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.