Donald J. Trump made headlines on Friday by saying he would like to keep two components of the Affordable Care Act: allowing young people to stay on their parents’ insurance until age 26, and continuing the ban on the exclusion of pre-existing conditions by insurers.
These have long been staples of proposed Republican replacements for the act, but their reaffirmation by the president-elect heightens the importance of understanding what these provisions do, and what they don’t.
The ability of young adults to stay on their parents’ insurance provided real benefits. It increased coverage by roughly a million people, and improved young people’s health. Maintaining this provision is a clear part of any sensible replacement for the Affordable Care Act, and Mr. Trump can do it.
Keeping the ban on insurance companies excluding people with pre-existing conditions, however, is a different story. The problem these patients faced was one of the most pernicious flaws of the individual insurance market pre-Obamacare; their exclusion essentially undercut the entire notion of insurance. How is a breast-cancer survivor meaningfully insured if any costs associated with the recurrence of her cancer, expenses that could run into the hundreds of thousands of dollars, are not covered? So it sounds encouraging that Mr. Trump would continue to ban this behavior.
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Michael Nagle/Bloomberg
But let’s not kid ourselves. Maintaining this popular provision while scrapping the rest of the health care law would be worse for people with pre-existing conditions than repealing the law in its entirety.
To understand why, let’s go back to the world of individual insurance before the major provisions of the Affordable Care Act went into effect on Jan. 1, 2014. In that world, the primary source of profit for insurers was not providing better care so that patients stayed healthy, or negotiating better prices with hospitals and drug companies; it was their ability to avoid the sick and insure only the healthy. And insurers had three tools for doing so: denying coverage to the insured for any costs associated with pre-existing conditions; denying insurance entirely to sick people; and charging the sick much higher prices than the healthy, a practice called health underwriting.
If Mr. Trump preserves just the ban on the first of these tools, and allows insurers to reintroduce the other two, he has effectively done nothing. That’s because any insurer can simply use the other tools to accomplish the same goal as it could with all three.
Suppose a breast-cancer survivor applied for insurance in Mr. Trump’s post-Obamacare world. It’s true that the insurer could not offer her coverage that didn’t include breast-cancer treatments. But the insurer could simply not sell her coverage at all.
Alternatively, the insurer could offer coverage, but say that any breast-cancer survivor had to pay, say, five times more than everyone else. Both would be perfectly legal if the Affordable Care Act was repealed and replaced under Mr. Trump’s principles. If we say that insurers have to pay for breast-cancer treatment for their insured, but allow them to set unaffordable prices or deny insurance altogether, how does that solve the problem?
In fact, Mr. Trump’s idea would make insurance markets function even worse than they did before Obamacare. Back then, an otherwise-healthy breast-cancer survivor could at least get insurance coverage for medical expenses not related to her cancer. If Mr. Trump followed through with his suggestion, that would not be possible: The insurer would simply deny coverage altogether rather than take the risk of being forced to pay for treatment for a recurring breast cancer.
So Mr. Trump would not only continue the insurance discrimination that plagued the country before the Affordable Care Act but even make it worse.
In fact, there is simply no Republican replacement for the act that wouldn’t leave millions of Americans at serious financial risk. The single most important accomplishment of the Affordable Care Act was to bring the United States into line with the rest of the developed world, as a place where people were not one bad gene or one bad traffic accident away from bankruptcy.
Mr. Trump and other Republicans can discuss kind-sounding alternatives as much as they like, but they can’t hide the fact that repealing the fundamental insurance protections that are central to the act would be a cruel backward step.
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