits? We might start by saying that, at 200% FPL, the tax credit becomes a tax break. The tax credit is the government putting a credit toward the HSA; a tax break is when you fund an HSA yourself. Now all Americans can enjoy the tax benefits of an HSA and every American, if they choose to invest with their HSA, gets to be a part of the market system both in terms of investing and in terms of using their HSA dollars to shop for care.
For those with low incomes, who can’t go the HSA route because they don’t have the money to fund an HSA, we provide a tier of the plan for low-income people which covers all costs (like Medicaid) but doesn’t offer tax credits. Consider that many Americans don’t even file taxes due to poverty. In this way, we incentivize people to raise their incomes and file taxes, and because a tax credit turns into a tax break via an HSA, we avoid any cliffs for those making their way up the economic ladder.
Here we could even just allow employers to buy into the public plan and fund HSAs directly, this would give employers a simple choice and could attract small businesses who wouldn’t otherwise buy into a health plan.
You could, instead of trying to play big government with high-risk-pools and strange rules for insurers, just take Medicaid, Medicare, ACA, and all of the socially minded Americans and let them join in a group plan that can be coordinated on a state-level. Then the private market, now unrestrained, could woo away customers with attractive supplemental insurance while we focus on building up non-profit networks in every region.
Let those who want to opt-out do so, and then, at that point, let the “the Continuous Coverage Exclusion” perhaps apply to them both in the general pool and the private market.
Thus, we would have:
- A Public plan with an opt-out which handles Medicaid and Medicare and all citizens who don’t opt-out.
- Supplemental coverage. Just like with current Medicare, a company takes over the contract. Those who buy a plan this way don’t have to pay into the public plan.
- An opt-out where those who elect not to get coverage or pay a tax have now elected to face the “the Continuous Coverage Exclusion” rather than pay a tax or buy a private plan, which is much more reasonable than forcing private plans for the rest of one’s life. In this situation a little “oops I was irresponsible and cost the state tens of thousands in unpaid care tax” is inevitable. You’d have to provide for it. When someone suddenly gets sick, we can absorb them into the public plan if needed over time or they can bounce back and go private. This opt-out doesn’t help anyone really, but it gives people their liberty, and that is probably worth the cost.
To detail the public plan more, we would add tiers and riders to the public plan that worked like this:
- Basic plan: Just has the maximum-out-of-pocket and basic essential coverage for emergencies. It works like catastrophic under 65 and works exactly like the Original Medicare over 65.
- Silver and Gold Plans: People should be able to opt-in to paying more for lower maximums, copays, and coinsurance.
- Sick-rider: If you are sick, you pay this. It replaces a high-risk-pool and platinum plans.
- Drug-rider: If you have drug needs, other than chronic essential drugs, you can opt-in to a part D-like plan. For over 65, there is Part D.
- Medicaid-rider: Those who don’t file taxes or are below a certain income get a basic plan with no cost sharing and no maximum at no cost. All current Medicaid funding goes toward this.
The public plan should utilize a public non-profit network, which would have to be phased in over time. It should model itself after Bernie Sanders’ American Health Security Act, S. 1782. See explain the mechanics of this vital non-profit public network here. Bernie’s plan is, next to Tom Price’s plan, one of the only truly well thought out pieces of legislation I’ve seen, and the bit about non-profit networks could really work wonders for keeping healthcare costs down. It would be a very big mistake to for the GOP to dismiss Bernie’s good ideas just because of his politics; his plan is very well thought out and would pair nicely with the GOP’s current solutions.
In summary, although this is only the gist of the idea, the concept is that we are taking pressure off of the private market, offering those socially minded Americans the public solution they have wanted for decades, and enacting those key market-minded provisions the GOP wants.
The idea here isn’t to centralize everything; instead, it is to take weight off the private market, to offer state-based solutions, to focus public plans on non-profit networks, to make those HSAs work even better, and to offer Americans choice.
We know we don’t all have the same political beliefs. I believe that we all have the same set of ethics and these give us the only true mandate, “to care for all the members of our nation, especially the sick and poor who are most in need.”
TIP: Articles like “TrumpCare could work. Here’s how.” are well written and insightful, but overly optimistic. How can we say something works when it forces us to buy private coverage and keep it for the rest of our lives or face an 18 month exclusion period? That makes President Obama look like Ron Paul! Many parts of the plan work, but the “the Continuous Coverage Exclusion” is perhaps even worse than the mandate! A public option or single original Medicare solution still puts the state to work, but it gives America choices without sacrificing a class of people to reduce costs for everyone else. I would like to ask the GOP, Price, Ryan, or Trump, to take the high road and truly fix the ACA without tying us to the restrictive provisions like the requirement for continuous coverage that proved so detrimental in the past.
