The Preexisting Mess

by Ramesh Ponnuru

Many Republican moderates are balking at the latest version of a health-care bill because they fear it would result in hardship for people with chronic health conditions. But the same sort of confusion that has bedeviled Republicans on health policy before is distorting this debate. The impact of this legislation on people with these conditions is likely to be much smaller than people think.

The bill includes the MacArthur-Meadows amendment, which is being discussed as though it allows states to get waivers releasing them from regulations protecting people with preexisting conditions. People, including journalists and legislators, have the impression that states would just dump these people on high-risk pools — returning to a pre-Obamacare dispensation that worked badly for many people.

The amendment would be much more limited than that, and people with preexisting conditions would have several protections that were not in place before Obamacare.

States would be able to waive Obamacare rules on preexisting conditions only for people who do not maintain insurance coverage. If you are someone with one of those conditions who has gotten coverage through Obamacare (or otherwise gotten coverage), the Obamacare regulations will still apply: In no state will it be possible for an insurance company to charge you more than a person without such a condition. If you are someone who has insurance and develops one of these conditions, you too will be covered by the Obamacare regulations. Insurers will not be able to charge you extra, either, under any waiver.

And maintaining insurance coverage will be easier than it was pre-Obamacare, because people without access to Medicare, Medicaid, or employer coverage will have a tax credit to purchase insurance on the individual market.

So the only people who might be adversely affected by a waiver of the Obamacare rules — if a state applied for one — would be those who have a preexisting condition but have not used their credit to buy insurance. And even they would have to have access to a high-risk pool for the regulations to be waived.

People with preexisting conditions, then, would have a triple safety net even in a state that took maximum use of the waivers: Tax credits, regulatory protection contingent on continuous coverage, and high-risk pools would all benefit them.

One advantage of this system over Obamacare is that it would strengthen the incentive for healthy people to buy insurance (since buying coverage would mean also buying the ability to renew that insurance at nondiscriminatory rates). It could enable lower premiums and higher coverage rates than Obamacare, without Obamacare’s fines for people who don’t buy insurance.

And the potential downside of this policy change would, by design, be carefully contained.

Different Republicans have different objections to the health legislation. If it fails, so be it. But it would be a shame if it failed because people didn’t understand what it does.

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