A Project of The Annenberg Public Policy Center

Millions with Preexisting Conditions


Q: Is it true — as the Obama administration claims — that “129 million Americans with a pre-existing condition could be denied coverage without new health reform law”?

A: No. The number who would be truly at risk of losing health insurance or paying more money is much smaller.

This figure comes from an analysis released by the Department of Health and Human Services as House Republicans were preparing a vote to repeal the Patient Protection and Affordable Care Act. The administration was making the argument that these millions of Americans would be at risk of losing (or not obtaining, or paying more money for) insurance if the health care law were to be repealed. The headline on the HHS press release said: “129 million Americans with a pre-existing condition could be denied coverage without new health reform law.”

Democrats have repeated that assertion. Rep. Nancy Pelosi claims on her website that “Health and Human Services has found up to half of Americans under 65 have preexisting conditions and could lose their health coverage under repeal.” But it’s not true that if the law didn’t exist, 129 million persons would all be at risk of losing their insurance, and that becomes clear when reading the full administration report.

The 129 million was the upper range of the administration’s estimate. The low estimate was only 50 million. Plus, those figures are the “share of non-elderly individuals likely to be denied coverage in the non-group market,” according to the report. Of course, most Americans don’t get their coverage in the non-group, or individual, market. They get coverage through an employer.

HHS report: According to a new analysis by the Department of Health and Human Services, 50 to 129 million (19 to 50 percent of) non-elderly Americans have some type of pre-existing health condition. … As many as 82 million Americans with employer-based coverage have a pre-existing condition, ranging from life-threatening illnesses like cancer to chronic conditions like diabetes, asthma, or heart disease.

Those 82 million with job-based health benefits wouldn’t be dropped from their plans if the law wasn’t in place. In fact, the preexisting condition provisions don’t even go into effect until 2014. As the report says: “Starting in 2014, insurers can no longer carve out needed benefits, charge higher premiums, set lifetime limits on benefits, or deny coverage due to a person’s pre-existing condition.”

The administration does have a point, however, in that some persons with heart conditions, diabetes or other illnesses may hold onto their jobs, delay retirement or not risk launching their own businesses because of a concern that they wouldn’t be able to get or afford insurance on their own. Also, those who lose their jobs face the sometimes challenging prospect of buying their own insurance. And the law’s provisions that are designed to help those with preexisting conditions may indeed give those persons more security to find coverage in the individual market. But, with or without the law, most Americans will get their insurance through their jobs. Under the law, the number of people with job-based health policies is expected to decline by 4 million by 2019, according to the nonpartisan Congressional Budget Office.

In the administration’s report, about 6 million of those with a health condition were on the individual market already (so they did manage to buy coverage) and 25 million had no insurance. Those numbers are from the high-end estimate. The analysis acknowledges that the lower estimate represents those with a problem “likely to lead to a denial or significant mark-up or carve-out of benefits.” But the higher estimate includes “additional common health and mental health conditions (e.g., arthritis, asthma, high cholesterol, hypertension, and obesity) that would result in an automatic denial of coverage, exclusion of the condition, or higher premiums according to major health insurers’ underwriting guidelines identified using internet searches.”

Preexisting Exclusions

It’s true that it can be difficult for those with health issues to get insurance on the individual market. The Commonwealth Fund reported that in a survey of those who tried to buy such coverage between 2004 and 2007, 47 percent of those with health problems said they were either denied coverage, charged a higher premium or had some coverage excluded because of preexisting conditions. Twenty-six percent of those without a health problem reported the same thing.

“In most states, it’s really challenging to get a policy if you have any kind of preexisting condition,” says Sara Collins, a vice president at The Commonwealth Fund and one of the authors of that report. Even a minor ailment like asthma can cause someone on the individual market to be denied, charged a higher rate, or have treatment of asthma excluded from the policy.

Employer-based coverage, however, is more secure. “As an individual, when you are hired by a large employer,” Collins says, “you are automatically eligible for coverage.” You wouldn’t be denied based on preexisting conditions.

In fact, there are additional protections for those who get insurance through work. HIPPA (Health Insurance Portability and Accountability Act of 1996) limits the ability of job-based policies to exclude existing health conditions, and it puts time limits on “preexisting condition exclusion periods,” a time during which a plan can refuse to cover a certain ailment for a new employee who hasn’t had continuous coverage.

But preexisting conditions are still an issue for small employers, says Linda Blumberg, an economist and senior fellow with The Urban Institute’s health policy center. “In the vast majority of states, small group insurance carriers are still allowed to use health status rating,” she says, meaning they can charge higher rates for small groups that have health issues. “So if you have a small employer, who happens to have a couple 50-year-old guys with heart conditions,” the premium could be higher for that group.

Individuals buying coverage on their own, without the benefit of a larger group risk pool, face larger hurdles. They can get excluded for something like hay fever, which is a drug cost, Blumberg says. There’s wide variation in policies and pricing across carriers and across states. The individual market can be “the wild west,” she says.

So, in theory, as many as 129 million Americans have some kind of health condition that could cause them to be denied, charged more or be offered a limited policy on the individual market. But it’s not the case that those 129 million all risk such discrimination if the health care law didn’t exist. The law bans preexisting condition exclusions, but most of those included in this figure would still be getting coverage through employers, not buying it on their own.

— Lori Robertson

Sources

U.S. Department of Health and Human Services. “New report: 129 million Americans with a pre-existing condition could be denied coverage without new health reform law.” News release. HHS.gov. 18 Jan 2011.

The GOP Patients’ Rights Repeal Bill. Democratic Leader Nancy Pelosi’s website. accessed 4 Feb 2011.

U.S. Department of Health and Human Services. “At Risk: Pre-Existing Conditions Could Affect 1 in 2 Americans: 129 Million People Could Be Denied Affordable Coverage Without Health Reform.” HealthCare.gov. 18 Jan 2011.

Collins, Sara. Vice president, The Commonwealth Fund. Interview with FactCheck.org. 3 Feb 2011.

Blumberg, Linda. Senior fellow, The Urban Institute. Interview with FactCheck.org. 3 Feb 2011.

Congressional Budget Office. Letter to Sen. Harry Reid. 19 Dec 2009.

Doty, Michelle et. al. “Failure to Protect: Why the Individual Insurance Market Is Not a Viable Option for Most U.S. Families.” The Commonwealth Fund. 21 Jul 2009.

Kaiser Family Foundation. “Survey of People Who Purchase Their Own Insurance.” Jun 2010.