I love this whole article and find the idea brilliant. You make so much sense, and the combination of lowering government costs while still providing for all Americans including a large part of the population who is terrified of having no insurance if something goes awry…and so often out of the blue it does, all I can say is God Bless you!!!
Thank you for the compliment. Fingers crossed someone form the new administration feels the same way!
Modern American health care is VERY complex and that’s why most people love or hate Obamacare based on like/hate for party (Right-wingers formed that plan decades ago, then they and their followers attacked it while leftists mostly jumped on board…neither of which tend to know its pros AND cons OR the pros/cons BEFORE it or about current GOP proposals or with the article in question…speaking of which….I commented about the article asking: Why don’t people like you talk about price controls, price negotiations, and price transparency?
I guess that’d require thinking to actually reduce costs instead of spread them around while picking n choosing the pros over the cons (e.g. your public option will be very costly if people can wait till they get sick to buy into it, and may collapse like the co-ops have mostly collapsed under the ACA and HSA’s and tax credits will add to the debt…and none of these costly programs except maybe HSA’s is morally or politically ok with most right-wingers and some leftists).
I do think that those things should be discussed. We hardly got every point that needs to be made in our theoretical fix. I’d love to discuss this all more. The public option would ideally be designed to avoid collapsing. 😀
Thanks for the feedback.
“People who had coverage their whole life, but were dropped when they got getting cancer because they couldn’t pay the bills or keep up with the workload lost their insurance.”
If they lose their workplace coverage, can’t they then just go to the exchange, estimate their income appropriately, and either get on Medicaid or (likely) get a subsidy on a plan on the exchange under “loss of insurance”?
If they can’t pay their insurance bill due to the illness, that’s a bigger problem as “being unable to pay premiums” doesn’t (I believe) qualify one to enter a new plan except during open enrollment. The solution, for those who can get themselves into the position early in life, is to save enough (perhaps in an isolated account) to make premium payments for the upcoming year even if income disappears (or, alternatively if your insurance company lets you pay 12 months in advance, pay up front and start saving for next year’s expected premiums). Use that account ONLY for insurance payments if you CAN’T make them out of cash flow and then, presumably, sign up for Medicaid or an exchange plan with subsidies during the next open enrollment period.
Great points and great advice to try and save enough to cover premiums just in case you have a loss of income (for any reason). Not every state has expanded Medicaid under the Affordable Care Act. There are many states where working and non-working families making under 100% FPL (this number goes up with each family member) are not eligible for Premium Tax Credits for Marketplace insurance and they also aren’t eligible for Medicaid. This is known by many as the Medicaid GAP and while they get an exemption from the fee for not having insurance it doesn’t help them get health insurance or help cover their costs.
I could have a recurrence of Breast Cancer if I do not continue my medication. I can not afford 500.00 a month for my prescription. I changed jobs due to being forced out because I have cancer so I lost my insurance. Obama care is all I can get because I am not elligable for insurance with the new job. I am doing all I can to support myself and pay my medical bills. I think we need to go after companies that force Cancer patients,that are trying to maintain their jobs and insurance,out of their jobs because they don’t want to deal with them.
Some very interesting and well thought out proposals. Nice to see some objective critical thinking about this topic. I would like to see something standardized on what constitutes a pre existing condition though. I have been in this trap having had a brush with cancer in the 1980’s but even with no recurrence or follow up treatment for more than 35 years insurers used this as an excuse to deny me. The ACA, even with its imperfections and high premium/deductible allowed me coverage and peace of mind for once.
I came here and hoped in vain to find:
How will the current and likely final GOP continuous coverage plan work without “essential” benefits? what about those who have Medicaid but later make too much to qualify, or a high out of pocket plan that dont cover certain kinds of cancer, and then get that cancer…can you upgrade your plan later or the plan you choose now is yours for life or else you pay the higher 30% sick person mark up??
Some of the stupidest ideas I have ever heard of.
Here’s the solution: The government provides a safety net for the very poor. Everyone else buys private insurance.
I agree, the GOP’s continuous coverage provision is a very bad idea. Why punish people for wanting to re-enter the market? That will only ensure the young and healthy don’t buy in and everyone’s premiums will go up.