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Overview of Federal Policy Around Pre-Existing Conditions Coverage

The order comes as the nation awaits the Supreme Court’s decision on the Affordable Care Act’s constitutionality, the law which originally secured pre-existing conditions coverage.

Kelsey Waddill
By
Published: 28 Sep 2020

Update 11/5/2020: This article has been corrected to state that the Supreme Court will hear the oral arguments regarding the Affordable Care Act’s constitutionality on November 10, 2020. A previous version incorrectly stated that the decision will be released on November 10, 2020. Kaiser Family Foundation has noted that the Supreme Court may not release its final decision until June 2021.

President Trump has signed an executive order which he says will protect pre-existing conditions coverage for Americans.

“It has been and will continue to be the policy of the United States to give Americans seeking healthcare more choice, lower costs, and better care and to ensure that Americans with pre-existing conditions can obtain the insurance of their choice at affordable rates,” the executive order stated.

“Any healthcare reform legislation that comes to my desk from Congress must protect the pre-existing conditions or I won’t sign it,” the president elaborated in his remarks. “And I made that pledge last week, but now I’m making it in writing.”

In addition to the statement on protecting pre-existing conditions, the executive order directed the Secretary of the Treasury, the Secretary of Labor, and the Secretary of HHS to increase access to affordable care.

The Secretary of HHS also must work with Congress to solve surprise billing by December 31, 2020. If no solution is reached in that timeframe, the order stated that the Secretary of HHS has the authority to take “administrative action” to end surprise billing.

The executive order also touched on drug pricing, price transparency, care for veterans, and voiced support for medical research.

To supporters, the executive order is another step in the Administration’s move towards a small government approach to healthcare.

“Make no mistake about it: the president’s also been very clear that we’re going to make sure that any American with a pre-existing condition continues to have coverage,” Vice President Mike Pence stated in advance of the president’s executive order.

“The president’s going to take action in the weeks ahead to ensure that. And we’re going to continue to take our case to Capitol Hill to pass a new healthcare reform bill that will lower the cost of health insurance without growing the size of government.”

He noted that the Administration put forward a replacement bill in the Senate which failed to pass by one vote.

The only time that pre-existing conditions is explicitly mentioned in the bill is to direct the Government Accountability Office (GAO) to study “the availability and cost of health insurance policies for individuals with pre-existing medical conditions.”

Experts have noted that the executive order on pre-existing conditions is a statement, not an action.

“An executive order can direct agencies to act within the scope of authority permitted by law. The President’s current order does not direct any government agency to enact a regulation nor does it request Congress to pass legislation with respect to preexisting conditions,” Troy Oechsner, partner with Manatt Health and former deputy superintendent for health insurance at the New York State Department of Financial Services (DFS), pointed out in a comment emailed to HealthPayerIntelligence.

Critics of the executive order do not consider the order as having enough legal weight to effect change, arguing that upholding the Affordable Care Act would be a stronger display of commitment.

“Today’s executive order is nothing more than wallpaper meant to provide cover during an election season,” House Majority Leader Steny H. Hoyer (D-MD) said in a statement. “Should the Supreme Court strike down the ACA, preserving the protections for pre-existing conditions can only be achieved through legislation and not by executive order.”

Pre-existing conditions coverage before the Affordable Care Act

The Affordable Care Act’s protections for pre-existing conditions was a major asset of the law because, prior to its enactment in 2014, payers on the individual and small group health insurance markets were able to deny coverage, set higher premiums, or limit benefits due to an individual’s pre-existing conditions.

Nearly four in ten consumers who attempted to purchase health plans directly through the individual health insurance market (36 percent) were denied coverage, charged a higher premium, or had a health condition that was carved out of their coverage.

Previous policies caused a lot of uncertainty for patients. Over half of consumers on the individual health insurance market during that time period (54 percent) were concerned that they might lose their health insurance coverage if they became seriously ill.

Pre-existing conditions coverage under the Affordable Care Act

The Affordable Care Act includes a provision that protects patients with pre-existing conditions. Accordingly, it is unlawful for any health plan that is compliant with the Affordable Care Act to exclude an individual from coverage based on their current condition.

Without the Affordable Care Act and protections for those with pre-existing conditions in place, 45 percent of families in America would have a non-elderly adult with a pre-existing condition who might be denied coverage.

“If the ACA is repealed, consumers will revert to the pre-ACA protections in the Health Insurance Portability and Accountability Act (HIPAA), which offers no protections to consumers in individual health plans and only protects consumers in group health plans from preexisting condition exclusions if they have had coverage for a year or more and less than a 63 day break in coverage,” Oechsner said.

Pre-existing conditions coverage outside of the Affordable Care Act

Still, even with the Affordable Care Act as the law of the land, there are health plans that do not have to comply. Plans that are not compliant with the Affordable Care Act include grandfathered individual health insurance plans that have not been significantly altered since March 23, 2010 as well as short-term, limited duration health plans.

The Trump Administration has supported these health plans as a low-cost, temporary option to help members transition between insurance coverage types. Under the current Administration, these plans have been extended from only one year in duration to up to three years.

Since these plans are exempt from complying with Affordable Care Act standards, they permit payers to reject potential enrollees based on pre-existing conditions. Every short-term, limited duration health plan in a recent Milliman study had a pre-existing conditions exclusion provision.

Both sides of the aisle have recognized the need for protections around pre-existing conditions. As the Trump Administration pursued dismantling the Affordable Care Act, Republicans introduced a bill in the Senate and Democrats passed a bill in the House that each aimed to protect patients with pre-existing conditions.

This executive order comes as the Supreme Court prepares to make its final decision on whether the Affordable Care Act is constitutional. The Supreme Court will hear oral arguments for the case on November 10, 2020 and may not release its decision until June 2021.

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