Preexisting Condition Spin

Opponents of the Republican House health care bill are claiming its provisions on preexisting conditions reach further than they actually do.

• A TV ad from AARP says “insurers can charge thousands more” for preexisting conditions under the bill. They can, but that would happen only in states that obtained a waiver, and only for the relative few who buy policies on the individual marketplace and have a lapse in insurance coverage.
• Democratic Sen. Catherine Cortez Masto wrongly claimed that “over 1.2 million Nevadans with preexisting conditions … would be denied coverage or face exorbitant, unaffordable premiums.” The bill doesn’t allow insurers to deny coverage, and that figure includes Nevadans who wouldn’t be buying insurance on the individual market.

AARP’s Attack Ad

It’s not surprising that AARP, a nonprofit membership organization for those age 50 and older, is against the Republican health care bill passed by the House. The nonpartisan Congressional Budget Office said in its analysis of the legislation that lower-income older people buying coverage on the individual market would see “much larger” net premiums on average than under current law. And, the CBO said, an increase in the number of the uninsured under the bill “would be disproportionately larger among older people with lower income.”

But a TV ad from AARP targeting 11 Republican senators in eight states doesn’t tell the whole story about what the bill would mean for those with preexisting health conditions.

AARP’s ad is airing in Iowa, Ohio, Tennessee, West Virginia, Arizona, Colorado, Alaska and Nevada, and it urges viewers to call Republican senators in those states to tell them to “vote ‘No’ on the health care bill.” The House passed the American Health Care Act on May 4, and it is now under consideration by the Senate, which could make changes to the bill or introduce its own health care legislation.

The ad launched in late May in four states on a seven-figure ad buy and was expanded to four more states in June. AARP says the ad “will stay on the air as long as the Senate debates health care.”

The ad begins with a shot of a storefront window that says, “Ryan & Associates Financial & Tax Services,” a reference to House Speaker Paul Ryan. It then cuts to an accountant behind a desk asking a man and woman if they’re both over 50 years old. “Yes,” the woman responds, and the accountant says, “that’ll cost you.”

“The new health care bill in Congress,” he explains. “If you’re over 50, insurance companies can charge you five times more. It’s an age tax.”

It’s not actually a “tax,” but under the bill, insurers can charge older people five times more for premiums than younger people for insurance on the individual market, where those without employer-sponsored insurance or coverage through programs like Medicaid buy their own policies. Insurers could even charge more than that, under one of three waivers that states could get under the bill. If a state got the waiver from the Department of Health and Human Services, it could set a higher age-rating ratio than the bill’s 5-to-1 stipulation.

The Affordable Care Act, or Obamacare, limits insurers to charging three times as much to older policyholders.

Then the accountant in the ad asks, “Any preexisting conditions?” The man responds: “I have asthma.” The accountant says, ” Ok, well, insurers can charge thousands more for that. This is going to be a big bill.”

Insurers can charge more based on health status but only under certain conditions. The couple in the ad — or those watching the ad — would have to meet several criteria for that to happen. Under the House Republican bill:

• Insurers cannot set premiums based on health status. That’s the case under the Affordable Care Act as well.
• However, states can get a federal waiver to allow insurers to price policies on the individual market based on health status in some cases.
• Under the waiver, insurers could charge more for preexisting conditions if an individual hadn’t maintained continuous coverage, defined as a lapse of 63 days or more over the previous 12 months.
• That higher premium can be charged for one year, and then, provided there wasn’t another 63-day lapse in coverage, the policyholder would get a new premium that wasn’t based on health status.

Under the Affordable Care Act, insurers couldn’t deny anyone coverage based on their health status, and the Republican bill doesn’t change that.

But the GOP legislation does include a penalty for not maintaining continuous coverage — regardless of whether an individual has a health condition or not. Those buying policies on the individual market — such as state and federal insurance marketplaces — would pay a 30 percent surcharge if they had a lapse in coverage of 63 days or more over the previous year. The waiver that states can get would allow insurers to go above that 30 percent surcharge and instead price policies based on health status.

For a couple older than 50, that could easily mean “thousands more” in premiums. The CBO estimated that for a single person age 64, the average net premium paid in 2026 would be $13,600 for the year in a state that made “moderate” changes to the individual market regulations under the available waivers. (The third waiver available would allow states to set their own list of essential health benefits that plans must cover. There are currently 10 such benefits under the ACA. See our story “The Preexisting Conditions Debate” for more information on these waivers in the GOP bill.)

To get these waivers, states would apply to the U.S. secretary of health and human services and would have to have a “risk mitigation program,” such as a high-risk pool, or participate in a new Federal Invisible Risk Sharing Program, both designed to help those with high medical costs.

How many people could potentially be affected by these waivers? It’s difficult to say.

The CBO estimated that about half of the U.S. population lives in states that would not request waivers to allow pricing based on health status or to change the essential health benefit requirements. About one-third lives in states that would “make moderate changes to market regulations,” and about one-sixth lives in states that would request both waivers, resulting in premiums that would be priced based on health status for a “substantial portion” of the individual market in those states.

