Pre-Existing Contradictions

May 2nd, 2017

There is a perverse contradiction about Obamacare’s most popular feature: people overwhelmingly support Obamacare’s protections for people with preexisting conditions, unless they understand that these protections increase the cost of insurance for people without preexisting conditions.

I discuss the results of a September 2009 Kaiser poll in Unraveled:

Under the Affordable Care Act, he said, “for insurance companies to drop your coverage when you get sick or water it down when you need it the most.” By far, this was one of the most popular aspects of the ACA, if not the most popular provision. A September 2009 Kaiser survey found that 80% of respondents supported this ban – that included 88% of Democrats and 67% of Republicans. Among those supporters, however, only 56% still favored the provision if it resulted in higher premiums; 36% would oppose it.  Supporters almost certainly did not realize that requiring insurers to cover sick people would necessarily shift the cost onto everyone else.

Eight years later, the numbers remain remarkably the same. According to a Cato/YouGov survey from March 2017, the support for the pre-existing condition ban flips when people recognize that it imposes costs on everyone else:

By a margin of 63% to 33%, Americans support the ACA’s community-rating provision that prevents health insurers from charging some customers higher rates based on their medical history. However, support flips with a majority opposed 60%-31% if the provision caused the quality of health care to get worse.

Majorities also come to oppose the ACA’s community-rating provision if it increased premiums (55% oppose, 39% favor), or raised taxes (53% oppose, 40% favor).

This divide resembles President Obama’s lie that people can keep the plans they like. Nothing is free. Mandating that insurers issue policies to all customers, based on community ratings irrespective of prior health conditions, increases costs. To ensure sick people have access to more affordable and more comprehensive insurance, those who previously skated by with cheaper premiums will have to pay the price. Or, as Jonathan Gruber explained, the genetic “lottery winners” have to pay their fair share.

Compounding this contradiction further is the fact that the number of people who would actually be denied coverage due to preexisting conditions is really, really small. Even before the ACA, people on Medicaid, Medicare, and those on group or employer-provided health plans were not subject to these bans. Under provisions of HIPAA, those who maintained continuous coverage on the individual marketplace could keep their plans. The Wall Street Journal explained this morning:

Pre-existing conditions are an understandably emotional issue, because people fear losing their plan or a financial catastrophe if they develop a serious health problem. But only about 4% of the population under age 65 is high risk. ObamaCare’s Pre-Existing Conditions Insurance Plan was created from 2010 to 2014 as a transition until the entitlement debuted nationwide: Anyone could sign up for heavily subsidized coverage if they were denied in the private market. Enrollment topped out at merely 115,000 people in 2013.


However, the facts of this contradiction are largely irrelevant. President Trump, who seems to lack even the most basic understanding of how health care markets work (remember the “lines”?) has continued to mislead people that the new AHCA will provide the same (or even better!) level of protections for people with preexisting conditions. It won’t. An honest politician would explain that the ACA’s protection of pre-existing conditions imposes too great a cost for too small a benefit, and the new law will provide worse coverage for sick people, but greatly reduce the cost for tens of millions of other Americans in the marketplace, thereby improving risk pools, and ensuring the long-term stability of the marketplace. Alas, if a politician said that, everyone from Jimmy Kimmel to Barrack Obama will call them heartless bastards. So here we are.
In any event, even before the ACA, infants added to a parent’s insurance plan within 30 days of birth would be charged the standard rate.