In praising the Affordable Care Act, President Joe Biden misleadingly warned of the consequences if Republicans ever repealed the law, saying that would mean “100 million Americans with preexisting conditions can once again be denied health care coverage by their insurance companies.” But those Americans could only be denied coverage on the individual market.
Employer-based plans, the largest source of insurance in the U.S., couldn’t deny an insurance plan to employees before the ACA. They could decline coverage for some preexisting conditions for a limited period, if a new employee had a lapse in coverage.
As a candidate, Biden made a similar claim during the 2020 campaign. As we explained then, the 100 million figure is an estimate for the number of Americans with preexisting conditions, such as cardiovascular diseases, obesity or diabetes, not including those with Medicare or Medicaid coverage. (The Kaiser Family Foundation put the figure at 53.8 million people who could be denied if seeking coverage on the individual market, as we also wrote before.)
In his recent comments, made on April 5, Biden said that the 100 million Americans could face rejection by their insurers because “that’s what the law was before Obamacare.”
The ACA, which was signed into law 12 years ago by then-President Barack Obama, prohibits insurers, in any market, from denying coverage, charging more or excluding coverage of certain conditions based on a person’s health status. Before the ACA, people who bought their own insurance on the individual market could face denials or higher premiums because of their health. But, as we said, employer-based plans had protections against denial of insurance.
As of 2020, a little over half of the U.S. population — 50.3% — had employer-based health insurance, while only 5.5% got coverage on the individual market. However, in the past two years, more people are benefiting from the ACA’s preexisting condition protections in the individual market, due to the economic impact of the coronavirus pandemic and to temporary, expanded subsidies for HealthCare.gov and state-run marketplace plans. The additional subsidies, made available under the American Rescue Plan, are set to expire at the end of 2022.
In 2019, 9.8 million people had ACA marketplace plans, a figure that increased to 11.3 million by 2021. This year, 14.5 million people were enrolled in plans during the open enrollment period, with 3 million of them being new consumers, according to the Centers for Medicare & Medicaid Services.
Enrollment in Medicaid and the Children’s Health Insurance Program also has gone up significantly — by 15 million people — during the pandemic, from February 2020 through November 2021, the latest available figures from CMS. The Urban Institute estimated last September that “most” of the increased Medicaid enrollment was due to a requirement under the Families First Coronavirus Response Act that states not disenroll people during the coronavirus public health emergency. That law also temporarily increased the amount the federal government, as opposed to states, contributes to cover Medicaid costs. The public health emergency is set to expire on April 16, though it has been extended many times.
When the public health emergency does expire, “many” of those who leave Medicaid “are estimated to be eligible for Marketplace subsidies, but not all of them will enroll,” the Urban Institute said in a March report. All of this is to say that potentially millions more people could, in the near future, seek coverage on the individual market and benefit from the ACA’s preexisting condition protections.
To be sure, even those with employer plans may be reassured to know that under the ACA they wouldn’t face a denial if they lost their job and needed individual market insurance, and the law’s increased protection for employer plans could have greater importance now for anyone who had a lapse in coverage. Before the ACA, under HIPAA, the 1996 Health Insurance Portability and Accountability Act, employer-sponsored plans couldn’t deny insurance or charge higher premiums based on a worker’s health status (see Section 702). However, if a new employee had a gap in insurance coverage of more than 63 days, job-based plans could exclude coverage of certain preexisting conditions — but not pregnancy — for up to a year.
New employees with continuous coverage for at least a year before starting the new job couldn’t be subject to any coverage exclusions. But if the prior coverage had been for less than a year, the new plan could decline to cover preexisting conditions for a limited period, up to a year. For example, if the previous coverage had been in effect for only six months, the new job-based plan could have excluded coverage of a health condition for up to six months.
There were also complicated HIPAA protections for people moving from employer plans to the individual market. The ACA changed all these rules to a simple, blanket protection against any discrimination based on preexisting conditions.
The president has a point that going back to the way insurance markets worked before the ACA would mean millions of Americans with preexisting health conditions would face uncertainty over whether they could be denied coverage or pay higher premiums for their insurance — but the 100 million Americans he referenced would have to seek coverage on the individual market to possibly be denied a plan outright.
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