The governors of at least two states where the ads are running have criticized the House bill. Democratic Gov. John Hickenlooper of Colorado issued a statement calling on the Senate to reject the House bill, saying it does not “adequately protect people with preexisting conditions.” Republican Gov. John Kasich of Ohio has said that states “will not opt” for waivers because the House GOP bill doesn’t provide enough funding for the high-risk pools.

As we explained, in order to be charged more based on health status, an individual would have to live in a state that got a waiver, have a gap in coverage and buy coverage on the individual market. The Kaiser Family Foundation estimates 7 percent of the population had insurance on that market in 2015. In a March 2017 report, AARP estimated, based on the Urban Institute’s work, that 6 million people age 50-64 got individual market insurance — or 39 percent of those with individual market plans.

AARP estimated, using KFF’s work, that 40 percent of all 50- to 64-year-olds had a health condition that could cause a denial of insurance on the individual market if such denials were allowed. And AARP notes that protections for preexisting conditions “are especially important for older adults,” since people are likely to develop health issues as they age.

Exaggerating the Impact

Despite the difficulty in determining the potential impact, Democrats have taken to exaggerating the number of people with preexisting conditions who would be charged more based on health status.

At a June 13 Democratic media availability on health care, Sen. Catherine Cortez Masto of Nevada claimed that 1.2 million people in her state “would” be affected. But that’s a high-end estimate for all Nevadans with some preexisting condition — not just those likely to buy plans on the individual market.

Cortez Masto, June 13: Right now, there are over 1.2 million Nevadans with preexisting conditions, 1.2 million Nevadans that if Republicans have their way, would be denied coverage or face exorbitant, unaffordable premiums.

First, no one “would be denied coverage” under the GOP health care bill. The bill keeps the ACA’s “requirement to guarantee issue coverage” — which means coverage must be offered regardless of health status, as a Kaiser Family Foundation summary of the bill says.

Second, as we’ve explained, some with preexisting conditions could “face exorbitant, unaffordable premiums,” but it’s unknown if they “would,” as Cortez Masto claimed. And her 1.2 million figure includes Nevadans who get their insurance through an employer, as 46 percent of the state’s population does. Seven percent of Nevadans get coverage through the individual market, where the GOP bill’s waivers could directly apply.

The senator based her claim on a study by the liberal-leaning Center for American Progress, according to her spokeswoman Bianca Recto. The CAP study in turn generated state-by-state figures based on a national estimate that the Department of Health and Human Services issued just before President Obama left office.

That Jan. 5 HHS report found that the percentage of Americans under age 65 who have preexisting medical conditions falls in a rather broad range — somewhere between 23 percent and 51 percent of the population — depending on what conditions are included. But the CAP, and Cortez Masto, used only the high end of the range.

The HHS report said “as many as” 51 percent of Americans had conditions that “could” lead to denial of coverage, or higher rates without the ACA’s protections. That’s counting people with common conditions including arthritis, asthma, high cholesterol, high blood pressure and obesity.

But using a narrower definition, HHS found the figure was 23 percent. That’s counting only such serious conditions as heart disease, cancer, diabetes and others that HHS said would cause individuals to be “outright rejected for coverage by private insurers.”

The HHS report hedged its findings, saying “up to” 51 percent of the under-65 population “may” have a preexisting condition and “could” have been denied coverage, or offered coverage only at an exorbitant price, if seeking coverage in the pre-ACA individual market.

But possibility morphed to certainty by the time Cortez Masto spoke. She said Nevada’s share of this high-end estimate “would” lose coverage or pay “unaffordable” rates if the GOP bill became law.

The waivers to allow pricing based on health status apply only to the individual market. But we’ll note that some experts have said that employer plans could be affected by the waivers on essential health benefits. The EHBs are used to determine which benefits are subject to the ACA’s ban on annual and lifetime limits, as well as the cap on policyholders’ out-of-pocket spending, in employer plans.

But the CBO said it expected that benefits in large-group plans “would probably not be noticeably affected” by states getting such waivers. The CBO explains:

CBO, May 24: For the large-group market, which generally consists of employers with more than 50 employees, current regulations allow employers to choose the EHB benchmark plan of any state in which they operate. Because of those regulations, a large employer operating in multiple states, including one that elected an EHB waiver, could base all of the plans it offers on the EHB requirements in a state with the waiver. That decision could allow annual and lifetime limits on benefits not included in the state’s EHBs. However, large employers already have considerable flexibility in the range of the benefits they include in their plans, so CBO and JCT expect that their benefit offerings would probably not be noticeably affected by the actions of states.

Congressional and administration spokespeople have told reporters that the intent of the bill isn’t to impact employer plans in this way and any ambiguity could be remedied through guidance from the Department of Health and Human Services.

The GOP bill does offer fewer protections for people with preexisting conditions than under current law. But saying that everyone with a health condition “would” be affected goes way too far, and it has become a pattern. Our fact-checking colleagues at the Washington Post found Sen. Kamala D. Harris of California making a similar claim in May about those at risk nationwide. And we wrote about such Democratic exaggerations way back in 2011.